As we witness the evolution of the regulatory landscape across the MENA region, it was timely for us to investigate and lift the lid, on what is keeping the region’s legal decision-makers awake at night.
Our first-of-its-kind report titled Legal Leaders in MENA is out now! It captures the views of 700 legal decision-makers across nine countries and 13 industry sectors in MENA, as well as in-depth interviews with experts from key sectors such as financial services and education to name a few, which revealed the emerging risks and priorities challenging the legal sector across the region.
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Over the past couple of years, there has been rapid development in the FinTech space. In response to such developments, the UAE Central Bank (“Central Bank”) has issued the Stored Value Facilities Regulation (“Regulation”), dated 30 September 2020 (released in November 2020). The Regulation was published in the Official Gazette on 15 October 2020 and comes into effect on 15 November 2020. The Regulation replaces and repeals the ‘Regulatory Framework for Stored Values and Electronic Payment Systems’ (the “Framework”) previously issued by the Central Bank in 2016. The transition period is one year from the effective date of the Regulation.
The scope of the Regulation includes licensing and the ongoing supervisory and oversight requirements and related enforcement action in relation to the provision of Stored Value Facilities (“SVF”) in the UAE. The Financial Free Zones continue to be outside the remit. However, if financial institutions in any Financial Free Zone intend to conduct SVF related business in the UAE onshore, such financial institutions would be required to obtain a license of the Central Bank.
The key highlights are essentially a more streamlined application process for licensing, inclusion of the regulation and licensing of activities in relation to crypto-assets and virtual assets, the ability to obtain a license without having to partner with commercial banks, regulation of cross border offerings of SVFs into the UAE and recognition of e-KYC processes for such business activity. Additionally, a requirement has been introduced for the provision of independent assessments in seven areas by qualified assessors (these areas are corporate governance and risk management; float management; technology risk management; payment security management; business continuity management; business conduct and Customer protection; and AML/CFT control systems).
The UAE is at the forefront of innovation and the issuance of the Regulation is timely to create a stimulus in the payments industry in the UAE in accordance with international standards. It will provide an easier access to international SVF providers to the UAE market.