UAE Satisfied with Remittance Laws: Changes Rule on Workers’ Payments, Foreign Operators Eye Market

A new government rule has been introduced that requires workers to be paid, not in cash, but by deposits into their accounts. The fastexpanding construction business in the UAE will now need to work with service providers to accommodate this change and foreign banks, MTOs and service providers are keenly eyeing the market opportunity. Global electronics payment provider Earthport is amongst those looking to offer its services to UAE-based businesses.

Earthport is a specialist electronic payments company that enables a company to offer an International ‘Bank-2-Bank’ payments and collection service to its customers. CEO James Bergman says that client companies can allow their workers to send a portion of their pay check home directly into the recipients’ account, saving them a step. However, the efficient exchange houses (or local MTOs) in the UAE are also in the running for this opportunity. Senior Manager at Abu Dhabi National Bank, Mr Ahmed Al Naqbi believes that the local exchange houses will have an edge over the foreign competition because they have a deeper understanding of the market and have relationships with construction companies already in place. Insiders assert that a few large family-run groups manage most of the business in the Middle East and there are strong links between these families. Earthport CEO Bergman goes on to say that their service could potentially work in partnership with exchange houses as well, since it completely sidesteps the correspondent banking network.

Exchange houses in the UAE have been reporting problems in working with international banks and clearing houses – Mr Mohamed Al Ansari, Chairman of the Al Ansari Exchange claims that banks in the US overreact in case of any problems in any country and do not discriminate when closing down banking partnerships. Since all remittance transactions in the UAE go through New York to be converted into US dollars before being finally turned into the destination currency, exchange houses are particularly dependent on their US banking relationships.

This remains a point in favour of the large multinational banks, which may serve them well in the fight over the lucrative Gulf ‘send money home’ market.