UAE Law and Practice Contributed by: Stefan Mrozinski, Gabrielle Margerison (nee Lowe) and Arnold Krutilins, White & Case LLP
The DFSA The DFSA is the financial services regulator in the DIFC. It supervises all banks, investment firms, securities traders and reinsurers that oper - ate within the DIFC. 2.7 No-Action Letters The authors are not aware of regulators in either “onshore UAE” or “offshore UAE” issuing “no- action” letters and this practice is not generally common in the UAE. 2.8 Outsourcing of Regulated Functions Regulated financial service providers (FSPs) are permitted to outsource certain functions to third- party vendors. FSPs retain responsibility for the outsourced function and must maintain over - sight over the third-party vendor. The level and precise requirements of this oversight depend on the nature of the outsourced function and the FSP. Generally, where an FSP outsources one of its functions, it will be required to put in place an appropriate agreement governing its commercial relationship with the third-party vendor including audit rights in favour of the FSP. Under the DFSA General Rulebook Module and the FSRA General Rulebook, an outsourcing agreement must also require the third-party vendor to deal with the relevant regulator in an open and co-operative way. Further contractual requirements to be set out in the outsourcing agreements of banks are provided for in the CBUAE’s Outsourcing Regu - lations and Standards for Banks, which largely centre around access to the bank’s data by the third-party vendor. A bank’s outsourcing agree - ment must establish (among other things): • that the bank retains ownership of the data and unfettered access to it;
participant’s business model and risks and on a case-by-case basis. In the DIFC, the DFSA operates a licensed sandbox known as the DFSA Innovation Testing Licence Programme. It allows participants to: • test new and innovative financial products, services and business models; and • benefit from adaptations to the regulatory framework on a case-by-case basis. 2.6 Jurisdiction of Regulators The key regulatory authorities responsible for administering the UAE’s financial services frame - works and for regulating the UAE fintech market are the CBUAE, the SCA, the VARA, the FSRA and the DFSA. “Onshore UAE” The CBUAE The CBUAE regulates banks, finance compa - nies, payment service providers, stored value facilities providers, exchange businesses and insurance companies. The SCA The SCA regulates markets, listed companies, securities brokers, virtual asset service providers (VASPs) and the trading of commodities. The VARA The VARA regulates virtual asset-related activi - ties in the emirate of Dubai, excluding the DIFC. “Offshore UAE” The FSRA The FSRA is the financial services regulator in the ADGM. It supervises all banks, investment firms, securities traders and reinsurers that oper - ate within the ADGM.
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