KUALA LUMPUR: Hawala or illegal money remittance is set to become the largest illegal trade in Malaysia, overtaking narcotics, illegal wildlife trade and other criminal activities, according to a senior official of the country's Federal Reserve Bank .
The official, who is associated with Bank Negara Malaysia , said the hawala system posed a serious concern in the financial market and many licensed money changers were working in cohorts with their foreign counterparts.
The amounts transferred in and out of the country in this way run into several hundreds of million ringgit annually, local media reported today quoting the official.
The Reserve Bank is also considering serious measures to curb illegal money transfers by imposing a new set of guidelines and stepping up surveillance and investigations.
The United Nations had pinpointed the hawala system as a potential means of financing terrorism, as money could be made available internationally without actually moving it or leaving a record of the transaction, the report said.
"Although no official figures are available, the amount involved could even surpass one billion ringgit (1 ringgit = Rs 15) annually, and this is a very serious concern for the authorities," the official said.
The official said hawala is growing so rapidly that serious action was needed to be taken immediately to stop its exponential growth.
"Despite the national Reserve Bank (Bank Negara) revoking the licences of 41 moneychangers, there seemed to be no clear solution to this problem," he said.
The hawala system in Malaysia gained media prominence last year when allegations surfaced that a senior politician had transferred out ten million ringgit to London through a moneychanger in 2008.
Reports also emerged that a growing number of politicians and wealthy individuals had used the system to transfer money to various parts of the world. Following the reports, Bank Negara went after moneychangers offering such services.
Those found to have contravened provisions of the Money Changers Act saw their licences being revoked. Over the past few weeks, charges have been brought against at least three companies and their directors for money laundering involving millions of ringgit.
It was also reported that the single largest amount detected via hawala was over 20 million ringgit by a property developer. Malaysia currently has 875 licensed moneychangers.
The official, who is associated with Bank Negara Malaysia , said the hawala system posed a serious concern in the financial market and many licensed money changers were working in cohorts with their foreign counterparts.
The amounts transferred in and out of the country in this way run into several hundreds of million ringgit annually, local media reported today quoting the official.
The Reserve Bank is also considering serious measures to curb illegal money transfers by imposing a new set of guidelines and stepping up surveillance and investigations.
The United Nations had pinpointed the hawala system as a potential means of financing terrorism, as money could be made available internationally without actually moving it or leaving a record of the transaction, the report said.
"Although no official figures are available, the amount involved could even surpass one billion ringgit (1 ringgit = Rs 15) annually, and this is a very serious concern for the authorities," the official said.
The official said hawala is growing so rapidly that serious action was needed to be taken immediately to stop its exponential growth.
"Despite the national Reserve Bank (Bank Negara) revoking the licences of 41 moneychangers, there seemed to be no clear solution to this problem," he said.
The hawala system in Malaysia gained media prominence last year when allegations surfaced that a senior politician had transferred out ten million ringgit to London through a moneychanger in 2008.
Reports also emerged that a growing number of politicians and wealthy individuals had used the system to transfer money to various parts of the world. Following the reports, Bank Negara went after moneychangers offering such services.
Those found to have contravened provisions of the Money Changers Act saw their licences being revoked. Over the past few weeks, charges have been brought against at least three companies and their directors for money laundering involving millions of ringgit.
It was also reported that the single largest amount detected via hawala was over 20 million ringgit by a property developer. Malaysia currently has 875 licensed moneychangers.
Note: article from http://economictimes.indiatimes.com
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