The UAE’s Central Bank has downgraded the licences of seven exchange houses for violating regulation relating to anti-money laundering and other areas.
The affected companies are prohibited from conducting any activities relating to remittances or payment of wages going forward.
Instead they can now only offer the sale and purchase of foreign currencies and travellers cheques.
The move comes after Taher Exchange Est. Al Hadha Exchange LLC, Al Hemriya Exchange Company LPC, Dubai Express Exchange, Sanaa Exchange, Cosmos Exchange and Bin Bakheet Exchange Est. failed to regularise their activities during a grace period, the central bank said.
“The Central Bank confirms that it will not tolerate violations of financial institutions to its regulations and instructions, and the Central Bank alerts not to remit funds or pay of wages via the above exchange houses.”
The central bank has ordered money exchange houses in the UAE to raise their standards after several banks cut ties with them due to concerns about the risk of illicit financial flows.
Exchange houses in the UAE have faced an increasingly stringent regulatory environment in recent years. There are about 125 exchange houses operating in the UAE.
To improve the industry’s reputation, the Foreign Exchange and Remittance Group (FERG), an industry body published an anti-money laundering manual in January to give exchange firms guidance on best practices.
The UAE saw a 17.3 per cent surge in remittances during the first quarter to Dhs43.5bn ($11.84bn), compared to Dhs37.1bn ($1bn) in the same period last year.
With contributions from Reuters