Illegal money transfers thriving in the GCC


According to local  economists and banking experts, expatriates in proxy, also called shadow businesses in these countries are the largest patrons of illegal money transfer channels. Shadow or proxy businesses are retail trading and other business activities being carried out solely by expatriates in the name of citizens who are said to be paid a pittance for allowing their business and civic licences to be (mis)used.

Low-income foreign workers who are staying and working in these countries in violation of local laws, also benefit from the illegal remittance business as they don’t need to produce legal identification documents.

Doorstep delivery

Recent media reports suggest that after some major Asian currencies plunged against the US dollar triggering economic crisis in those countries, large numbers of low-income expatriates, including even those working legally, are attracted to the illegal money transfer channels as they have been offering ‘good rates’ and charging low commission as well as guaranteeing ‘delivery at their doorsteps in their home countries.’ Business news website has reported that the problem is quite acute in the kingdom of Saudi Arabia, with experts estimating that illegal overseas remittance volumes from Saudi Arabia alone could be a staggering SAR 130 bn, or USD 35 bn, a year.

This is a huge volume considering that some SAR 86.3 bn (USD 23 bn) were remitted by foreign workers abroad using the official channels in the first seven months of this year, the website said. Based on this average, the annual turnover of the legal remittance business in the kingdom should be SAR 148 bn, which is only marginally more than the illicit money transfer volumes of SAR 130 bn.

“It is clear from the above figures that the illegal and parallel remittance businesses all over the GCC are a huge and thriving market,” a banking industry source told He said this meant if the official worker remittance figures for the entire GCC region were USD 75 bn dollars a year, for instance, the money transfers from these countries should actually be double – USD 150 bn. This is a large sum and beats even the US which is a USD 15 tn plus economy, and from where yearly worker remittances routed are the highest.

The economies of the GCC states combined are worth a tenth of that (of the USD 1.5 tn). The population of these countries is low with unofficial estimates putting the number at some 45 mn, more than a third of which should be expatriates.



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