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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (15)
Powers and Duties of the Board of Directors
The Board of Directors shall enjoy, within the limits defined by the provisions of this
Decree- Law, full powers to achieve the objectives of the Central Bank. In particular, the
Board of Directors shall:
1. Approve the regulations, rules, standards, inst ructions and work controls to perform its
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 15
tasks and functions, and take all measures and actions necessary to implement the
provisions of this Decree -Law;
2. Formulate policies concerning the use and management of private funds and the Central Bank's ass ets, and supervise the implementation of such policies;
3. Decide on issues pertaining to the issuance of currency and the withdrawal thereof from
circulation;
4. Issue the regulations regulating Licensed Financial Activities and decide on the issues
pertaining thereto, including control and supervision regulations and procedures and
specify terms and rules related to granting licenses for practicing Licensed Financ ial
Activities and permits for practicing the Designated Tasks;
5. Approve the regulations, rules, standards, instructions and work controls related to
insurance, reinsurance, insurance agents and professions and activities related thereto;
6. Formulate policies and approve regulations pertaining to prudential regulation, standards and guidelines concerning Licensed Financial Activities;
7. Develop the regulations and standards on the protection of Licensed Financial
Institutions' customers;
8. Approve the regulations, controls and procedures needed to counter money laundering
and combat the financing of terrorism and unlawful organizations;
9. Take necessary measures and actions and impose administrative penalties against any
person violat ing the provisions of this Decree -Law or the regulations issued in
implementation hereof;
10. Approve the regulations and rules pertaining to the maintenance of integrity and
efficiency of financial infrastructure systems licensed, established, develope d or
operated by the Central Bank;
11. Adopt risk management and compliance policies of the Central Bank;
12. Adopt the Articles of Association of the Central Bank, issue the organizational structure
and administrative, financial and technical regulations and specify powers and
competences within the limits of the provisions of this Decree -Law;
13. Adopt HR policies of the Central Bank;
14. Approve corporate governance rules of the Central Bank, including a collection of rules
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 16
and regulat ions aiming at achieving quality and excellence of performance, in line with
the government strategic plans and their objectives;
15. Decide on loans and advances granted to the Government, pursuant to the provisions of
this Decree- Law;
16. Approve settlements and reconciliations pertaining to the Central Bank's functions;
17. Approve the Central Bank's draft annual budget and approve any amendments thereto throughout the year;
18. Approve annual final accounts of the Central Bank and annual net profits;
19. Establish an objection mechanism related to the insurance activity, pursuant to the legislation regulating the same; and
20. Examine all other issues falling within the sco pe of its powers and which would achieve
the objectives and perform the functions of the Central Bank pursuant to the provisions
of this Decree -Law.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (16)
Formation of Committees and Delegation of Powers
1. The Board of Directors may form commit tees, as deemed appropriate, to assist the Board
of Directors in performance of its tasks and competencies pursuant to the provisions of
this Decree by Law. Said committees may be formed from within or outside the Board of
Directors. Also, the Board of Dir ectors may form consultancy committees and councils
comprising persons from outside the Central Bank and may define the remunerations of
members of said committees and councils;
2. The Board of Directors may delegate some of its powers to the Chairman, the Governor,
or to any committee formed from within the Board of Directors;
3. The Board of Directors may review competencies and per formance of committees
formed pursuant to Clause (1) of this Article annually. It may take appropriate actions to
cause said committees adhere to professional and international standards, and to work and governance controls.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 17
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (17)
The Higher Shar ia Authority (HSA)
1. Pursuant to this Decree -Law, a sharia authority called the "Higher Sharia Authority
(HSA)" shall be established and report to the Central Bank. The members of such
Authority shall not be less than five (5) members and not more than seven (7) members
from among experts and specialists in the jurisprudence of financial Islamic transactions.
2. The Board of Directors shall approve the Authority's working system, functions,
competences and the mechanism for funding costs of its establishment and continuation
of operation.
3. The Governor shall issue a resolution whereby the HSA shall be formed and the
members thereof shall be appointed.
4. Licensed Financial Institutions performing all or part of their business and activities
according to the Rules of Islamic Sharia shall bear all expenses of the Authority
aforementioned in Clause (1) of this Article, including allowances, remunerations and
expenses of its members, as decided by the Board of Directors.
5. The HSA shall develop the rules, standards and general principles applicable to licensed financial business and activities in compliance with the Rules of the Islamic Sharia. It
shall cont rol and supervise internal Sharia audit committees of the Licensed Financial
Institutions referred to in article (79) of this Decree -Law.
6. The HSA shall approve Islamic monetary and financial instruments issued and developed by the Central Bank to manage monetary policy operations in the State. It shall express its opinion on regulatory bylaws and instructions regarding business of
Licensed Financial Institutions that perform all or part of their business and activities in
accordance with the Rules of t he Islamic Sharia.
7. Islamic advisory opinions "Fatwa" and opinions of the HSA shall be binding on the
internal Sharia audit committees, referred to in article (79) hereinafter, and to Licensed
Financial Institutions performing all or part of their business and activities in accordance
with the Rules of the Islamic Sharia.
8. The HSA may seek the assistance of a specialized entity, if necessary, to conduct the
external Sharia audit of the business of any Licensed Financial Institution performing all
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 18
or part of their business and activities in accordance with the Rules of the Islamic Sharia
and conditions and procedures set by the HSA at the expense of the relevant institution.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (18)
Appointment of Senior Officials at the Central Bank
The Board of Directors, upon nomination by the Governor, may appoint senior Central Bank
Officials, with titles of deputy, assistant governors, or any other titles deemed appropriate by
the Board of Directors. The decision whereby said deputies and assista nts are appointed
shall determine their competences, salaries, and remunerations.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (19)
Full- Time Employment at the Central Bank
1. The Governor, his deputies and assistants shall work at the Central Bank on a full- time
basis. None of them may hold any paid or unpaid position at, or be a member of the
Board of Directors of, any of the Regulatory Authorities in the UAE, or in the Financial
Free Zones; or be a member of the board of directors of any Licensed Financial
Institution. They may not be a direct or indirect party to contractual obligations
concluded by the public sector;
2. The prohibition aforementioned in Clause (1) of this Article shall not apply to any tasks entrusted to any of the aforementioned officials by the Government in the Public Sector,
including representation in international conferences, or representation of the Public
Sector on the various committees. This shall be s ubject to the approval of the Board of
Directors.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (20)
Remunerations and Benefits
The Board of Directors shall develop a system regarding remunerations, other benefits of the
Governor and the remunerations of the Chairman and board members. A Federal Decree
shall be issued in respect of the same.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 19
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (21)
Board Meetings
1. The Boa rd of Directors shall hold an ordinary meeting, at least once every sixty (60) days
upon invitation by the Chairman.
