UNITED ARAB EMIRATES Law and Practice Contributed by: Arnold Krutilins and Gabrielle Margerison (nee Lowe), White & Case LLP
4.4 Syndication of Fiat Currency Loans The authors are not aware of any syndications for online loans. These loans are typically small, short- term checkout loans which do not require syndication. 5. Payment Processors 5.1 Payment Processors’ Use of Payment Rails There is no explicit requirement for payment proces - sors to use existing payment rails or to create new ones. Payment processors commonly use already- established payment rails. 5.2 Regulation of Cross-Border Payments and Remittances In “onshore UAE”, cross-border payments are regulat - ed by the RPSCS Regulation. The RPSCS Regulation requires providers of cross-border transfer services to obtain a licence in order to carry on these activities in the UAE. Cross-border transfer services are defined as “a retail payment service for the transfer of funds in which the payment service providers of the payer and the payee are located in different jurisdictions or coun - tries”. The RPSCS Regulation sets out various regula - tory capital requirements, consumer protection, data protection, compliance and governance, AML/CTF and technology risk and information security require - ments which licensed providers must comply with. Cross-border payments are further facilitated by cross-border payment systems. Two of the main cross-border payments systems in the region are the Arabian Gulf System for Financial Automated Quick Payment Transfer (AFAQ) and Buna. Membership and participation in these systems follows an agreed set of requirements, rules and specified standards that govern the relationship between the participants and the business rules affecting the related transactions, such as the currency or currencies of the transac - tion, the exchange rate and the settlement institute. In December 2023, the CBUAE announced that it had joined AFAQ, which links payments systems in GCC countries. The FSRA and the DFSA respectively regulate the pro - vision of money services in the financial free zones.
or regulation of loans to entities, including small busi - nesses, etc. The CBUAE’s Consumer Protection Regulations pro - vide that financing to individuals must be provided in a responsible manner, to prevent over-indebtedness and support economic stability. In order to achieve this, the Consumer Protection Regulations set out var - ious measures that must be implemented, including: • ensuring credible and independent information regarding the financial situation of the consumer has been obtained; • not providing excessive credit; and • issuing credit on the basis of the consumer’s con - sent. The SME Market Conduct Regulation sets out mate - rially the same requirements in respect of SMEs as the Consumer Protection Regulations, with a limited number of differences. 4.2 Underwriting Processes The underwriting process adopted by an online lender will depend on its business and internal risk manage - ment framework. 4.3 Sources of Funds for Fiat Currency Loans The access to sources of funds for loans will depend on the nature and maturity of the online lender. At the early stages of business, online lenders may seek seed investment, for example, from venture capital firms. Separately, the crowdfunding market in the UAE has experienced significant growth in recent years. Lenders may also seek to fundraise through peer- to-peer lending. In expansion stages, and where an online lender has established a market presence, it may seek a fresh capital injection through a secured or unsecured debt facility. Depending on the nature of the online lender, chal - lenger banks may also use consumer deposits to fund loans. At all stages, sovereign wealth is an important source of funding within the region.
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