The UAE has enhanced the authority of the Central Bank over the licensing and regulation of all financial institutions and their activities in the UAE, with the issuance by Decree of Federal Law No. (14) of 2018 (the Central Bank Law). This effectively repeals and replaces the Central Bank Law of 1980 (the 1980 Law), which has become out of date and no longer adequately caters to the needs of the highly complex financial industry, which has developed tremendously over the last 40 years.

In line with international best practices and standards including those set by the Financial Stability Board (FSB) and the Basel Committee on Banking Supervision (BCBS), the Central Bank Law introduces some key enhancements and entrusts broad authority to the UAE Central Bank to carry out:

  • Licensing and regulation of all financial institutions based on activity, including a general prohibition on carrying out or promoting unlicensed financial activities;
  • Prudential supervision and implementing regulations for licensed financial institutions and activities;
  • Imposing administrative and financial sanctions and reporting obligations for financial institutions;
  • Establishing the Higher Shari’a Board, including determining its powers and functions as well as the appointment of its members by the Board of Directors of the UAE Central Bank; and
  • Implementing the UAE’s monetary policy to protect the local financial system and maintain the stability of the national currency.

Read the full article here.

Author

Mazen Boustany is the UAE Head of the Financial Regulatory, Policy & Legislative Group of Baker McKenzie Habib Al Mulla, based in Dubai. He has over 22 years' experience in banking and finance law in the Middle East, including financial services regulation, Islamic finance, structured finance, securitisation, private equity, financial structuring and restructuring, cross-border transactions and investment funds. Mazen has helped draft many of the financial regulations for the UAE Central Bank and Ministry of Finance.

Author

Matthew Shanahan is a partner in Baker McKenzie Habib Al Mulla's UAE Banking & Finance practice, based in Dubai. He has over twenty years of experience of financial services regulators and financial services regulatory regimes in the UK and Middle East. Matthew advises on all aspects of financial services regulation, including fintech, financial markets, anti-money laundering, investigations and data protection, and has full rights of audience in the DIFC Courts.

Author

Sandeep Puri is the Head of the UAE Banking & Finance practice of Baker McKenzie Habib Al Mulla, based in Dubai. He has extensive experience advising on all aspects of banking, finance and capital market matters across the Middle East. Sandeep has been based in the UAE since 2003 and has worked on both conventional and Islamic finance transactions across various asset classes, including project finance, corporate finance, asset finance, real estate and capital markets (including sukuk).

Write A Comment