New UAE Banking Law: Strengthening Regulation and Supervision
On November 23, 2018, the United Arab Emirates (UAE) implemented a new banking law that represents a significant development in the country’s financial services sector. This article provides an overview of the key points of the new law and its implications for licensed financial institutions operating in the UAE.
Overview of the New UAE Banking Law
The new UAE Banking Law is designed to strengthen the regulation and supervision of licensed financial institutions, improve transparency, and enhance cooperation with international regulators.
Regulatory Framework for Licensed Financial Institutions
The law establishes a comprehensive regulatory framework for licensed financial institutions, including:
- Licensing Requirements: Clear guidelines for obtaining and maintaining licenses
- Governance: Requirements for board composition, risk management, and internal controls
- Risk Management: Guidelines for identifying, assessing, and mitigating risks
- Anti-Money Laundering Measures: Strict requirements to prevent money laundering and terrorist financing
UAECB’s Role and Powers
The UAE Central Bank (UAECB) has been granted extensive powers to regulate and supervise licensed financial institutions, including the authority to:
- Impose penalties for non-compliance
- Take enforcement action against errant institutions
New Electronic Rulebook
The UAECB is required to create an electronic rulebook containing all implementing regulations, rules, standards, decisions, and circulars published by the bank. This will enhance transparency and accessibility of regulatory information.
Examination of Licensed Financial Institutions Operating Abroad
The law allows the UAECB to conduct examinations of licensed financial institutions operating abroad in collaboration with relevant regulators. This demonstrates a commitment to cooperation and international best practices.
Significance of the New Law
The new UAE Banking Law provides a more comprehensive regulatory framework, enhances cooperation with international regulators, and strengthens the supervision of licensed financial institutions.