ABU DHABI // At a busy office on Hamdan Street, a Sri Lankan woman walks in with a pocketful of notes and a zipped-up plastic bag of coins in total, about Dh500 ready to send her monthly remittance home.
A decade ago, her family would have had to wait a week, maybe more, to see the fruit of her labour in the UAE. Now, she says, she expects them to have the money by tomorrow. Soon, they may not have to wait at all. "A time will come," said Sudhir Shetty, the chief operations officer of UAE Exchange, the country's leading handler of remittances, "when a man standing at the counter, before he leaves, the money will be credited to his wife's account.
"This is going to happen. That is how fast this technology of money transfer is moving because we are now doing whatever is possible for the customer to remove all uncertainty at the other end." The business has changed beyond recognition since 9/11, when the informal hawala banking network was identified by the US authorities, among others, as a major route of funding for terrorists. For concerned security services, the old Islamic honour system, in which one broker phoned another in a different country, settled the amount to be transferred and promised to repay the debt at a later date, had a major problem: there was no paper trail, making it a perfect vehicle for money laundering, or funding less-than-legitimate entities.
"Post-9/11, statutory regulations on how to transfer funds changed for both the host and receiving countries," Mr Shetty said. "So they have made it difficult for those using the informal channels. "However, with foreign exchange and taxation in any country, you cannot kill them totally but you can make life difficult for that system. The informal channels will always exist." Partly, he said, that is because the hawala system offered an advantage, even for those transferring money for legitimate purposes. Its lack of paperwork meant money could be in recipients' hands far more quickly than with the often Byzantine formal banking and currency exchange systems. The hawala brokers also took a smaller cut.
So the task for UAE Exchange, and others like it, has been to provide a legitimate, traceable system that can beat the speed, convenience and low cost of hawala. "It was all about being faster and cheaper than them," Mr Shetty said. Realising the need for a more secure system, governments have also played a part in reducing the hurdles. Pakistan, for example, implemented free money transfers in 2004. That has led to an explosion in the amounts being sent to the country through the formal remittance system, from US$1 billion (Dh3.7bn) a year in 2001 to around $10bn a year now.
Technology has helped, too, allowing much faster transfers. In the 1980s, the process of raising a draft and clearing it between two countries could take up to a fortnight. There were forms to fill in the same forms, month after month. Even one wrong digit could mean a transfer going awry, a problem especially acute with the large number of illiterate labourers in the UAE. Transfer house clerks would often have to write out workers' addresses, and double-check from ledgers that the money was being sent to the right branch, in the right village.
And even once it had all been done correctly, it was often hard to be sure that the money had indeed arrived where it was supposed to be going. Today, everything is automated. Each worker has an e-banking card linked to his account, so clerks can instantly pull up details of the sender and recipients. Not only do the cards mean fewer mistakes, they have dramatically cut the amount of waiting time for customers. Whereas 10 years ago the process could easily wipe out an afternoon, no small sacrifice for labourers already working a six-day week, now it takes a matter of minutes.
Once activated, sending money as a draft, into an account, or even as cash can happen within 24 hours. There are even facilities to make emergency transfers. The amounts are often small, in absolute terms, but represent a huge portion of many workers' salaries. For South Asian countries such as India, Nepal, Bangladesh, Sri Lanka and Pakistan, workers send an average of Dh400 a month home on earnings that may be double that. For the Philippines, the average is more like Dh700.
"Somehow, they do it," said Moideen Koya, the head of public relations for UAE Exchange. "Sometimes, the other side does not realise how much they sacrifice here but they will do everything to make sure that their families are taken care of." The endpoint varies from country to country, and town to town; while UAE Exchange's network spreads far and wide, with 460 branches in 22 countries, it cannot reach everywhere.
Much of its coverage is achieved through tie-ups that give it a total of 45,000 payout locations across 94 countries. There also is the challenge of mapping out where the changing labour force is coming from. A decade ago, "we sent nothing to Nepal, but it has picked up", Mr Shetty said. "Going forward, we are going to see Vietnam, China and of course, now South Africa is big because a number of people are employed in the hospitality sector here."
While many of the receiving locations are banks or established money-changing offices such as Western Union outlets, some are more surprising. In the Philippines, for example, many families pick up their money from a chain of certified pawnbrokers, whose branches are open 24 hours a day. The company also has to take account of countries where there is instability. Fortunately, the banks that regulate the system tend to stay secure, even in the worst of scenarios.
"As long as the banks are working, the transfer is available," Mr Shetty said. "We tend to sit here and think, if Kashmir in India is unsafe then all of the North Indian region must be unsafe. That is not the case for the people on the ground. What is happening in one city does not affect another city nearby, sometimes. When you live there, it is not the same thought as here." Once the money has arrived, wherever it is being sent, there is one final step: giving peace of mind to the worker in the UAE that his efforts have not been in vain.
"Sending money home is an emotional matter," Mr Shetty said. "Most send money home to maintain their families' lives back home, from household expenses to schooling, but when the money is sent for a specific purpose like a medical emergency, the timeliness is the most critical factor." To that end, the company now sends text message alerts when the money has reached its destination. Driving the point home, a poster at its main branch in Abu Dhabi asks in Bengali: "Did you receive your SMS?"