Central Bank to regulate Informal Money Transfer Systems
- 5opn1
- January 22, 2025
- Banking and Financial
- Central Bank to regulate Informal Money Transfer Systems
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The Central Bank has taken steps to regulate informal money transfer systems including Undial and Hawala to ensure financial stability and prevent illicit activities.The Undial and Hawala systems are informal, trust-based methods of transferring money, common in South Asia and West Asia.
They offer speed and cost-effectiveness but lack transparency, raising concerns about money laundering and illegal activities. Governments seek to regulate these systems.The monetary authority has introduced measures to regulate informal money transfer systems to ensure financial stability and curb illicit activities.
Officials informed the Committee on Public Finance (COPF) at a meeting chaired by Dr. Harsha de Silva, MP in parliament on January 7 that operators of Undial and Hawala have been requested to register with the Central Bank and if anyone wishes to operate afresh, such persons must register prior to conduct operations.
This initiative seeks to enhance transparency, reduce risks tied to unregulated financial transactions, and integrate these operators into the formal financial system, a senior official Ministry of Finance explained.
