Financial Crime World

The New UAE Banking Law: A Comprehensive Guide for Market Participants

Introduction

The United Arab Emirates (UAE) has introduced a new banking law, marking a significant development in the country’s financial services sector. The law aims to provide a comprehensive framework for licensed financial institutions, promote transparency and cooperation with international regulators, and enhance the UAE’s position as a financial hub.

Key Provisions

  • Definition of Licensed Financial Institutions: The new law defines licensed financial institutions, including banks, finance companies, and other financial services providers.
  • Registration and Licensing: The law requires all financial institutions to register with the UAE Central Bank (UAECB) and obtain a license to operate in the country.
  • Capital Requirements: The law establishes minimum capital requirements for licensed financial institutions, which are designed to ensure their stability and soundness.
  • Risk Management: The law emphasizes the importance of risk management and requires licensed financial institutions to establish effective risk management systems.
  • Compliance with International Standards: The law requires licensed financial institutions to comply with international standards and best practices in areas such as anti-money laundering, know-your-customer (KYC), and capital adequacy.

New Features

The new UAE Banking Law includes several key features:

  • Electronic Rulebook: The UAECB will create an electronic rulebook containing all implementing regulations, rules, standards, decisions, and circulars.
  • Examination of Licensed Financial Institutions Operating Abroad: The UAECB has the power to undertake examinations of licensed financial institutions operating abroad in collaboration with relevant regulators.

Implementation

The new UAE Banking Law is a significant development that demonstrates recognition by the UAE legislators of the scope and depth of the country’s financial services sector. The law provides a comprehensive framework for ongoing progress and greater cooperation with international regulators and supervisory bodies necessary for the UAE to become a fully-fledged financial hub.

Conclusion

Clifford Chance remains close to the regulatory developments in the UAE, having developed close relationships with regulators and advised leading market participants across the region and overseas for over 40 years. Our team of experts is available to provide guidance on the new UAE Banking Law and its implications for licensed financial institutions operating in the country.

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