Dubai's hawala operators, who move huge sums of money mainly for Asian expatriates via informal money transfers, have been told by the UAE Central Bank to freeze the accounts of those involved in money laundering

Some hawala operators have had their accounts frozen too in the clampdown that may impact on the number of letters of credit (L/Cs) opened.

Cash confiscated

Officials say that police have shut down several offices used by hawala operators and confiscated large sums of hard currency from operators.

"Police officials have rounded up a number of hawala operators from their offices in downtown Deira and shut their operations near the Gold Souq and Murshid Bazaar - Dubai's major wholesale market, forcing others to go underground," an official told local media.

L/C impact

Money launderers, mainly from India, Pakistan, Sri Lanka and Bangladesh, are thought by officials to use Dubai as a transit point for their operations.

But legitimate traders also use the hawala system for moving money to finance L/C and other trade finance transactions.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.