UAE authorities have launched a crackdown on ‘hawala’ operators as part of a move to target money laundering after several arrests were made last week in Dubai, according to Gulf News.
The UAE Central Bank today warned banks and money exchanges to freeze accounts of the main suspects and the nine firms at the centre of the alleged scam, the report said. ‘Hawala’ is a system which allows customers to transfer money via a network of brokers.
“The UAE Central Bank, in view of the reports received from Dubai Police General Headquarters, issued a notice to all banks and moneychangers, operating in the country instructing them to freeze the accounts of the main suspects, those who assisted them as well as the nine companies involved in the case,” said a Dubai Police statement quoted by Gulf News. “In addition, all transfers in the said names were also prohibited.”
Security forces detained a number of suspects in Deira last week, shutting down their hawala operations. According to reports, the criminal organization – involving Asian, European and American citizens – misused financial institutions and was helped by some staff “to conceal such crimes, against commissions.”
Market officials said police have shut also confiscated large sums of hard currency from operators.
“Police officials have rounded up a number of hawala operators from their offices in downtown Deira and shut their operations near the Gold Souq and Murshid Bazaar – Dubai’s major wholesale market, forcing others to go underground,” an official told Gulf News.
According to Gulf News, Dubai is used as a transit point by currency traders and while some operators move currency to legalize black money from clients, others use the currency for trading, finance banks’ letters of credit and money laundering.
An issued statement said the UAE Central Bank has remained vigilant in combating money laundering and financial crimes.
“As a result of the common coordination between Dubai Police and the UAE Central Bank’s Anti-Money Laundering and Suspicious Cases Unit, over a period of almost a year and a half, we have taken measures to detect those operations through the commercial and financial activities, carried out by the suspects,” the statement said in Gulf News.
Dubai Police are preparing to take legal measures in this case and are set to finalize a detailed report.
The hawala system – located mainly in the Middle East, Africa and Asia – lets customers transfer money via a network of hawala brokers from one city to another. Hawala operators in each city are in contact and provide each other disposition instructions of the funds, normally without commission, and promise to settle the debt at a later date. The transaction is based entirely on the honour system and without legalities, and there are usually no kept records of individual transactions – only a running tally of the amount owed one broker.
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