2. The Chairman of the Board may convene the Board whenever necessary.
3. The Chairman of the Board shall convene the Board of Director s upon request of the
board members of at least three (3).
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (22)
Quorum for Meetings
1. The Meeting of the Board of Directors shall not be valid unless attended by at least five
members including the Chairman, a deputy Chairman of the Board or the Governor.
2. The Decisions of the Board of Directors shall be issued by the majority of attending votes
and in the case of a tie, the Chairman of the Board shall have a casting vote.
Section Three
Powers of the Chairman of the Board and of the Governor
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (23)
Powers of the Chairman of the Board
Without prejudice to the powers and competences of the Chairman of the Board of Directors, the Governor shall be the legal representative of the Central Bank and shall sign,
on its behalf, all instruments, contracts and documents.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (24)
Responsibi lities of the Governor
Without prejudice to any competences vested in the Board of Directors or the Board
Chairman, the Governor shall process all affairs of and manage the Central Bank, issue
regulations, statutes and policies approved by the Board of Dir ectors and issue decisions
necessary for the implementation thereof. The Governor shall be responsible for
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 20
implementing this Decree -Law, the Central Bank's Statutes and the Board resolutions. He
may delegate any of his powers and competences to any of his deputies, assistants or some
senior officials of the Central Bank.
Section Four
Other Provisions
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (25)
Exemption from Liability
1. The Central Bank, Board Member, m embers of committees formed by the Board of
Directors, whether from among or from outside the Board of Directors, the staff of the
Central Bank and its duly authorized representatives shall all be exempted from civil
liability towards third parties in resp ect of the following:
a. Performance, or failure to perform the tasks, powers, authorities and business of the Central Bank, or their own tasks, powers, and authorities, and all related practices;
b. The instructions, guidelines, declarations, data, st atements and opinions given
thereby in relation to performance of the Central Bank's tasks, powers, authorities and business, or their own tasks, powers, authorities and business.
2. They shall be exempted from these liabilities unless bad faith with the intention to cause
harm to third parties is proven. The Central Bank shall bear all charges, costs, expenses,
and attorney fees incurred in connection with defending the persons aforementioned in
Clause (1) of this Article in lawsuits pertaining to performance of their duties at the
Central Bank.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (26)
Confidential Information
1. The board members, members of committees formed by the Board of Directors,
employees or representatives of the Central Bank, experts, technicians, and academic
persons with whom the Central Bank deals may not disclose any of the information
banned to be disclosed unless disclosure thereof is made pursuant to the provisions of
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 21
Clause (3) of this Article. This ban shall remain in effect until termination of m embership
or service or end of the task;
2. All and any information made available to any of the persons aforementioned in Clause
(1) of this Article by virtue of their positions or in the course of performance of their duties shall be deemed confidential so long as they are not available to the public
through formal or legal channels;
3. Information banned to be disclosed may be disclosed whenever such disclosure is
permitted or required by law, or whenever such disclosure is made to entities or
author ities inside the UAE or in other jurisdictions pursuant to provisions of article (28)
hereof.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (27)
Declaration of Conflict of Interests
1. Upon appointment thereof, and in case that any conflict of interests arises, board
members shall declare their interests which may conflict with their membership of the
Board of Directors. Should any board member have a personal interest in any
transaction or contract whereto the Central Bank is party, such member shall declare
such interest prior to discussing the issue, and shall withdraw from the meeting during
which such transaction or contract is discussed. He may not participate in voting
pertaining t hereto. This shall be made in accordance with the code of conduct and
governance rules issued by the Board of Directors.
2. Every employee or representative of the Central Bank shall disclose to his manager or his
immediate superior any interest which may be in conflict with performance of his tasks.
He may not participate in opinions expressed, decisions made or actions taken in this
regard;
3. The Board of Directors shall formulate the code of conduct for employees and representatives of the Central B ank, as well as procedures of disclosure, compliance, and
governance.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 22
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (28)
Cooperation with Local and International Authorities
1. Within the scope of its jurisdiction, and in accordance with the Law, the Central Bank
may cooperate with the regulatory authorities concerned in other countries and with
international institutions by way of providing assistance and exchanging information,
subject to the following:
a. The request shall be based on the principle of reciprocity;
b. The request may not be in contravention of any laws and regulations in force in UAE;
c. The request shall be serious and important;
d. The request may not be in conflict with the public interest and order public
requirements.
2. In coordination and collaboration with the regulatory authorities concerned, the Central
Bank shall exercise its powers over Licensed Financial Institutions operating outside the
UAE or in Financial Free Zones.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (29)
Seeking Assistance of Experts, Technicians, and Academic Persons
The Central Bank may seek assistance and define remuneration and allocations of experts, technicians, and academic persons. The Board of Directors may invite anyone to its meetings
for consultation and opinion on certain issues, provided that such persons shall have no
votes.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (30)
Publishing Draft Rules and Regulations
1. The Central Bank may publish the draft regulations and rules issued thereby in relation
to the regulation of the business of Licensed Financial Institutions and Licensed Financial
Activities in order to obtain opinion thereon by virtue of a public notice to the parties
concerned.
2. The Central Bank may invite the parties concerned to express their opinions on the draft
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 23
rules and regulations aforementioned in Clause (1) of this Article, within the period
specified by the Central Bank.
