UAE to watch Saudi funds closely

Money exchange houses in the UAE, apart from banks, have also been directed by the country's Central Bank to keep a close watch on inflows from Saudi Arabia.

The measure is being implemented on the request of the Saudi Arabian Monetary Agency, the kingdom's central bank.

Banks will soon be provided a list of accounts by the Central Bank which should not receive any transfers from Saudi Arabia, "in order to avoid abuse of these accounts," the Central Bank said.

Banks have been instructed to decline accounts to Saudi nationals if third parties would be given power of attorney to operate the account, except in certain cases subject to Central Bank approval.

The Central Bank circular 1400/2002 dated July 21, 2002 instructs all banks and money exchange houses in the country to follow additional procedures when receiving remittances from the Kingdom of Saudi Arabia.

"Banks and exchange houses must henceforth provide details about the entities wherein an aggregate of Dh2 million or more is transferred into its accounts within a period of six months after deduction of funds relating to money market transactions or documentary credits.

"Also, for individuals, wherein a total of Dh500,000 or more is transferred into their accounts within a period of maximum six months.

"Where a transfer of Dh40,000 or more is received from Saudi Arabia to be paid to the beneficiary in cash, such a transaction must be reported by banks and exchange houses with Suspicious Transactions Reports.

"Moreover, when a remittance or a demand draft for 100,000 Saudi riyals or more is received, a certificate of remittance from the remitting bank or financial entity must be obtained.

Otherwise, the remittance must be returned and the demand draft not encashed," states the circular.

Meanwhile, bankers and exchange houses officials welcomed the move and are abiding by the directives, although exchange houses here mainly deal in outward remittances especially to the Indian Subcontinent, the Philippines and some other Asian countries.

"It is important to monitor cash inflows and outflows and any additional measure, in this case relating to Saudi Arabia, will be taken seriously by banks. Illegal funds have no right to pass through banking channels," a senior official of a local bank said.

Mohammed Al Ansari, managing director of Al Ansari Exch-ange, said that the curbs on Saudi inflows was a step in the right direction.

"It is essential to keep a control of funds coming into the country and going out. I believe even in Saudi Arabia, banks and exchange companies have to inform the Central Bank there about transactions over 15,000 Saudi riyals or so."