UAE Federal Law raising the capital of Central Bank to AED 20 Billion
The UAE President Shaikh Khalifa bin Zayed Al Nahyan issued Federal Law No. (14) of 2018 concerning the Central Bank of UAE and Organization of Financial Institutions and Activities which aims to raise the capital of the Central Bank (the Bank) to AED 20 Billion.
Major Objectives and Roles:
In addition to this, the new law maps out the following:
Modified role of the Bank in protecting the financial stability, reserve management and conduct of the monetary policy.
Superior objectives for stable financial system and management of foreign reserves of UAE.
Improve and maintain the stability of UAE currency.
Scope and Application of the law:
Article 151 of the law states that this new law shall be applicable to the Central Bank, financial institutions, financial activities, and Persons subject to it. It does not apply to the Financial Free Zones and the financial institutions regulated by the authorities of these zones.
The new law further aims to provide a stringent framework granting additional supervisory powers with transparent disclosure and compliance procedures for governance of the Central Bank operations. The Central Bank now has additional powers to impose wider administrative as well as financial sanctions to reinforce a strengthened UAE financial system.
Grievance and Appeals Committee:
Under Article 136 of the new law, an independent committee is to be established, chaired by Court of Appeal Judge, having exclusive jurisdiction to decide on grievances and appeals against any decisions taken by the Bank relating to licensing, authorization of individuals and licensing and designation of financial infrastructure systems.
Customer protection and confidentiality:
Apart from licensing requirements for financial institutions to conduct financial activities in UAE, Article 120 of the new law provides for stricter regulations for the protection of customer’s data and sets comprehensive rules governing the confidentiality, protection and appropriate use customer banking and credit information, and to facilitate greater financial inclusion.
Penalties and Sanctions:
Article 137 to 150 of the law sets forth administrative and financial sanctions which may be imposed on the licensed financial institutions for violation and breach of provisions. The major penalties that may be imposed are:
For disclosure of confidential information by Central Bank employees or members: imprisonment of maximum 3 months and/or the maximum fine of AED 100,000.
Issuing false currency: imprisonment of maximum 20 years and/or fine of maximum AED 100,000,000.
Breach of any provision of the law: imprisonment for a period not exceeding 20 years and/or a fine not exceeding AED 100,000,000 AED.
Breach of any provision of this law committed by a judicial person will also face the same penalties as stated in this law.