3. The Central Bank may decide not to publish the draft regulations aforementioned in
Clause (1) of this Article if it deems such publication shall conflict with the public interest, with realizat ion of the Central Bank's objectives or with implementation of its
duties.
Chapter Four
Monetary Policy and Financial Stability
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (31)
Monetary Policy Objectives
1. Monetary P olicy aims to maintain soundness and stability of the monetary system in the
UAE to ensure maintenance of required stability and confidence in the national
economy.
2. The Central Bank shall determine monetary instruments and practical means for
achievem ent of monetary policy objectives, including policies pertaining to management
of the exchange rate of the national currency and pertaining to money markets in the
UAE.
3. Upon proposal of the Board of Directors and approval of the Cabinet, the Central B ank
shall determine the exchange rate regime for the national currency.
4. For operational purposes, the Central Bank may adopt measures necessary to manage
and control the official exchange rate of the national currency as per the guidelines developed by the Board of Directors.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (32)
Mandatory Reserve
1. In line with the monetary policy objectives and the current and forecasted liquidity
position, the Central Bank may determine to impose minimum Mandatory Reserve on
each type of deposits or on total deposits held with Licensed Financial Institutions
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 24
receiving deposits. The Board of Directors shall determine the method of calculating the
percentage of the mandatory reserve, as dee med appropriate thereby.
2. The Central Bank shall specify all operational arrangements concerning maintenance requirements of the Mandatory Reserve aforementioned in Clause (1) of this Article.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (33)
Control of Credit Positions
The Central Bank may develop and set regulations or rules specifying the maximum limits of credit transactions concluded between Licensed Financial Institutions and their customers
as compared to their total stable resources or total deposits of their cust omers. Such limits
may be applicable to a specific Licensed Financial Institution or to all Licensed Financial
Institutions.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (34)
Coordination between Monetary and Fiscal Policies
The Central Bank and the Ministry shall formulate a mechanism for coordinating monetary and fiscal policies to achieve balanced growth in the national economy. Such coordination
shall take place before the beginning of each fiscal year, and whenever necess ary. The
coordination shall be made in respect of volume of government expenditure, debts of the government and governments of emirates members of the Federation,
Government -Affiliated Entities, and companies and institutions owned or managed by the
govern ment, or wherein the government holds shares, and coordination shall be made in
respect of their plans regarding domestic and foreign public debt.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (35)
Designation of Systemically Important Licensed Financial Institution (SIFI)
The Central Bank s hall have the sole power to define any Licensed Financial Institution as
systemically important. In this course, the Central Bank may require the designated Licensed
Financial Institution to take required measures and procedures.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 25
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (36)
Domestic Mark et Statistics
1. The Public Sector and other agencies, deemed appropriate by the Board of Directors,
shall provide the Central Bank with all the information and statistics required for the
purpose of performing the tasks entrusted thereto pursuant to the provisions of this
Decree by Law. Such information and statistics shall include all monetary and economic statistics, as well as balance of payments statistics and consumer prices. The Central
Bank may publish all or part of these statistics as deemed app ropriate.
2. The Central Bank shall obtain the approval of other Regulatory Authorities in the UAE
regarding accessibility to and/or publication of non -public information and statistics in
relation to institutions regulated by of those authorities.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (37)
Research
1. The Central Bank may conduct research and analyses in areas of macro -economy, and
management of monetary policy, and banking and financial operations of strategic
importance to the UAE economy.
2. The Central Bank shall regular ly publish and issue statistical reports, quarterly and
annual reviews of the Central Bank briefs of policies and working papers that contain
analyses of relevant data to verify soundness and effectiveness of policies decisions.
Chapter Five
Central Bank Operations
Section One
Operations with the Public Sector
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (38)
Advisor to the Government
The Central Bank shall advise the Government on matters falling within its jurisdiction, and shall express its opinion on monetary, banking, and financial affairs whenever required by
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 26
the Government.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (39)
Financial Agent for the Government
1. The Central Bank shall take part in negotiations pertaining to the Government's
international monetary and financial treaties. The Central Bank may be entrusted to
implement the provisions of such treaties.
2. The Central Bank may, directly or through Primary Dealers, sell and manage securities
issued or secured by the Government or governments of emir ates members of the
Federation pursuant to an agreement with the government concerned.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (40)
Government Bank
1. For the purposes of achieving objectives of its monetary policy, and to satisfy the needs of the Government and governments of emirates members of the Federation for national
and/or foreign currencies, the Central Bank shall buy or sell foreign currencies from or to the government concerned and governments of emirates members of the Federation at
prevailing exchange rates;
2. The Central Bank shall conduct and provide banking transactions and services for the Government, whether inside the UAE or in other jurisdictions in return for fees. The
Central Bank may also perform and provide banking transactions and services for govern ments of member emirates of the Federation in return for fees;
3. The Government and governments of emirates members of the Federation shall open
accounts in national and foreign currencies with the Central Bank, and shall make
transfers through such accounts;
4. Government funds in national or foreign currencies shall be deposited with the Central Bank, and the latter shall pay or charge interest thereon in view of the prevailing market
rates. Governments of emirates members of the Federation may also deposit funds in
national or foreign cu rrencies with the Central Bank, and the latter shall pay or charge
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 27
interest thereon in view of the prevailing market rates;
5. Other Public Sector entities may deposit their funds in national or foreign currencies
with the Central Bank. The Central Bank sh all pay or charge interest thereon as
determined by the Central Bank;
6. The Central Bank may grant advances or other credit facilities to the Government at
interest rates to be set in accordance with the terms and conditions of the agreement to
be execute d in this respect between the Central Bank and the Ministry, provided such
advances and credit facilities are granted for the purpose of covering a temporary
unforeseen deficit in Government revenues as compared to its expenditures. The
Government may not re -grant such loans or advances to any other entity. Granted
advances may at no time exceed ten percent (10%) of the government's average revenues realized in the budgets of the last three (3) years. The Government shall repay
these advances within a perio d not exceeding one (1) year as of the date of being
granted the same. In case of non -repayment of said advances on maturity date, the
outstanding balance shall be subject to a late payment interest rate provided for in the
agreement executed between the C entral Bank and the Ministry;
7. The Central Bank may subscribe to securities and debt instruments issued by the
Government for maturities exceeding one (1) year, only in the cases determined by the
Board of Directors. The Government shall repay the amount s due including interests on
maturity dates. In case of late or early payment, an interest rate shall be imposed, as
provided for in the debt agreement.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (41)
Investment and Use of Government Funds
Except for the funds deposited with the Central B ank in accordance with provisions of
article (40) of this Decree by Law, the Central Bank may not interfere in the investment and
use of Government funds, or funds of governments of emirates members of Federation
unless it has been entrusted to do so as pe r the agreement concluded by and between the
government concerned and the Central Bank.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 28
Section Two
Transactions with Financial Institutions, Monetary Authorities and other
Central Banks
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (42)
Opening Accounts and Keeping Balances of Digital Curr ency
First: The Central Bank may open the following accounts:
1. National or foreign currencies accounts for Licensed Financial Institutions and may take
deposits therefrom. The Central Bank may pay or charge interest on such deposits as
agreed upon;
2. Accounts for monetary authorities, other Central Banks, foreign banks, international fi-
nancial and monetary institutions, Or Arab and international monetary funds. The Cen-
tral Bank may pay or charge interest on such accounts, and may act as an agent or cor-
respondent for these entities.
