Financial Times

Illicit dealers offer fast money transfers
By Suren Gnanaraj
JAFFNA - With the increase in the volume of foreign remittances into Jaffna, several private money exchange agents have mushroomed in the city, offering instant money transfers at competitive rates from anywhere in the world. Popularly referred to as 'Undiyal' (meaning Bills of Exchange), these local agents collectively transfer close to thirty million rupees a day through their international network of agents.

A senior bank official in Jaffna said that these illegal operators were commonly frequented, since they provided liquid cash within an hour, in contrast to the services of local banks, which generally took two days to receive the money. The entire operation may be illegal, but the money transferring process is simple. The Jaffna agent has appointed representatives stationed in different countries across Europe, the Middle East and the United States.

Anyone who wishes to send money to a relative in Jaffna, simply visits these representatives, pays up front and identifies the person to whom the money should be paid by providing details of the person's national identity card. The representative then immediately contacts the local agent in Jaffna via telephone, and the amount is converted to Sri Lankan rupees according to the existing market rates, and paid to the person in Jaffna upon producing his National Identity Card.

Upon visiting a local agent in Jaffna, at first, he denied his involvement in the trade. However, the endless queue of people at his cleverly disguised textile shop counter, waiting anxiously to collect their remittances, together with the endless phone calls he was receiving, did not do justice to his denial. He later claimed to be a licensed dealer in exchanging foreign currency, but many of the people we spoke to dismissed this alibi on the basis that authorities were hot on the chase to arrest these businesses.

Many people we spoke to said that even though the commissions levied by these operators were slightly higher than the bank rates, the service they provided was far more efficient and convenient.

The government is currently trying to crackdown on these illegal operators - located across Sri Lanka - due to the severe loss of foreign exchange, which is used to buy imports from other countries. Nearly 40-50 million rupees comes into the region on a daily basis through foreign remittances, out of which Rs. 30 million comes through these illegal channels.

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