Financial Crime World

UAE Banking Regulation Changes: A Review of Key Developments in 2023

As the UAE continues to evolve as a hub for financial services, regulatory changes have been introduced to enhance the stability and security of its banking sector. Here are some key developments that have taken place in 2023.

Digital Dirham Introduction

The Central Bank of the UAE (CBUAE) has made history by introducing the national digital dirham, marking the first country in the region to permit its central bank to issue a native digital currency as valid legal tender. The move is aimed at promoting financial inclusion and innovation in the banking sector.

Financial Restructuring and Bankruptcy Amendment

The UAE has introduced a new corporate bankruptcy law, which will repeal the existing 2016 law on May 1, 2024. The new law updates definitions to clarify key concepts, modifies the liability of boards of directors and managers of insolvent companies, and expands the scope of the Financial Restructuring Committee.

Key Changes in the New Law

  • Updated Definitions: Clarifies key concepts to improve understanding and implementation.
  • Board Liability: Modifies the liability of boards of directors and managers of insolvent companies.
  • Financial Restructuring Committee: Expands the scope of the committee to facilitate more effective restructuring.

Recovery Planning Regulations

The CBUAE has introduced a Recovery Planning Regulation that requires financial institutions in the UAE to establish a recovery plan to navigate periods of severe financial challenge. The goal is to facilitate their recovery and maintain stability in the banking sector.

Key Requirements

  • Recovery Plan: Establish a comprehensive plan to navigate periods of financial challenge.
  • Stability Maintenance: Maintain stability in the banking sector through effective recovery planning.

Finance Companies Regulation Update

The CBUAE has issued a new Finance Companies Regulation, introducing two new license categories:

  • Restricted License Finance Company: For entities providing Buy Now Pay Later (BNPL) services.
  • Agent: Can provide BNPL services without a license provided they partner with a finance company or bank in the UAE.

SCA Rulebook Amendment on Anti-Money Laundering

The Securities & Commodities Authority has issued an amendment to its regulatory rule book, introducing a fifth section focused on anti-money laundering measures and combating the funding of unlawful organisations. SCA-licensed entities will need to review their internal anti-money laundering policies to ensure compliance.

Changes to Moveable Security Registration Fees

The Emirates Integrated Registries Company has amended its fees and available services, introducing new categories and incremental fees for registration periods. Sixteen new additional services are now available for matters such as registration of amendment, extension of registration, and so on.

These regulatory changes aim to enhance the stability and security of the UAE’s banking sector, promote financial inclusion and innovation, and maintain its position as a hub for financial services in the region.