Campaigners want middlemen out of home-remittance process

Transfer industry challenges appeal of hawala system

ABU DHABI // Authorities have launched an awareness campaign against the unofficial remittance of money, which they say can lead to exploitation, fraud and security risks.

New figures show that more than a fifth of money remitted, for example, to Bangladesh from the UAE, is moved through these illegal means.

According to the Bangladesh Bureau of Statistics, in the 2015-2016 financial year, the 700,000 Bangladeshis in the UAE sent Dh9.9 billion home.

The bureau found 22 per cent of these funds had been sent through the hawala or hundi system – illegal brokers or middlemen who transfer the money outside the banking system.

Promoth Manghat, chief executive of the UAE Exchange Group, said many were ignoring the official money transfer companies because either the illegal methods were cheaper or the workers did not have bank accounts or documentation. Mazeed Rehman, 26, who works as a cook in a private household, has been sending money to his family in Bangla- desh through a middleman for the past four years.

“I belong to a remote village where there is no bank and post office near by,” he said.

“It takes almost a day to reach the nearest post office and a bank branch. My wife and my parents are literate enough to understand banking process. There is lots of paperwork.

“But sending money through a middleman is the suitable option for me. Money reaches the doorstep of my house without any hassle.”

He said he would prefer to send the money legally but the money exchanges and banks were too expensive. Mr Rehman said he was aware of the risks involved in using illegal methods.

“Hawala is risky because we have to trust an unknown middleman . Some of my friends have lost money because the middleman ran away and they couldn’t complain because it was illegal.

“Banks are always safer but because of the higher rates and complicated procedures, people, especially those who have no support system back home, have no other option than to opt for illegal channels.”

Akbar Khan, 45, a Pakistani driver in Dubai, said he uses hawala because it costs only Dh10 to send money, compared with Dh25 in money exchanges.

“It’s all about economics and what is cheaper on your pock- et,” he said. “Also, it only takes only few hours for the hawala guy to drop money at my doorstep in Pakistan and a bank will take at least three working days to transfer the money.”

The UAE Exchange has started a partnership with Bangladesh’s ministry of expatriates’ welfare and overseas employment and the Bangladesh embassy to encourage expatriates to use legal channels. The Amar Bangladesh campaign will distribute 500,000 pamphlets in labour camps and community centres advocating the advantages of transferring money legally.

“We will also use social media and TV channels to spread the message,” Mr Manghat said. Muhammad Imran, the Bangladeshi ambassador, said that expatriates who were sending money through illegal means were not helping their country. Foreign currency sent through conventional means added to its foreign reserves, he said. According to Bangladesh Bank, remittances coming from expatriates in Gulf countries have dropped in recent months. A sum of US$548 million ( Dh2.01 billion) was remitted in November compared with $591m (Dh2.19bn) in October.

Remittances contributed 13 per cent of Bangladesh’s gross national product last year.