3. Accounts for monetary authorities, other Central Banks, foreign banks, international fi-
nancial and monetary institutions, as well as Arab and international monetary funds.
4. The Central Bank may open any other accounts within the limits and subject to the rules
and requirements issued by the Board of Directors.
Second: The Central Bank may keep other forms of financial accounts of digital currency
whatever its kind within the limits and subject to the rules and requirement s issued by the
Board of Directors.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (43)
Money and Capital Markets Transactions
The Central Bank may conduct the following money and capital markets transactions:
1. Purchase, re -purchase, sell, and accept deposits of gold bullion or coins and precious
metals;
2. Accept and take monetary deposits and pay or charge interest thereon pursuant to the
provisions of article (62) of this Decree by Law;
3. Issue bills payable on demand and other types of payable financial transfers at the
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 29
Central Bank headquarters, branches, or offices of agents or correspondents thereof;
4. Conduct all foreign currency transactions and external transfers with the Governme nt,
governments of emirates members of the Federation, public entities, local and foreign
banks, licensed money exchange houses, other monetary authorities and Central Banks, as well as other Arab and international financial institutions and funds;
5. Issue securities in the name of the Central Bank, and sell, re -purchase, discount,
rediscount, and redeem such securities for the purposes of monetary policy transactions management;
6. Purchase, re -purchase, sell, discount and rediscount Eligible Securities and other
securities related to the management of its own funds and/or Foreign -Exchange
Reserves pursuant to the adopted terms and conditions;
7. Purchase, re -purchase, and sell commodities and securities compliant with Sharia
provisions in order to d evelop liquidity management instruments for Licensed Islamic
Financial Institutions;
8. Grant collateralized loans, advances, other credit facilities, and financing facilities
compliant with the provisions of Islamic Sharia to Licensed Financial Institutions for the purpose of managing monetary policy transactions in accordance with the terms and
conditions set from time to time and deemed appropriate by the Central Bank;
9. Grant collateralized loans and advances to monetary authorities, Central Banks, foreign
banks, and international financial institutions, and may obtain loans and advances
therefrom, provided that such transactions be consistent with the Central Bank's
functions and competencies. Interests or commissions may be paid or charged for this
purpose;
10. Obtain, guarantee or secure loans and advances, or grant credits in any currency, inside the UAE or in other jurisdictions, in accordance w ith the terms and conditions the
Central Bank deems appropriate for conducting its own business;
11. Conduct all other transactions which would help achieve the Central Bank's objectives.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 30
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (44)
Protection of Licensed Financial Institutions
The Central Bank shall take all necessary measures it deems appropriate to ensure proper
functioning of Licensed Financial Institutions according to frameworks and limits set by the
Board of Directors.
To that end, the Central Bank may:
a. Call for the g eneral meeting of the Licensed Financial Institution to discuss any issue the
Central Bank deems important;
b. Request that any item the Central Bank deems required be listed on the agenda of the
general meeting of the Licensed Financial Institution; and
c. Suspend the implementation of any decision issued by the general meeting of the
Licensed Financial Institution if it violates laws and regulations in force.
2. The Central Bank may, at its sole discretion in urgent cases where the Licensed Financial
Institution that receive deposits undergoes liquidity pressures or is under crisis management
procedures, provide loans to such institutions to contribute to the enhancement and
protection of the financial system and the protection of the monetary system in the State.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (45)
Appointment of Primary Dealers
1. The Central Bank shall set the rules regulating securities issued thereby or by the
Governmen t in coordination with various stakeholders. Such rules shall include
issuance, custody, trading of these securities in the UAE.
2. The Central Bank may appoint Primary Dealers for securities issued inside the State
whether by the Central Bank or by the Public Sector in accordance with the terms and
conditions set by the Central Bank.
3. For the purpose of listing securities issued by the Public Sector in the State's stock markets, the Central Bank shall appoint Primary Dealers approved thereby who satisfy
the requirements of the regulatory authority concerned.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 31
Section Three
Investment of Foreign -Exchange Reserves and the Central Bank's Own
Funds
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (46)
Foreign -Exchange Reserves
In accordance with the instructions and rules stipulated in the inve stment policy and the
guidelines approved by the Board of Directors, The Central Bank may invest the
Foreign -Exchange Reserves in all or any of the following instruments:
1. Gold bullions, gold coins and other precious metals;
2. Paper notes and coins, call money, and deposits in foreign countries;
3. Securities issued or secured by governments of foreign countries and relevant bodies, or by international monetary and financial institutions.
