The UAE's banking and telecoms industries are banding together to address a loophole in regulations which is feared could enable money laundering in their lucrative new product lines.
Banks have sought to innovate to attract customers, especially among the UAE's young adult and labourer populations, segments which are traditionally considered "unbanked".
In some cases, banks have been stripped from the transaction altogether.
Purchases made via mobile phone, also known as m-commerce, mobile remittances and prepaid cards have all been in vogue among retail bankers as the Central Bank tightens regulation of personal loans and credit cards.
With banks and telecoms companies becoming increasingly linked, both would have to be especially vigilant against illicit transfers via mobile platforms, according to Ali Abbas, a regional consultant for Euromonitor International.
"They're going to have to work in partnership, especially in this 'next big thing', which is mobile commerce."
Governments are particularly alert to money laundering because funds gained through illegal means, such as drug trafficking or other crimes, can gain a veneer of legitimacy when deposited in a bank account and moved through the financial system.
But some products appear problematic. Prepaid cards function like debit cards, but are "topped up" with cash payments rather than being linked to a bank account. Sometimes they are also accompanied by lines of credit.
The Central Bank does not regulate top-ups of prepaid credit or debit cards at present, a spokesman for the regulator said.
Though it is possible to top-up the card via a transfer from a bank which operates under Central Bank oversight, it is also possible to top up with cash and then transfer to another party — raising fears among banks that money laundering could take place.
Raghu Malhotra, the general manager for the Middle East at MasterCard Worldwide, said: "If the prepaid banking source is another bank account, that's a clear funding source. But with prepaid you can also go and top up by cash, and then you don't know the source."
In a report published in 2006, the US Department of Justice said: "Prepaid stored value cards - a product experiencing explosive growth - provide an ideal money laundering instrument to anonymously move monies associated with all types of illicit activity, without fear of documentation, identification, law enforcement suspicion, or seizure."
To combat money laundering, MasterCard applies restrictions on its prepaid cards, Mr Malhotra added.
"Depending on what customer you're talking about, we'll put standards like ticket size, and how much can you load at a time," he said. "You can't just come in and say, 'Here's $300,000, load it up.'"
M-commerce is also perceived as a potential problem, as some mobile phone services for payments and remittances have attempted to strip out the need for a bank as an intermediary altogether.
Such is the concern of illicit financial transfers among m-commerce providers that Etisalat, the telecoms giant, has taken the unusual step of hiring an anti-money laundering compliance officer.
"This is a norm for banks, but not for telecoms operators," said Rashed al Abbar, director of m-commerce at Etisalat, speaking at a forum in Abu Dhabi yesterday.