UAE takes action against unregistered hawala
UAE takes action against unregistered hawala

The Central Bank of the UAE will start taking legal action against unregistered hawala service providers when the registration deadline expires on December 2, 2020, after which no hawala service provider will be allowed to operate in the country.

 

After the deadline ends, the Central Bank will impose the necessary legal and supervisory measures stipulated in the law.
The central bank said in a statement that this includes imprisonment and a fine, in addition to administrative penalties that may include closure of operating premises.

Hawala, also known as hundi, is a process by which the value of money is transferred to individuals in other countries, and it is usually used in remote locations in those countries, which do not have access to banking services.

Hawala regulation is an important component of the Central Bank's ongoing efforts to maintain transparency of money transfer transactions, and to strengthen reporting systems in accordance with international standards, especially with regard to combating money laundering and terrorist financing.

According to the provisions of Circular No. 24/2019 issued by the Central Bank, registration is mandatory for hawala service providers, or informal money transfer service providers operating in the United Arab Emirates, to settle their status before December 2, 2020.

Regulating hawala operators will bring transparency to the transfer of funds as well as reporting systems in accordance with international standards, especially in relation to Anti-Money Laundering and Terrorism Financing (AML / CFT).

Two parts

Under central bank regulations, the hawala provider faces a penalty in two cases. Firstly, if he fails to register by December 2, 2020, and secondly, if he fails, as a registered hawala provider and holds a registration certificate from the central bank, to comply with the requirements of the Registered Hawala Providers Regulation. Penalties for failure to register include fines and imprisonment.

The Central Bank monitors the concerned companies as well as audits their accounts because the "Registered Transfer Provider Regulations" and the Central Bank Law grant the competent departments in the Main Bank powers to inspect and examine all areas of the hawala business.

How to register:

- Hawala service providers are required to fill out and send the required documents available on the Central Bank's website to the address Licing@cbuae.gov.ae to fulfill the necessary criteria regarding the registration process.

- Hawala service providers also need to fill out, sign and send the “Declaration and Certificate for Hawala Service Providers to re-register with the UAE Central Bank as registered hawala service providers” available on the Central Bank's website.

- The document “Acknowledgment and certification of hawala providers for re-registration with the Central Bank as registered hawala providers” includes connection to the UAE Central Bank's goAML system, which all hawala providers must complete before obtaining the final registration certificate from the Central Bank.

In addition, hawala providers are obligated to comply with the requirements specified in Articles (4) and (5) of the bylaws, as well as laws and regulations related to combating money laundering, terrorist financing and illegal organizations in the United Arab Emirates.