4. Financial derivatives and other f inancial instruments required for the management of
Central Bank's exposure to interest rates, exchange rates, credit, gold, and other precious metals rates;
5. Any other financial assets the Central Bank deems appropriate to invest therein as
Foreign -Exchange Reserves, subject to approval of Board of Directors.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (47)
Own Funds
In accordance with the investment policy and guidelines set by the Board of Directors, the
Central Bank may use or invest part of its Own Funds in the following manner:
1. Purchase and sell securities, and subscribe to loans issued or secured by the Public
Sector, or buy shares in any entity wherein the Government or governments of emirates
members of the Federation hold shares or is granted a privilege in the State;
2. Invest in investment projects and funds and financial institutions not licensed by the
Central Bank; and
3. Possess real estate properties, equity and movable properties and all relevant issues.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 32
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (48)
Appointment of External Parties to Manage Foreign -Exchange Reserves and
the Central Bank's Own Funds
The Central Bank may appoint external parties to manage its Foreign Reserves and Funds in
accordance with the investment policy and guidelines set by the Bo ard of Directors.
Chapter Six
Miscellaneous Provisions
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (49)
Establishment of Commercial or Financial Companies and Institutions
In the course of achievement of its objectives and performance of its tasks provided for in
article (4) herein, the Cen tral Bank may establish commercial and financial companies and
institutions, or companies or institutions established for any specific purpose, either solely
or in partnership with any other entities inside the State or in other jurisdictions. It may
perform any commercial activity or own moveable and immoveable assets as per the
controls issued by the Board of Directors.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (50)
Lien and Security for Special Rights
1. Debts of the Central Bank shall have the same lien of the Government debts over funds of its debtors. The Central Bank's debts shall be collected in the same method and by the
same means prescribed for the collection of the Government debts and funds.
2. Except for the Mandatory Reserve aforementioned in article (32) hereof, the Cen tral
Bank shall have a lien over the property of Licensed Financial Institutions for the
payment of all its claims and dues of cash balances or assets which constitute collaterals
for these claims and dues when falling due.
3. The Central Bank may purchase or own, by amicable agreement or by means of
compulsory sale, real properties and movable assets to satisfy any of its debts. Such
property shall be sold within the shortest possible time, unless the Central Bank decides
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 33
to use them to conduct its business pursuant to the provisions this Decree -Law.
4. The Central Bank shall obtain adequate collaterals for satisfying its rights, including
pledge, mortgage or assignment.
5. If the Central Bank's secured rights are not fulfilled on the maturity date thereof, the
Central Bank may, following the lapse of (10) ten days of the date on which the debtor is
duly notified, proceed with the sale of the pledged assets, without prejudice to the
Central Bank's right to initiate other legal proceedings against the debtor until its secured rights are fully fulfilled.
6. Pledged property shall be sold, pursuant to Clause (5) of this Article, by the competent court at the request of the Central Bank.
7. The Central Bank shall collect its d ues from proceeds of the sale to be carried out
pursuant to the provisions of Clause (6) of this Article. Should such proceeds exceed the
amounts due to the Central Bank, the surplus shall be deposited in the Central Bank at
the debtor's disposal without p aying any interests.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (51)
Financial Exemptions
1. The Central Bank shall be exempted from the following:
a. Taxes, fees, and payments relevant to the capital, reserves, Currency issue, or income thereof;
b. Taxes, fees, and payments relevant to contributions, shares, or profits generated from companies and institutions wherein the Central Bank owns a share of its capital.
2. The Central Bank, the companies and institutions wherein it holds the majority of s hares
shall be exempted from bail bonds and court fees required by law.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (52)
Guardianship of Premises and Safe Transport of Funds and Assets
The Government shall provide security guards for the Central Bank to secure its premises, as
well as the security escort needed for the safe transport of funds and valuables free of
charge.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 34
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (53)
Dissolution of the Central Bank
The Central Bank may be dissolved only by virtue of a law specifying the manner and timing
of liquidation thereof.
Part Two
Currency
Chapter One
Currency Unit and Issuance
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (54)
Currency Unit
The official Currency of the UAE is "Dirham" and s hall be referred as (? ? ?) in Arabic
alphabets and as (AED) in Latin alphabets. Dirham is subdivided into one hundred (100) fills.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (55)
Currency Issuance
1. Issuance of Currency shall be a privilege granted exclusively to the State which shall be
exercised solely and exclusively by the Central Bank.
2. No Person is allowed to issue or put into circulation paper banknotes, coins, or any in-
strument or cheques payable to bearer on demand which have the appearance of, or
purporting or are likely to be confused with the currency, and may be circulated in the
UAE or in any other country as a currency.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (56)
Currency Legal Tender
1. Paper banknotes and digital currency issued by the Central Bank shall be an absolute
legal tender valid for paym ent of any amount up to their full face value.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 35
2. Coins issued by the Central Bank shall be legal tender valid inside the UAE for payment
of any amount up to its full face value but not exceeding fifty (50) Dirhams. Neverthe-
less, should such coins be prese nted to the Central Bank, the latter shall accept them
without any limitation to their value.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (57)
Specifications, Features and Denominations of Currency
1. Paper banknotes issued by the Central Bank sh all be of such denominations, designs,
and specifications as well as features decided by the Board of Directors. Paper banknotes
shall bear the signature of the Chairman of the Board.
2. The Board of Directors shall determine the weights, compositions, mix ratios, allowed
variation, and all other specifications of coins as well as the quantities required to be
minted of each denomination.
3. The Central Bank shall take the necessary proced ures for printing paper banknotes
aforementioned in Clause (1) of this Article, and minting coins aforementioned in Clause
(2) of this Article, in addition to all matters pertaining to such printing, minting and safe-
keeping of such paper banknotes and coin s as well as relevant printing plates and coin
dies.
4. The Central Bank shall issue the forms, specifications and designs of digital currency, re-
quirements and conditions of possession and all other features decided by the Board of
Directors.
5. The Centr al Bank shall publish resolutions whereunder Currency is issued pursuant to
the specifications, designs and all other features in the Official Gazette.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (58)
Gold, Silver and Commemorative Coins
1. The Board of Directors shall set up the conditio ns for sale and purchaser of gold and
silver coins with the Central Bank.
