Abu Dhabi, 5 April 2004

The Conference acknowledged and reaffirmed the important achievements of the First International Conference on Hawala as set out in the Abu Dhabi Declaration on Hawala (May 2002).

The Conference recognized the key role that hawala and other informal funds transfer (IFT) systems play in facilitating remittances, particularly those of migrant workers. It noted, as well, the significance of IFT systems as an integral part of the international financial system.

A major outcome of the Conference was its contribution in increasing awareness of the role of IFT systems. Participants emphasised that IFT systems need to be understood against the diversity of socio-cultural, legal and economic contexts. Nevertheless, IFT systems, like other parts of the financial system, can also me misused for illegal purposes, and participants therefore re-emphasised the need for transparency and traceability of financial transactions. Furthermore, acknowledge the work of the Financial Action Task Force (FATF) in development standards and best practices in this area, the Conference highlighted the range of experience, practices and approaches that could apply.

The Conference identified the following challenges in implementing IFT regulatory regimes:

. Overcoming imperfect information on the functioning IFT systems;

. Ensuring authorities have adequate resources in dealing with this issue;

. Designing regulatory solutions that are proportionate to the risks and sensitive to possible unintended consequences.

. Avoiding over-regulation that might drive IFT operations underground; and

. Demonstrating to the participants in IFT systems that the benefits of regulation outweigh the costs.

With the aim of addressing these challenges, the Conference concluded that there was a need to :

. Gather and analyse information on IFT systems and their operations;

. Engage in a dialogue with IFT providers and users to develop constructive solutions;

. Conduct outreach to raise the awareness of the regulated community and public to IFT issues; and

. Remove any impediments to cost-effective, reliable and convenient transmission of funds in the regulated financial sector.

Where IFT systems are permitted, countries should as a first step register and/or license IFT operators. Further anti-money laundering and combating the financing of terrorism (AML/CFT) requirements should then be implemented in the IFT sector by countries according to their capacity.

Finally, the Conference encouraged the FATF and the international financial institutions to take note of the conclusions of this Conference and work to develop further guidance.

The Conference expressed its gratitude to the Government and Central Bank of the United Arab Emirates, and the International Monetary Fund for organizing this Conference.