Regulatory Compliance For Fintech Business In Dubai

For companies looking for a way to make their business dreams a reality, Fintech is a beacon of hope that opens the door to new business opportunities and enhances the customer experience with high-resolution solutions that they can only dream of. Dubai is treated as the most promising financial hub across the globe. Fintech is a controlled area.  Accordingly, new companies also want to dismantle Fintech in Dubai. The companies must have a thorough understanding of the establishment of the financial service provider to deploy new technology.

The rise of Fintech, the reporting of positive disruptions, and the achievement of significant milestones have created an exciting momentum in the financial services industry, among others digital payment solutions, end-to-end solutions, and changes in wealth management. As the industry grows rapidly - analysts predict that the industry value could reach $ 306 billion by 2023 - there is no doubt that this is a booming sector, which is not the only line between FinTech and traditional financial institutions. As a result, we have seen some Fintech try to partner with banks by leaving the mantra ‘not a financial institution’, cashews being the first BNPL in the region. This allows Fintech to compete more broadly and avoid different regulatory needs at the individual state level where they do business. We also see banks working with FinTech or working hard to build this partnership.

In Fintech, the data collected is highly sensitive, and lack of security or absence can lead to cyber theft, identity theft, fraud, and exploitation. Implementing federal rules to protect this information will not only help prevent cybercrime and reduce the share of data on those who may be more financially vulnerable but also make consumers feel secure.

Currently, Cashew’s partnership with Mashrek Bank benefits us by allowing us to take lessons and advice, to ensure that we do not go against financial rules and that the products we design with Mashrek follow the rules of the Central Bank. Of course, this is not true for all BNPL options in the region

There is an opportunity for regional governance and policy to run a robust Fintech sector. In some parts of the world, such as Saudi Arabia and Bahrain, ecosystems have been created for Fintech work, which will support the growth and success of the region. Of course, it is now relatively fragmented; the rules vary within the area. Regional regulations will allow systems to communicate with each other, share data, and drive better performance for their customers than Fintech. They will also allow companies to expand to the GCC without having to set up separately in each country.

Compliance framework for Fintech Industry-

Approval of the Fintech Regulatory Framework ("Fintech Regulatory Sandbox Guidelines") of the 2018 SCA Board of Directors No. (28 / Chairman) (Fintech Regulatory Guidelines), which governs the development/management of innovative products, regulates the testing environment, and regulates the environment. The decision introduces the concept of a "Fintech Pilot License" that allows companies to operate within a limited and limited range in a pilot and controlled environment (defined as the Pilot Financial Technology Laboratory).

Generally speaking, the idea is to get participants to enter the "sandbox" and comfortably test their product. Work with SCA applicants to evaluate product, service, program, or business models and determine legal and regulatory requirements that may or may not be comfortable with applicants.

Regulatory Framework for Stored Costs and Electronic Payment Systems-

There are two (2) types of payment service providers that need to get the required licenses as per the rules, such as Payment Service Providers (“PSP”) and Payment System Operator (“PSO”). The relevant licensing requirements to be followed by the relevant organization will depend on the category of the organization.

In short, a PSO is an organization that manages a fund transfer system or any other system that facilitates digital money transfer in the UAE, while a PSP is an organization/institution that is licensed or digitally paid.

In the UAE, there are four (4) types of PSPs, such as:

• Retail PSP: Authorized Commercial Banks and other licensed PSP offers.
• Micro Payment PSP: PSPs that provide micropayment solutions to digital payments by targeting the
• UAE's non-banking and under-banking segments.
• Government PSP: Central and local government legislatures that provide government digital payment services
• Non-issuer PSP: Non-depositing and issuing entities -Retail, government, and partner-to-peer digital payment services

Outside of the issue of banking and lending, the UAE was the only financial services regulator for the coastal UAE before the establishment of the Central Bank SCA (in 2001) and the IA (in 2007). So there are some other areas of financial activity that the UAE’s central bank continues to control - such as, among other things, currency brokers, money exchanges, and some activities that are generally related to investment banking.

Types of regulated activities in the coastal UAE, DIFC, and ADGM include, among other things:

• Marketing and sale of securities
• Investment advice
• Transactions in products and investments (as principal or agent);
• Undertaking and placement of financial products
• Provision and provision of prudent investment management services
• Fund marketing or sales (including investment advice)
• Accepting deposits
• Providing credit
• Providing financial services
• Arranging transactions in investments
• Asset management
• Managing a collective investment fund
• Financial product advice
• Insurance mediation

Security and financial products which are not regulated by the financial services regulators involved in the UAE, DIFC and ADGM, equity security, debt security, joint products, derivatives, structured products, deposits, notes, and warrants.

In order to effectively evaluate a category, it is important to look at what falls within an organization. Relevant criteria that must be met by that organization to qualify as one Of the PSPs listed above While the exact requirements are being met by an organization to obtain a license, it is still unclear (since the manual mentioned in the regulations has not been issued by the central bank), applicants can write to the central bank for approval.

Based on the above discussion, it can be seen that the relevant authorities are constantly working to take into account the rapid growth of companies and institutions working towards the development and use of technology, products, services, etc. for the purpose of providing financial services. Make sure there is a well-controlled environment for these institutions.

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