UAE HOSTS 4TH INTERNATIONAL HAWALAS CONFERENCE

UNCLAS SECTION 01 OF 02 ABU DHABI 000524

SIPDIS

TREASURY FOR U/S LEVEY, A/S POBRIEN, DAS DGLASER, RLOEFFLER
NSC FOR JZARATE
FINCEN FOR JEL-HINDI
STATE FOR NEA/ARP TREUTER, DBAGWELL
OFAC FOR ASZUBIN
FBI FOR TFOS MMOREHART, FWAIKHART
DHS FOR MMIDDLETON, JGALLION

E.O. 12958: N/A
TAGS: PREL KTFN ECON PTER AE
SUBJECT: UAE HOSTS 4TH INTERNATIONAL HAWALAS CONFERENCE


1. (U) Summary. On March 18 and 19, 2007, at the Fourth
International Conference on Hawalas the UAE Central Bank (CB)
stressed the importance to poor workers of hawalas, and the
need to regulate without being overly burdensome and
expensive. In the UAE there are 215 registered Hawaladars,
each whom needs a certificate from the CB to maintain bank
accounts. The CB reported that it received over 700 reports
from the registered hawalas but provided no analysis of this
data. The CB noted these confidential reports were subject
to law enforcement scrutiny and the CB will close accounts.
However, the CB has not imposed more stringent requirements
on hawaladars in order to encourage their registration. Also
during the conference Cynthia Oberg (AUSA) and Matt Meyer
(FBI) presented their hawaladars investigation and Jamal
El-Hindi (FinCEN) explained the objectives of US regulations
on hawalas. End summary.


2. (U) On March 18 and 19, 2007, the UAE CB hosted its Fourth
International Conference on Hawalas (informal money
remittance systems). There were over thirty presenters who
discussed the current regulatory environment for hawalas, the
pitfalls of over-regulating hawalas, the challenges for law
enforcement, and the importance of interagency coordination
between regulators and law enforcement. CB Governor Sultan
bin Nasser Al-Suweidi opened the conference by highlighting
the importance of hawalas for poor migrant workers, and
stressing that regulations should prevent misuse without
being too restrictive or expensive to implement.


3. (U) The CB gave a report on hawalas in the UAE. In the
UAE, registered hawaladars can hold accounts with whatever
banks they choose but they must have a certificate from the
CB to keep the account open. The CB reported that, so far,
250 entities have applied with the CB to register as
hawaladars and 215 have been registered as hawaladars in the
UAE. The CB also reported that they have received over 700
quarterly reports from the registered hawaladars. Central
Bank officials reported that they review all the reports that
come in and question the hawaladars about any suspicious
transactions. However, they did not provide any analysis of
the 700 reports that they had received and did not report
that the registered hawaladars had filed any STRs. (Note.
The 700 reports seems to demonstrate that the hawalas are not
all reporting, at least quarterly, as they are required. As
of January 2005 there were 128 registered hawalas and if just
these hawalas were reporting there would be over 1000
reports. End note.) The CB also noted that the data
provided by hawaladars was confidential and that no one but
the CB will review the data. However, the confidentiality is
subject to the Anti-Money Laundering Law, and law enforcement
can request information on the hawaladars and the CB has the
power to "investigate and dismantle" and refer the issue to
judicial authorities (Comment. We know of no case where UAE
authorities investigated or shut down a hawaladar. End
comment.)


4. (U) Regarding concerns over the lack of control over the
hawaladars, Abdulrahim Al-Awadi, Head of the Anti-Money
Laundering and Suspicious Cases Unit (AMLSCU) noted that if a
hawaladar fails to register the CB will close its bank
accounts. Additionally, banks must still file STRs if they
see suspicious activity in a hawaladar account. When asked
if the hawaladars needed compliance officers, Al Awadi
responded that the more stringent regulations and
requirements for hawalas will come later and that if the CB
imposed all the regulations now it would drive the hawaladars
underground.

USG Presentations - FBI/DOJ and FinCEN
--------------


5. (U) Cynthia Oberg, Assistant United States Attorney in the
Eastern District of Michigan, and Matthew R. Meyer, Special
Agent with the Federal Bureau of Investigation, made a
thorough presentation detailing their prosecution of the case
US v. Omian, Wassil et al. Mrs. Oberg and Mr. Meyers
successfully prosecuted an unregistered and unlicensed
hawaladar in Michigan who moved over 10 million dollars and
used accounts to launder narcotics proceeds, perpetrate visa
and naturalization fraud while concealing personal income in
order to qualify for state and federal aid. The presentation
demonstrated succinctly how hawalas can be abused and the
necessity for regulation and careful scrutiny.


6. (U) In his presentation Jamal El- Hindi, the Associate
Director for Regulatory Policy and Programs of FinCEN stated
that the objectives of US regulations with regard to hawalas
were not to disrupt them and the population they serve but to
ensure compliance with money laundering regulations and to
take action if corrective measures are not taken by the money
service business (MSB) (Note. Hawalas are regulated as MSBs
in the US. End note.)


7. (U) Post would like to thank Mr. El Hindi, Mrs. Oberg and
Mr. Meyer for their participation in the Hawalas conference.
Most of the presentations will be available at the UAE CB
website at www.centralbank.ae/Hawala/hawala2007.php.
SISON