The UAE Central Bank, in co-operation with the Ministry of Interior and other law enforcement agencies, has introduced a public awareness campaign to highlight the laws and standards for remitting money through registered hawala providers (RHPs), state news agency Wam said on Thursday.
The campaign features a series of messages carried on the platforms of all participating entities and through media outlets, Wam said. It aims to enhance the protection of end users and introduce legal frameworks and legislation to regulate money transfers through RHPs.
“The Central Bank of the UAE launched the Hawala Providers’ Registration system with the aim of ensuring transparency, integrity and financial governance in transactions executed through hawala providers registered with us, and to put in place measures to counter money laundering and combat the financing of terrorism,” said Khaled Balama, governor of the Central Bank.
“The Central Bank will continue to take all measures that guarantee the integrity of the financial system, and ensure that all outgoing financial transactions from the UAE are compatible with the systems and regulations included in the Registered Hawala Providers Regulations.”
Hawala providers extend an informal funds transfer service for people who do not have a bank account.
The regulator permits legitimate hawala activity and considers it an important element in its efforts to boost financial inclusion and bring the unbanked segment of the population into the regulated financial system.
Hawala is overseen by the Registered Hawala Providers Regulation, which was issued in 2019. All providers undertaking hawala activities in the Emirates must hold a provider certificate issued by the Central Bank.
RHPs are also mandated to maintain an account with a bank operating in the UAE to be used for settlements.
The Central Bank has unveiled a number of initiatives to further improve regulatory oversight of the country’s financial sector.
The Ministry of Economy set up an anti-money laundering department last year, while a court was established in Abu Dhabi in 2020 to tackle money laundering and tax evasion.
Other measures include an enhanced regulatory framework to supervise banks’ exposure to the property sector and the issuance of guidelines to help licensed exchange houses combat money laundering and the financing of terrorism.
Last year, the Central Bank also instructed all hawala providers to register with it in an effort to strengthen oversight of money transfers.
The Financial Action Task Force, the global money laundering and terrorist financing watchdog, said in March this year that the UAE had made “significant progress” to strengthen its anti-money laundering controls, including by demonstrating increased and swifter action against financial criminals.
The Executive Office of Anti-Money Laundering and Counter Terrorism Financing said the UAE authorities confiscated Dh2.33 billion ($634.4m) as part of an intensive clampdown on financial crime in 2021.
The Central Bank works closely with other authorities and entities in the UAE to monitor hawala providers and ensure they obtain the registration certificate that allows remittance activities to be carried out under their commercial name.
Hawala providers are also required to submit the details of these activities to the Central Bank on a daily basis, Wam said.
Any hawala provider who operates without registration shall be deemed to be acting illegally and will be subject to investigation and legal prosecution, it added.
On June 28, the Central Bank did not renew the registration certificates of seven hawala providers after they failed to report remittance data, according to Wam.
“The Ministry of Interior’s operations in combating crimes related to money laundering and terrorist financing monitor suspicious activities, leading to the arrest of perpetrators, bringing them to justice and cutting off their sources of funding with cross-border cooperation and coordination,” said Abdulaziz Al Ahmad, deputy director general of the federal criminal police at the Ministry of Interior and head of the subcommittee for investigating money laundering crimes.
After being alerted by the Central Bank, the ministry recently conducted an investigation and discovered a fraud attempt by a company engaged in unlicensed money transfer activities, Wam said.
The company was referred to the judicial authorities and deterrent action was taken, including imprisonment, fines, deportation and confiscation of all seized amounts.