2. The Central Bank may issue commemorative banknote or coins for any party desiring for
the same, as per the rules and conditions set by the Board of Directors.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 36
3. The Board of Directors shall determine the specifications, fineness, weights,
measurements, allowed variation and all other specifications of gold and silver coins, as
well as quantities required to be minted for each denomination.
4. The Central Bank shall take necessary actions for minting gold and silver coins
aforementioned herein, as well as all other matters related to minting and safekeeping
these coins and the relative parts, plates and dies.
Chapter Two
Circulation and Withdra wal of Currency
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (59)
Paper Banknotes
1. New paper banknotes shall be put into circulation by virtue of a resolution by the Board
of Directors specifying denominations and quantities thereof. Such resolution shall be
published in the Official Gaze tte and shall be communicated to the public via
appropriate media.
2. The Board of Directors may, after approval of the Cabinet, withdraw from circulation any
denomination of paper banknotes against payment of their face value. A resolution to
this effec t shall be published in the Official Gazette and shall be communicated to the
public through appropriate media.
3. Paper banknotes withdrawal resolution shall specify the grace period within which
exchange is allowed, provided that said period may not be less than three (3) months
starting as of the date of publication of the resolution in the Official Gazette. Said grace
period may be shortened to fifteen (15) days, if necessary.
4. Paper banknotes not presented for exchange prior to expir y of the grace period set forth
in Clause (3) of this Article shall cease to be legal tender and may not be used for
transactions. However, holders of such paper banknotes shall have the right to redeem
them at their face value from the Central Bank within ten (10) years from the effective
date of the withdrawal resolution. Paper banknotes not exchanged upon passage of said
ten-year period must be taken out of circulation and their value shall be credited to
Central Bank account.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 37
5. Paper banknotes withdr awn from circulation pursuant to the provisions of Clause (4) of
this Article shall be destroyed by the Central Bank in accordance with the instructions
issued by the Central Bank in this respect.
6. The Central Bank shall be under no obligation to refun d the value of any lost or stolen
paper banknotes, and shall not accept or redeem the value of counterfeit paper
banknotes.
7. The Central Bank shall pay value of torn, mutilated or imperfect paper banknotes
satisfying the conditions of the Central Bank in this regard. Paper banknotes not
satisfying those conditions shall be withdrawn from circulation without any
compensation to bearers thereof.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (60)
Metal Coins
1. Metal coins of various denominations shall be put into circulation by virtue of a resolution by the Board of Directors specifying the quantities thereof. This resolution
shall be published in the Official Gazette and shall be communicated to the public
through appropriate media.
2. Any denomination of the metal coins aforementioned in Clause (1) of this Article may be
withdrawn by virtue of a resolution by the Board of Directors and exchanged for payment of their face value. This resolution shall be published in the Official Gazette and
shall be communicated to the pu blic through appropriate media.
3. The withdrawal resolution shall specify grace period for exchanging withdrawn coins. Said period may not be less than six (6) months from the date of publication of the
resolution to this effect in the Official Gazette.
4. Metal coins not exchanged prior to expiry of the period aforementioned in Clause (3) of
this Article shall cease to be legal tender and may not be used for transactions. They shall
be taken out of circulation and their value shall be credited to the Central Bank account.
5. Should metal coins lose their features, become mutilated, diminished or changed in
shape for any reason other than normal use, the Central Bank shall withdraw such coins from circulation without compensating holders thereof.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 38
Arti cle (60) bis
Digital Currency
1. Board of Directors shall issue a resolution to introduce national digital currency into
trading and to withdraw the same when its face value is paid. Such resolution shall be
published in the Official Gazette and shall be announced to the public in appropr iate me-
dia.
2. The Bank shall not be responsible to refund the value of any digital currency that is miss-
ing, stolen or manipulated. The Bank shall not accept any counterfeit currency or pay its
consideration.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (61)
Currency Mutilation, Des truction and Shredding
No Person is permitted to mutilate, destroy or shred Currency in whichever manner. The
Board of Directors shall issue regulations on replacement of mutilated, destroyed or
shredded Currency.
Chapter Three
Monetary Base
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (62)
Monetary Base Cover
The Central Bank shall, at all times, hold reserves of foreign assets to cover the Monetary
Base pursuant to the provisions of article (63) of this Decree -Law and such reserves of for-
eign assets shall consist of one or more of the follo wing:
1. Gold bullions and other precious metals;
2. Cash assets and deposits, and other monetary and payment instruments denominated in
foreign currencies that are freely convertible in global financial markets, including digital
currencies issued by the Central Banks and other monetary authorities.
3. Securities denominated in foreign currencies issued or guaranteed by foreign govern-
ments and the companies, entities, institutions, and agencies affiliated thereto, or by in-
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 39
ternational monetary and financial institutions, or by multinational corporations, pro-
vided said securities be tradable in global financial markets.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (63)
Foreign -Exchange Reserves for the Monetary Base Cover
1. The market value of the Foreign -Exchange Reserves balance aforementioned in Article
(62) of this Decree by Law shall not, at any time, be less than seventy percent (70%) of
the value of the Monetary Base.
2. The Board of Directors may reduce the Monetary Base Cover percentage
aforementioned in Clause (1) of this Article for a period not exceeding twelve (12)
months.
Part Three
Regulation of Licensed Financial Institutions and Activities
Chapter One
General Provisions
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (64)
Prohibition of Performing or Promoting Financial Activities without a
License
1. Licensed Financial Activities m ay be carried on inside or from within the UAE only
pursuant to the provisions of this Decree by Law, the regulations and resolutions issued in implementation thereof.
2. Promotion of any of the Licensed Financial Activities and financial products may be
performed inside or from within the UAE only pursuant to the provisions of this Decree
by Law, the regulations and resolutions issued in implementation thereof. The
promotion referred to in this item shall mean any form of communication, by any
means, wit h the intention to call for or to offer entry into any transaction, or an offer to
conclude any agreement concerning any of the Licensed Financial Activities.
