The UAE market for cross-border transfers
Cross-border transfers in the United Arab Emirates (UAE) are crucial for its continued economic growth and appeal as a work destination. This is because the GCC country has built its reputation as one of the fastest growing economies in the world, accommodating a mix of expats who are either laborers, entrepreneurs, or skilled workers.
The volume of cross-border transactions has led to the vast development of official international money transfer channels - from wire services to exchange houses and banks. In 2020, the UAE sent a staggering $43 billion in cross-border remittances making it the second largest source of outbound remittances after the US. The vice-chairman of the Foreign Exchange Remittance Group (FERG), Osama Al Rahma, at the time disclosed that over 80% of the international remittance was through exchange houses.
The significant proportion of foreign workers in the UAE has made cross-border transfers a crucial activity in the country. This, the UAE Central Bank shows, is the reason why outward personal remittances from the country grew by 3% in 2018 from 2017 to reach Dh169.2 billion.
As of 2018, the UAE’s largest outbound remittance corridors are Pakistan (9.5 per cent), the Philippines (7.2 per cent), Egypt (5.3 per cent), the US (3.9 per cent) and the UK (3.7 per cent). However, it’s not just the outward cross-border flows that play an important part of the Middle East’s economy - in 2020 alone, remittances to Lebanon formed about 26% of Lebanon's GDP.
Banks, wire transfers, and over-the-counter services are some of the official channels for international money transfer in the UAE. In addition, a number of unregulated traditional methods know as Hawala and Hundi exist.