In a first step towards regulation of hawala, the UAE Central Bank has embarked on a registration and reporting system for hawaladars or brokers.

"The Central Bank will start registering and issuing a simple certificate to all hawala brokers (hawaladars) in the UAE, free of charge. The Central Bank of the UAE assures hawala brokers that their names and details will be kept safe at the Central Bank," an announcement from the UAE Central Bank said yesterday.

Accordingly, hawala brokers should provide the Central Bank with details of the remitters and beneficiaries who receive transfers from abroad on simple forms provided by the Central Bank.

Also, hawala brokers are required to report suspicious transfers whenever they doubt such transfers have taken place.

"This certificate will be necessary to deal with banks or money changers and avoid any money laundering suspicion," noted the Central Bank communique.

In May this year, the Abu Dhabi Declaration on hawala was adopted by participating countries which stated that "the international community should continue to work individually and collectively to regulate the hawala system for legitimate commerce and to prevent its exploitation or misuse by criminals and others."

The declaration acknowledged that hawala had many positive aspects and that much of the activity conducted by hawaladars related to legitimate business but also noted that there was a lack of transparency and accountability.

Following the Abu Dhabi Declaration, the UAE Central Bank said hawala operators in the UAE would be licensed and regulated.