Exchange houses in UAE ready for cryptocurrency but...
By Waheed Abbas
Published: Wed 24 Jan 2018, 7:56 PM
Last updated: Wed 24 Jan 2018, 10:36 PM
Currency exchange houses in the UAE are willing to accept cryptocurrency that is regulated or introduced by the country's central bank, a senior official of the Foreign Exchange & Remittance Group (Ferg) said in Dubai on Wednesday.
Osama Al Rahma, vice-chairman, Ferg, said that if a digital currency is regulated or initiated by UAE Central Bank - as there was an announcement that the UAE and Saudi Arabia may go for their own cryptocurrency - then this can be accepted by the currency exchange houses group.
"We have seen wild fluctuation happening in cryptocurrency tradings and they are not accepted by regulators too. But if a cryptocurrency is initiated by Central Bank, we will make use of it," Al Rahma told Khaleej Times on the sidelines of the launch of the New Anti-Money Laundering Standardisation Manual. Of late, digital currency Bitcoin has seen high volatility, rising to more than $19,000 before plunging it to nearly $11,200 on Wednesday evening as concerns have been consistently raised by some government and billionaires about prospects of the currencies.
"The existing ones which are labelled under different names are high risk issue which we don't want to consider it now," said Osama Al Rahma, who is also the CEO of Al Fardan Exchange, about the digital currencies.
Rajiv Raipancholia, treasurer, Ferg, said it is too early to say anyting about adopting cryptocurrencies by exchange houses because there are no regulations in place.
"We are studying it closely. It has been there for quite sometime, but, of late, it is beginning to get very popular. We need to get in touch with regulator on Bitcoin on what exactly can exchange houses do," said Raipancholia.
He pointed out that Ferg could raise this topic during its next meeting with the Central Bank.
Fatima Ali, analyst for suspicious transaction report at UAE Central Bank, said during the launch of manual that no regulations have been issued so far for digital currencies by the apex bank.
Raipancholia, who is also CEO of Orient Exchange, said that over the last 1-2 years, banks are de-risking, especially related to US correspondence. But this new anti-Money laundering standardization manual will help the exchange houses in the UAE to implement international standards in terms of compliance and improve relationships with the banks.
De-risking refers to financial institutions closing the accounts of clients perceived as a high risk for money laundering and terrorist financing abuse.
"We are sure that the banks would look at exchange houses in a different way once they implement this new manual. More importantly, it is up to exchange houses to make sure that these guidelines are implemented in their internal systems as we want to reduce the gap between banks and exchange houses and have better understanding between them," Raipancholia said.
Osama Al Rahma also emphasised that this manual's launch is aimed at meeting banks requirements and expectation when it comes to compliance regime within exchange houses.
"The more stringent system is in place, the more banks will be happier to engage and do business with exchange houses. This manual will offer clarity on how to raise the standards of compliance," Al Rahma added. Umair Hameed, partner, KPMG, said that if a company is penalised or shamed it will have impact on the entire industry and that knock-on effect is substantial as some companies are not able to bear the financial penalty.
He warned that a lot of companies take a tick-box approach when it comes to compliance. "Banks fear that you (currency exchange houses) are not fair to them, so each company has to meet the compliance," Hameed during the panel discussion at the launch of New Anti-Money Laundering Standardization Manual.
Ferg appointed KPMG Lower Gulf Limited to review and redraft the Governing Standards of Anti-Money Laundering and Combating Financing of Terrorism for Exchange Houses in the UAE. -email@example.com