3. The Board of Directors may issue the regulations, rules, standards and directives
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 40
prohibitin g performance of any of the Licensed Financial Activities without prior
licensing, and prohibiting promotion of Licensed Financial Activities and financial
products. The Board of Directors may take all necessary measures and actions in this
regard.
4. The Board of Directors may exempt any activities, practices, or natural or legal persons,
either in general or in particular, from said prohibition to perform or promote Licensed
Financial Activities.
Chapter Two
Licensing
Section One
Financial Activities Subject to Licensing
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (65)
Financial Activities
1. The following activities shall be considered financial activities subject to Central Bank
licensing and supervision pursuant to the provisions of this Decree by Law:
a. Taking deposits of all types, including deposits compliant with the provisions of
Islamic Sharia;
b. Providing credit facilities of all types,
c. Providing financing facilities of all types, including financing facilities compliant with
the provisions of Islamic Sharia;
d. Providing currency exchange and money transfer services;
e. Providing monetary intermediation services;
f. Providing stored values, electronic retail payments and digital money services;
g. Providing virtual banking services.
h. Arranging for and/or marketing Licensed Financial Activities;
i. Acting as a principal in financial products affecting the financial position of the
Licensed Financial Institution including, but not limited to, foreign exchange,
financial derivatives, bo nds and Islamic financial certificates "Sukuk", ownership of
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 41
equities, commodities, and any other financial products approved by the Central
Bank.
2. The Board of Directors may:
a. Classify and define Licensed Financial Activities and the practices relating thereto.
b. Add, remove, or modify activities or practices to the list of Licensed Financial
Activities aforementioned in Clause (1) of this Article, following coordination and
agreement with the Regulatory Authorities in the State. Same shall be m ade via the
Financial Activities Committee referred to hereinafter in article (66) of this Decree by
Law.
3. In case a Licensed Financial Institution desires to perform financial activities other than
the activities aforementioned in Clause (1) of this A rticle but are licensed by the
Regulatory Authorities inside the State or by regulatory authorities in other jurisdictions.
Such institution shall obtain approval of the Central Bank prior to obtaining the license
from the regulatory authority concerned.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (66)
Financial Activities Committee
1. The Ministry shall form a technical committee cited as 'Financial Activities Committee'
by virtue of a Cabinet resolution. The Committee shall be chaired by the Minister and
shall comprise a representative of each of the Regulatory Authority in the State. The
Committee shall express opinion on any proposal to regulate any financial activity other than those provided for in the laws of regulatory authorities in the UAE. The Cabinet
resolution shall specify th e Committee's terms of reference and the mechanism for
discharge of its functions.
2. In case that the Financial Activities Committee proposes addition of a certain financial
activity not included in the laws of the regulatory authority concerned to the list of
activities licensed and controlled thereby, approval of the regulatory authority
concerned shall be obtained.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 42
Section Two
Licensing Financial Institutions
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (67)
License Applications
1. Any Person may submit to the Central Bank a license application to perform one or more
of Licensed Financial Activities, or to add one or more Licensed Financial Activities to an
issued license in accordance with the regulations issued by the Board of Dire ctors;
2. The Board of Directors shall issue regulations, rules and standards, and shall set
conditions for licensing performance of Financial Activities, including the following:
a. Fit and proper criteria;
b. Resources necessary for performance of the activity;
c. Controls and supervision systems;
3. The Board of Directors may, at its own discretion and as it deems appropriate for
safeguarding public interest, add any requirements or conditions to be fulfilled by the
license applicant.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (68)
Compliance with the Scope of the License
1. A Licensed Financial Institution shall carry on its business within the scope of the license granted thereto.
2. No person may introduce himself as a Licensed Financial Institution unless it is an already Licensed Financial Institution.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (69)
Deciding on the Application for License or Expansion of its Scope
1. The application for license or expansion of its scope shall be decided on within a period not exceeding sixty (60) working days from the date of satisfying the requirements and
conditions of the license. The lapse of such period without reply shall be deemed
rejection of the application.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 43
2. The Central Bank may request the applicant to meet the requirements and conditions of
the license within the period it determines.
3. The Central Bank may reject the application or request the addition of any financial activity at its sole discretion, according to the absorptive capacity of the financial sector of the State and the requirements of the domestic market. The decision issued in this
regard shall be final and not appealable before the Grievances and Appeals Committee.
4. The applicant shall be notified of the substantiated rejection decision by means of an
official notice within a period not exceeding twenty (20) days from the date of its
issuance.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (70)
Imposing Conditions and Restrictions on a License
1. The Board of Directors may decide to impose, change, or cancel the conditions and
restrictions on the license of performing Licensed Financial Activities.
2. Prior to issuing its decision aforementioned in Clause (1) of this Article, the Board of Directors may request the financial institution concerned to provide its notes on the
reasons of the decision within the period specified by the Board of Directors.
3. The Licensed Financial Institution shall be notified of the reasoned decision by virtue of
an official notice to be sent within no more than twenty (20) work days as of the date of
issuing said decision. The notice shall include the following:
a. Content s of the decision;
b. Reasons entailing the decision;
c. Advising the Licensed Financial Institution of its right to file a grievance against the
decision before Grievances and Appeals Committee in accordance with the
provisions of this Decree by Law.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (71)
Suspension, Withdrawal, or Revocation of License
1. The Board of Directors may suspend, withdraw, or revoke a license granted to a Licensed Financial Institution in the following cases:
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 44
a. If the Licensed F inancial Institution fails to meet, or is in breach of one or more of the
conditions or restrictions imposed on the license granted thereto;
b. If the Licensed Financial Institution breaches any of the laws and statutes in force in
the UAE, or any of the regulations, rules, standards, instructions, and guidelines
issued by the Central Bank;
c. If the Licensed Financial Institution fails to take any measures or actions determined
or developed by the Central Bank;
d. If the Licensed Financial Institutio n ceases to perform one or more of the Licensed
Financial Activities for a period exceeding one year;
e. If the business or activities are suspended for a period exceeding one year;
f. If the Central Bank deems, at its own discretion, that full or partial withdrawal,
revocation, or suspension of the license would be necessary for achieving the
objectives and discharging functions thereof;
4. If the Licensed Financial Institution concer ned submits an application for total or
partial suspension or revocation of the license;
h. If the Licensed Financial Institution's liquidity or solvency is exposed to risk;
i. If the capital of the Licensed Financial Institution decreases the minimum capital required in accordance with the provisions of this Decree by Law, or the regulations,
rules, or standards issued by the Central Bank.
