UAE Central Bank To License Hawala Operators In Line With FATF Recommendations

by Lorys Charalambous, Tax-News.com, Cyprus

29 May 2002

The Central Bank of the United Arab Emirates announced this week that it is looking into ways to license and regulate hawala operators within the region.

Hawala is a non-banking channel for remittances which is widespread in Arabic nations and, to a lesser extent, throughout the Islamic diaspora. The practice came under fire in the international regulatory enhancement drive immediately post-September 11, but fears that large amounts of money were being laundered to finance terrorist activities were discovered to be largely unfounded.

However, in view of the fact that the practice is so widely used, it was decided at an international conference on the subject earlier this month that a system of regulation and supervision is necessary.

The Central Bank announced on Monday that its board had: 'studied the main themes of a licensing and supervisory system for 'hawala' in the UAE', and revealed that the proposals discussed will be 'implemented in the near future'.

In the intervening period, however, the Abu Dhabi Declaration principles were adopted by the countries which participated in the May 15-16 conference, according to the Gulf News service. A report released on Tuesday detailing the events of the International Conference on Hawala explained that:

'The (Abu Dhabi) declaration urged countries to designate competent supervisors to monitor and enforce the application of the recommendations of the Financial Action Task Force to hawala dealers and other alternative remittance providers.'

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