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UAE Amends Bank Secrecy Laws and Exceptions
The United Arab Emirates (UAE) has amended its bank secrecy laws, introducing new regulations that aim to strengthen financial stability and consumer protection in the country. The amendments come into effect following the publication of Federal Law No 14 of 2018 regarding the Central Bank and Organization of Financial Institutions.
Key Changes
The new law introduces several significant changes to the UAE’s banking regulatory framework, including:
- Confidentiality of customer information: The law reaffirms the confidentiality of all customer information, which can only be disclosed with the prior written consent of the customer.
- Lending to the board: Financial institutions may lend to their board in accordance with directives issued by the Central Bank.
- Change of control: Controlling interests in any financial institution remain subject to the approval of the Central Bank.
- Governance: The Central Bank will establish a general framework for governance of financial institutions, including an electronic rulebook that includes all regulations, instructions, and circulars.
New Regulatory Framework
The law introduces a new regulatory framework aimed at enhancing consumer protection and promoting financial stability. Key features include:
- Deposit guarantee scheme: The Central Bank is mandated to work with the Ministry of Finance to develop a deposit guarantee scheme.
- Quarterly reports: Financial institutions are required to submit quarterly reports on credit transactions with related parties.
- Fit and proper conditions: Authorized individuals performing designated functions must meet fit and proper conditions, which will be set by the Central Bank.
Effective Implementation
Financial institutions operating in the UAE have been given a period to reconcile their positions to comply with the new law. The Central Bank has been vested with discretion to charge for issuing licenses and authorizations.
Impact on Foreign Judgments
The law confirms that foreign judgments shall apply in accordance with the applicable legal proceedings of effective laws in the UAE, resolving issues related to the recognition of foreign judgments.
Conclusion
The introduction of the new law marks a significant step forward in strengthening financial stability and consumer protection in the UAE. As the country continues to develop its financial sector, it is essential for financial institutions operating in the region to stay up-to-date with the latest regulatory developments and ensure compliance with the new law.
For further information or advice on the implications of this development, please contact Al Tamimi & Company’s Banking & Finance team at j.waugh@tamimi.com or d.abrol@tamimi.com.