Financial Crime World

Financial Institution Compliance Policies Tightened in the United Arab Emirates

The United Arab Emirates (UAE) Central Bank has introduced new regulations to ensure greater transparency and accountability within the country’s financial sector. These regulations aim to enhance the overall stability and integrity of the UAE’s financial sector, while protecting consumers and preventing illicit activities.

New Regulations for Restricted Licence Finance Companies and Agents

As of September 29th, 2023, Restricted Licence Finance Companies and Agents operating in the UAE must establish robust compliance arrangements to ensure they are fully compliant with relevant UAE laws. This includes:

  • Complying with the Central Bank Law
  • Complying with the Commercial Companies Law
  • Reporting any breaches to the Central Bank immediately

The Central Bank has also been granted the authority to impose additional prudential or other requirements on Restricted Licence Finance Companies and Agents as needed, including:

  • Restrictions on activity size and scale
  • Specific governance or management arrangements
  • Capital adequacy requirements

Anti-Money Laundering (AML) Regulations

Restricted Licence Finance Companies and Agents must also comply with AML regulations and take appropriate measures to prevent money laundering and terrorist financing activities. This includes:

  • Reporting any suspicious transactions to the Financial Intelligence Unit at the Central Bank
  • Implementing robust risk management procedures to identify and mitigate potential risks

Prudential Conduct and Consumer Protection

Restricted Licence Finance Companies and Agents must operate prudently and with competence, ensuring that their activities do not negatively impact borrowers’ interests. They are also required to comply with all applicable regulatory requirements for consumer protection, including:

  • The Consumer Protection Regulation (Circular No. 8 - 2020)
  • Related standards

Outsourcing Service Providers

Outsourcing service providers must maintain high levels of information security, risk management, and service delivery, while ensuring compliance with all relevant UAE laws and Central Bank Regulations applicable to their outsourced services.

Conclusion

The new regulations introduced by the UAE Central Bank aim to enhance the overall stability and integrity of the UAE’s financial sector, while protecting consumers and preventing illicit activities. Restricted Licence Finance Companies and Agents must comply with these regulations to ensure they operate in a transparent and accountable manner.