UAE Law and Practice Contributed by: Stefan Mrozinski, Gabrielle Margerison (nee Lowe) and Arnold Krutilins, White & Case LLP
5. Payment Processors 5.1 Payment Processors’ Use of Payment Rails
The FSRA and the DFSA respectively regulate the provision of money services in the financial free zones. These licensed financial activities capture the provision of cross-border payment services. 6. Marketplaces, Exchanges and Trading Platforms 6.1 Permissible Trading Platforms “Onshore UAE” The SCA The establishment and operation of trading plat - forms and exchanges is regulated by the SCA. While Federal Decree-Law No 4/2000 concern - ing the Emirates Securities and Commodities Authorities Market (the “SCA Market Law” ) is not prescriptive in terms of the type of platforms permitted, the SCA’s glossary of terms defines a market as “a securities and commodities market licensed in the [UAE] by the [SCA]” . The VARA While the DVAL and its supplementary regula - tions and Rulebooks are not prescriptive in terms of the types of platforms permitted in the emirate of Dubai in respect of trading virtual assets, the DVAL defines a virtual asset platform as “a cen- tralised or decentralised digital platform, man- aged by a VASP, through which virtual assets are sold, bought, traded, offered, issued, kept and settled and their trading is cleared through the distributed ledger technology” . Furthermore, carrying on the provision of ser - vices of exchange between one or more forms of virtual assets is a regulated activity under the DVAL. Exchange services are defined by the Vir - tual Asset and Regulated Activities Regulation 2023 as:
There is no explicit requirement for payment pro - cessors 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 regulated 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 countries” . The RPSCS Regulation sets out various regulatory capital requirements, con - sumer protection, data protection, compliance and governance, AML/CTF and technology risk and information security requirements 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. Mem - bership and participation in these systems fol - lows 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 transaction, 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.
916 CHAMBERS.COM
Powered by FlippingBook