Dubai: The UAE regulator’s efforts to regulate the sending of money through ‘hawala’ channels is starting to get results, according to a top official in the local remittance industry.
Another major boost in the fight against parallel market remittances has come from the lowering of volatility in the Pakistan Rupee (when it dropped about 20% in 2023 alone) and the Egyptian Pound (which went through multiple devaluations).
“Hawala transactions will always be difficult to eliminate in full, but we are starting to see major remittance receiving countries from the UAE recording drops in hawala flows,” said Mohammad Bitar, Deputy CEO of Al Ansari Financial Services.
“With the Pakistan Rupee, you had a situation when the official and the hawala rates had a major gap, but, touchwood, it’s not the case now.
“Plus, you have the Central Bank of the UAE being clear about hawaladars’ need to register with the authority.
“The message is clear to the parallel market operators – Either you ship in or you ship out.” (During the peak of the volatility in the Pakistan Rupee, the difference between the official exchange rate and the parallel market rate was as wide as 9%. It is now around 1.5%. The PKR is currently at 281.08 to the dollar, after having been 315 in August 2023.)
### UAE rules are clear enough
No individual can carry on hawala activities in the UAE ‘unless he holds a ‘Hawala Provider Certificate’ issued by the Central Bank’.
According to senior industry sources in FERG (Foreign Exchange Remittance Group), there has been a clear decline in transaction flows as local authorities stepped up their campaign against violators.
"The UAE authorities give everyone reasonable time to adjust and comply with new rules," said Bitar. "They don't do an immediate enforcement, which is great and I give them credit for that.
"We see more awareness being spread against Hawala by regulators and enforcement agencies. It's not about Hawala being a risky way to send money home for UAE residents - it's actually illegal."
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