Dubai
A set of new compliance standards for exchange houses in the UAE is likely to create challenges for many of these houses amid an already tough operating environment, a top industry executive said.
Mohammad Ali Al Ansari, chairman of the Foreign Exchange and Remittance Group and chairman of Al Ansari Exchange, said the new standards, while inevitable to fight financial crime, will raise compliance costs, and may even put some smaller houses out of business.
In March 2018, the Central Bank of the UAE published a 150-page document laying out standards that exchange houses in the country must comply with by January 2019 or risk fines, Reuters reported. In the most extreme cases of non-compliance, exchange houses may have their licenses revoked by the Central Bank, according to the Reuters report.
“Naturally, the cost of compliance will rise, especially with some of the new rules, which will create a challenge for some of the exchange houses that haven’t kept up to date. Exchange houses will need to hire compliance officers and update their systems, so that will increases costs,” Al Ansari told reporters on Thursday.
“It will be a natural reaction that companies (exchange houses) that are already not very active or successful will exit the market.”
Al Ansari said that some 25-30 per cent of the roughly 125 exchange houses in the UAE are not doing enough business to justify raising costs.
As part of the new rules, every exchange house must appoint a compliance officer. They rules will also see exchange houses become more vigilant with checking identities of senders and receivers of money, rather than just checking those of transactions exceeding a certain amount.