Anti-Money Laundering News and Information

UAE central bank issues best practice rules for financial products

The Central Bank of UAE released new regulations for small to medium-sized enterprises (SMEs) aimed at promoting “best practices among licenced financial institutions when engaging with SMEs”.

The purpose of the regulation was to improve SMEs’ access to financial products and services, following the launch of its new regulatory framework for financial consumer protection, the central bank said in a statement on 4 April.

“The UAE government has placed considerable emphasis on developing the SME ecosystem and removing obstacles for a transparent, entrepreneurial, and innovative SME sector in the UAE, which has good access to various financial sources.”

The regulation “strengthens governance over the design, promotion and sale of financial products and services, and promotes responsible financing practices and appropriate disclosure of risks”.

“In addition, it provides SMEs with access to timely and accurate information to make informed decisions, implements clear mechanisms for redress of complaints by SMEs, and requires appropriate debt counselling.”

The regulator further said that licensed financial institutions would be required to ensure that the opening of a bank account for an SME should be completed within three business days, provided that appropriate due diligence was undertaken related to financial crime compliance and that SME presents a low risk of money laundering or terrorism financing.

The regulation also requires licenced institutions to establish an independent and effective complaints management function to ensure fairness, transparency, and neutrality in resolving complaints.

Abdulhamid M. Saeed Alahmadi, governor of the Central Bank of the UAE, said: “SMEs play a vital role in the UAE’s economy. The UAE government has placed considerable emphasis on developing the SME ecosystem and removing obstacles for a transparent, entrepreneurial, and innovative SME sector in the UAE, which has good access to various financial sources.

“To sustain this momentum, the CBUAE aims to ensure that SMEs enjoy the highest business standard when interacting with licensed financial institutions, in line with our new consumer protection mandate. We are confident that this regulation will facilitate the provision of best-in-class products and services to SMEs.”

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By Mark Battersby, April 6, 2021, published on International Investment

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