7 Expats Arrested In Riyadh For Illegal Remittances

RIYADH, 14 October 2003 — As part of a drive to curb money laundering, security officials recently arrested seven expatriates including two unauthorized agents for illegally remitting money worldwide. The expatriates were caught with large amounts of money in different currencies and denominations, sources told Arab News.

“Some of the culprits have fled to their respective countries after Saudi officials launched a massive crackdown recently,” said an expatriate businessman who would only give his initials M.R.

He said the expatriates would exchange riyals into dollars and then remit them to the destinations of customers’ choice. The method — used by Pakistanis, Indians, Bangladeshis, Sri Lankans, Filipinos, Indonesians and Nepalis and also by some Western expatriates — is known as “hawala” or “hundi”.

A hawala agent told Arab News on condition of anonymity that the funds collected from expatriates are used by money launderers to convert their “black” money into legal funds.

“We make out bank drafts in the names of currency wholesalers based in Dubai or elsewhere,” he said. The wholesalers, in turn, deliver black money in bulk in the country of the customer’s choice for retail distribution. He did not rule out the possibility that the funds might be used to finance smuggling operations.

M. Hakim, another hawala agent, said: “In many cases, the sponsors of the hawala agents are also involved in the illegal remittance business.” But, he said, the business had come under closer scrutiny since the Sept. 11 attacks.

Col. Salman Al-Juaid, who recently led a team of security personnel in raids on the hideouts of expatriates involved in the racket, has been quoted as saying that “an amount of SR118,110 and $4,654 as well as other currencies were found when a hawala agent’s flat was raided.”

The Kingdom has imposed tighter restrictions on individuals and companies remitting money. Riyadh has also asked money exchange firms not to send remittances abroad to unknown customers or dubious business entities.

This may be one reason why the total volume of remittances sent by money exchange firms in Saudi Arabia has drastically gone down. But the Kingdom remains one of the largest remittance markets in the world and its seven million foreign workers have been remitting some SR78 billion annually, second only to the United States.

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