Page 183 - AAE PR REPORT - MARCH 2025

3/25/25, 9:23 AM Tough UAE rules, less volatility in Pakistan Rupee, Egyptian Pound hit hawala money flows
“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.” (Hawala is the 'sending' of money through parallel
channels, whereby the operators do so at much lower 'fees' than what is there through official remittance channels.)

"Whenever the gap closes between official and Hawala rates, like it did with Pakistan Rupee, it means less of a need to go for Hawala
transactions," says Mohammad Bitar of Al Ansari Financial Services. "Plus, the risks are bigger for anyone using these channels in the UAE."
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."
For currency exchange houses in the UAE - and the wider Gulf - the Hawala transactions have historically been a major disruptor of their
operations. This is why Bitar's comments about remittance activity in the main money receiving countries from the UAE showing less of
Hawala flows adds weight.

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