DUBAI, April 4: The World Bank and the IMF are putting pressure on banking regulatory bodies of the Gulf and the South Asian region for more transparency in informal funds transfers (IFT), commonly known as ‘hawala’. A two-day Third International Conference on Hawala that ended on Sunday in Abu Dhabi has asked for more transparency, international cooperation and increasing information exchange “to root out misuse of the hawala system”.

The conference was co-organized by the Central Bank of UAE and the IMF with delegates from 50 countries, including Pakistan. The conference also asked the participants, mostly involved in curbing ‘white-collar’ crimes, to “assess in their IFT sectors the specific risks of money laundering, terrorist financing and other related crimes”.

Addressing the conference, the delegate from the World Bank emphasized the countries with large traffic of migrant workers to create a national policy on remittance and monitoring their remittance corridors.

“It is important to know your remittance corridors, how migrants send money so as to protect the integrity of remittance flows,” Raul Hernandez-Coss, a delegate from the World Bank, was quoted by Gulf News as saying.

According to the World Bank analysis, remittance by migrant workers had reached $110 billion last year as compared to $93 billion in 2003. The Gulf-subcontinent sector is the second highest after US-Mexico corridor. “About $16 billion in remittance was made in 2004 through Gulf-India (subcontinent) corridor,” he said.

Meanwhile, Sultan Bin Nasser Al Suwaidi, Governor of the UAE Central Bank, told the participants that the two-year old registration system of hawala operators was working well and insisted that there was no need to license them nor there was any plan to make public the identities of hawala operators.

“We have opted for the registration system because the licensing approach requires more formal work and examination that are meant for banks and exchange houses, not for freelance individual businesses like hawala,” Al Suwaidi was quoted as saying.

He said hawala was an inexpensive system of remitting money and was widely used by the low-income class who deserved to have such arrangement. However, he said: “There are those who misuse it. You have to black and white hawala operators. So our aim is to put the bad ones down.”

Velerie Schilling from the Financial Action Task Force disagreed and said “central banks don’t know where the money goes.” She told the conference: “Hawala should be able to identify all customers as it helps in creating shifts in money laundering, controls it and doesn’t allow money launderers or terrorist financiers to exploit the system.”