UAE Law and Practice Contributed by: Stefan Mrozinski, Gabrielle Margerison (nee Lowe) and Arnold Krutilins, White & Case LLP
The CBUAE, the FSRA and the DFSA have all issued their own licensing frameworks setting out specific requirements with respect to insur - ance-related activities. In line with the UAE’s leading position as an ena - bler of emerging technologies, the regulatory authorities are also actively exploring oppor - tunities and avenues through which they can promote the further development and adoption of insurtech solutions. For example, the FSRA and the CBUAE have launched an Insurance Co- Sandbox aimed at promoting “smart insurance market” . 9. Regtech 9.1 Regulation of Regtech Providers Regtech in the UAE is still in its nascent phase and there is currently no dedicated regulatory framework for regtech services. As regtech ser - vices are often technical services only, they are also less likely to trigger existing financial ser - vices licensing requirements. In January 2019, the UAE launched its RegLab in partnership with the Dubai Future Foundation. The RegLab was launched with the purpose of authorising the UAE Cabinet to grant temporary licences for the testing and vetting of innova - tions that utilise technologies such as AI. In 2020, the ADGM launched three regtech pilot initiatives and, in April 2021, launched its Digi - tal Lab to provide a secure environment to test technological solutions to facilitate the growth of regtech in the UAE. The DIFC has established the DIFC Innovation Hub, the largest innovation community and fin -
tech accelerator in the region, which also looks to support the development of regtech services. Regtech has recently become more of a focus for UAE regulators as the country looks to further develop its status as a thriving financial centre in the Middle East and is therefore increasing - ly interested in combating money laundering activities. As such, UAE regulators are looking to utilise regtech to help manage the growing AML requirements and risks associated with its increasingly sophisticated and active financial market. 9.2 Contractual Terms to Assure Performance and Accuracy Regulatory requirements related to outsourcing will need to be reflected in the contracts between the regtech provider and regulated FSPs. The extent to which these requirements will need to be applied may depend on the type of regulated FSP in question, the applicable regula - tory regime and the particular regtech solution provided. Where a regulated FSP outsources a function directly related to its regulated finan - cial activity, the General Rulebook Modules of the FSRA and the DFSA stipulate that a written agreement must be in place but are largely not prescriptive with respect to the contents of these agreements. By contrast, with respect to banks, the CBUAE’s Outsourcing Regulation details in more substan - tive terms the provisions that outsourcing agree - ments must contain. These requirements largely centre on data security and confidentiality and the permissibility of subcontracting within the outsourcing relationship. Obligations in respect of outsourcing also exist under other CBUAE regulations, including, for instance, the RPSCS Regulation and the SVF Regulation.
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