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UAE Central Bank has registered 220 hawaladars to date

The Central Bank of the UAE has registered 220 hawala brokers (hawaladars) since the registration system came into force on April 1, 2003.

"We have had 272 applications so far and as of April 26, 220 hawaladars have been registered," said Abdulrahim Al Awadi, assistant executive director and head of anti-money laundering and suspicious cases unit (AMLSCU) at the UAE Central Bank.

"The remaining have yet to be registered," he said, speaking at a Bankers' lunch at the Dubai International Financial Centre (DIFC) yesterday. Until they receive a certificate from the bank, they will be able to trade.

The word "hawala" comes from the Arabic meaning transfer or remittance and in this context refers specifically to informal money or value transfer systems or networks outside the formal financial sector. Those operators who take part in this system are known as hawaladars, or brokers. This system of money transfer leaves no paper trail because there are no accounts, cheques or signatures involved and works faster and more cheaply than conventional systems. It is used extensively across Arabia and in the subcontinent and can reach remote places not serviced by normal banking networks.

Countries have been reluctant to outlaw the hawala system because it is recognised as very important for handling the transfers of low-paid workers. To regulate hawala, therefore, the UAE Central bank introduced a registration system and issued a certificate to all hawaladars, free of charge. The UAE Central Bank has also assured hawaladars that their names and details would remain confidential.

On their part, hawaladars must provide the Central Bank with details of the remitters and beneficiaries who receive transfers from abroad on simple forms, said Al Awadi. He also said hawaladars must have a certificate in order to carry out transactions through banks or money changers and avoid money laundering suspicion. They also have to report all suspicious transfers.

Al Awadi described the registration system as "very effective and efficient" and said that it had been praised "by regional and international organisations as a model for the region and industry."

He cited such organisations as the IMF, World Bank, Financial Action Task Force against Money Laundering (FATF) and the United Nations Office on Drugs and Crime.

He also described the other laws and regulations the UAE Central Bank had put in place to tackle money laundering and the financing of terrorism.