UNITED ARAB EMIRATES Law and Practice Contributed by: Arnold Krutilins and Gabrielle Margerison (nee Lowe), White & Case LLP
processes, management and business practices in respect of data security, breach notifications, data retention and minimisation principles as well as ensur - ing that consumers are sufficiently informed to make choices in respect of their personal data. “Onshore UAE’s” first consolidation of the data pro - tection law came into effect in 2022 and although banking and credit data is excluded from its scope to the extent that provisions exist elsewhere, open bank - ing providers established in “onshore UAE” will also be required to comply with its provisions in respect of most other forms of personal data they process. Beyond this, the UAE’s financial services regulators issued “Guidelines for Financial Institution Adopting Enabling Technologies” (the “Guidelines”). The Guide - lines set out guidance in respect of the adoption of application programming interfaces (“APIs”), which are integral to the provision of open banking services. During the period between March 2022 and February 2024, the UAE was on the FATF’s grey list. The UAE’s removal from the grey list was a result of it significantly strengthening the effectiveness of its AML/CTF regime to meet the commitments in its action plan regarding the strategic deficiencies that the FATF had previous - ly identified. The development of a robust regulatory framework to combat AML/CTF risks has previously been a challenge for the UAE, given its rapidly devel - oping financial sector. As a result of the concerns raised in the FATF’s report, a number of measures were taken including the establishment of an AML and CTF executive office at the centre of the government, the adoption of new guidelines for financial institutions and designated non-financial businesses and professions aimed at AML and CTF, the establishment of a special court to prosecute financial crimes and the implementation of a new Penal Code. 12. Fraud 12.1 Elements of Fraud The financial regulators in the UAE are increasingly active in combating instances of fraud and money
laundering. Among the most common violations in 2024 that have led to investigations and sanctions are those relating to non-compliance with AML protocols, particularly in respect of notification requirements and developing systems to adequately combat the risk of money laundering and illegal transfers between con - nected individuals. 12.2 Areas of Regulatory Focus The UAE’s logistics and commodities sectors present a particular risk for regulators. For example, Dubai’s role as a centre for trading gold and other high-value commodities leaves it vulnerable to the laundering of illicit funds. The UAE regulators are focused on ensuring that for - eign investors in the financial services industry are not discouraged from doing business by risks of mon - ey laundering or non-compliance with international sanctions regimes. In 2022, the CBUAE issued guid - ance recommending the use of digital identification systems and the tracking of IP addresses to detect suspicious behaviour, including from sanctioned and high-risk jurisdictions. In August 2023, the DFSA signed a memorandum of understanding with the UAE’s Financial Intelligence Unit to further advance co-ordination and sharing of information to ensure AML/CTF compliance. It also released a consultation paper designed to align DIFC law with a number of guidelines released at the fed - eral level, proposing increased obligations on money laundering reporting officers, changing the threshold for notifications and increasing the scope of those who may be responsible for compliance with AML/ CTF conduct standards. 12.3 Responsibility for Losses The responsibility of fintech service providers for losses suffered by a customer would depend on the specific facts and circumstances surrounding the situ - ation. Below are examples of situations and the correspond - ing responsibility imposed by the relevant regulator on a fintech service provider for losses suffered by a customer.
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