Money exchanges seek standardisation of anti-money laundering effort

Money exchanges seek standardisation of anti-money laundering effort

(10/12/2015 6:10:00 AM)

The currency exchange houses that are primarily engaged in money transfer and foreign exchange business in the UAE are seeking to standardise their anti money laundering (AML) efforts in an industry-wide push for adoption of world-class regulatory compliance.

The UAE’s Foreign Exchange and Remittance Group (FERG) on Sunday launched its AML standardisation manual. The manual aims at improving AML measures across all members of the remittance and exchange business fraternity.

“The FERG AML standardisation manual is a huge milestone for us in our mission to create a safe, secure and vibrant remittance industry in the UAE. The best way to effectively combat money laundering is to follow strict compliance procedures with effective transaction screening and real time monitoring,” said Osama Al Rahma, chairman the UAE remittance industry body.

The manual is backed by comprehensive research into money laundering prevention. It has been designed to combat practices such as the use of money mules and smurfing, where large transactions are restructured into smaller ones to pass undetected.

“The objective of the standardisation manual is to improve the skill sets of money exchange employees to detect attempts of money laundering while adhering to a set of industrywide best practices,” said Rajiv Raipancholia, FERG Secretary.


Under growing pressure from international banks and banking sector regulators, banks are required to undergo stringent compliance standards [that] make some lines of business less lucrative for them and some of them have either quit or are rethinking the future of these lines of businesses.

Although the UAE based exchange houses are regulated by the Central Bank of UAE and follow stringent compliance standards, FERG officials say under the pretext of negotiating compliance standards, international banks and foreign regulators are forcing local banks to disengage from exchange houses and money transferors.

“The support of local banks is an important element in money transfer business as all transactions are executed through the banking channel. If the banking sector refuses to do business with exchange houses, this business will come to a standstill. Thus it is important for us to get the whole industry to the same level of compliance in AML,” said Raipancholia.

The industry association is working on a plan to work closely with all stakeholders in the industry such as the Central Bank of UAE, local and foreign banks and all engaged in money transfer and foreign exchange business.

Strong initiatives Exchange companies in the UAE are governed by strict anti-money laundering regulations specified and monitored by the Central Bank of the UAE. Currently these companies have strong initiatives in place to streamline their operations with requirements on ‘Know Your Customer — [KYC]’ principles to safeguard the interests of consumers, regulators, shareholders, employees and the community in general.

“Compliance across the sector is the key challenge the industry is facing. Unhealthy competition in the industry and inability of smaller players to bear the cost of training and installing systems are challenges that the industry faces today. Non-compliance by a single member often impacts the reputation on the industry as a whole,” said S. Karunakaran, General Manager of Al Rostamani International Exchange.

FERG currently has 70 exchange houses as members. The industry grouping intends to bring all players in the industry under its umbrella to address issues relating to common interest ranging from physical security of money transactions to international best practices and compliance to regulations. 


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