j. If the Licensed Financial Institut ion is merged into another financial institution;
k. If the Licensed Financial Institution is declared bankrupt;
l. If the Licensed Financial Institution's officers, employees, or representativ es refrain
from cooperating with Central Bank's officers, representatives, or inspectors, or from
providing required information, statements, documents, or records;
m. If the license of a foreign Licensed Financial Institution is revoked, or if the same is
put under liquidation at the country wherein the headquarters is located, or if the
businesses of branch, companies or Representative Offices thereof in the UAE is
terminated;
2. The Licensed Financial Institution shall be notified of the reasoned wit hdrawal,
revocation or suspension decision by virtue of an official notice to be sent within no
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 45
more than twenty (20) work days as of the date of making said decision. The notice shall
include the following:
a. Contents of the decision;
b. Reasons enta iling the decision;
c. Date of entry of the decision into force;
d. Advising the Licensed Financial Institution concerned of its right to file a grie vance
against the decision before Grievances and Appeals Committee in accordance with
the provisions of this Decree by Law.
3. After the Grievances and Appeals Committee decides on any grievance or appeal, if any,
or upon lapse of the grace period provid ed for under Clause (2) of this Article, the
decision made by the Central Bank shall be published in two local daily newspapers including one published in Arabic and the other to be published in English. The decision
shall be posted on the official website of the Central Bank and may be announced by any
other means if necessary.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (72)
Use of the Terms “Bank ” or “Masraf
1. The expressions "Bank" and "Masraf" or any other expression derived therefrom or
similar thereto in any language may not be us ed by entities other than Banks licensed in
accordance with the provisions of this Decree by Law in their business names,
advertisements, or in any manner which would mislead the public as to the nature of their businesses;
2. The following entities shall be excluded from to the provisions of Clause (1) of this
Article:
a. Foreign Monetary Authorities and Central Banks;
b. Any federation or association established for protection of Banks' interests; and
c. Any other institut ion exempted by the Board of Director.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 46
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (73)
Entry on the Register
1. The Central Bank shall create an electronic register called "Register of Licensed Financial
Institutions" whereon financial institutions licensed by the Central Banks shall be
entered. The register shall include all data pertaining to these institutions and all
modifications thereof. Rules and requirements for entry on said register shall be set by
virtue of a resolution by the Board of Directors. The resolution licensing the se
institutions along with any amendments thereto shall be published in the Official Gazette. This Register shall be published in the official website of the Central Bank.
2. A Licensed Financial Institution may not commence any Licensed Financial Activity
unless it is entered on the register.
3. Fees of licensing and entry on the register shall be deposited in a special account with
the Central Bank. The Board of Directors shall make a resolutio n organizing the
operation of the account, and setting the rules for withdrawing funds therefrom.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (74)
Legal Form
1. Banks shall have the form of public joint -stock companies, as authorized by the law or
decree establishing them, with the excep tion of branches of foreign banks operating in
the State and specialized banks with low risks determined in accordance with the conditions and rules set by the Board of Directors.
2. Other Financial Institutions may have the form of joint -stock companies or limited
liability companies, in accordance with the conditions and rules issued by the Board of
Directors.
3. Exchange Houses and financial intermediaries may be sole proprietorships or have any
other legal form, in accordance with the conditions and rules issued by the Board of Directors.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 47
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (75)
Minimum Capital Requirements
The Board of Directors shall formulate regulations concerning the minimum capital
requirement for Licensed Financial Institutions, and conditions and instances of capital
increase or reduction. The regulations shall provide for the risk -based capital requirements,
and the necessary actions to be taken in case of capital shortfall, in addition to the measures
taken by the Central Bank in this regard.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (76)
Shareholding and Ownership in Licensed Financial Institutions
1. Without prejudice to the financial and commercial activities restricted to U AE nationals
prescribed in any other law, the Board of Directors shall determine the conditions and
controls for holding shares in Banks incorporated in the UAE and their capital contributions therein. In all cases national shareholding in banks may not be less than
sixty percent (60%).
2. The BOB may specify the conditions and controls concerning percentage of citizens' and
foreigners' ownership of shares and capital contributions in Other Financial Institutions
incorporated in the UAE.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (77)
Amendment of the Memorandum and Articles of Association
1. Licensed Financial Institutions shall seek Central Bank's approval of the amendments
made to their memorandum or articles of association. Such amendments shall only take
effect after entry thereo f on the register.
2. The Central Bank shall decide on the application, and in case of rejection of entry
thereof, the matter shall be presented to the Board of Directors who shall make a final
decision thereon.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 48
Section Three
Provisions for Licensed Islamic Financial Institutions
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (78)
Scope of Activity
1. Licensed Financial Institutions performing all or part of their activities and carrying on
their businesses in accordance with the provisions of Islamic Sharia may p erform the
Licensed Financial Activities mentioned hereinabove in article (65), whether for their
own account or for the account of or in partnership with third parties, provided such activities and businesses are compliant with provisions of Islamic Sharia. The Board of
Directors shall develop regulations specifying the activities, conditions, rules, and
standards of operation of these institutions in line with the nature of the license granted
thereto.
2. Licensed Financial Institutions aforementioned i n Clause (1) of this Article, in respect of
their businesses and activities compliant with provisions of Islamic Sharia which are
performed for the interest of their customers rather than their own interest, shall be
exempted from:
a. Provisions of Claus e (1) of article (93) of this Decree by Law;
b. Provisions of Clause (2) of article (93) of this Decree by Law, provided that such
exemption does not contradict the provisions of local statutes in force in the relevant
emirate member of the Federation.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (79)
Internal Sharia Audit
1. Every Licensed Financial Institution performing all or part of its activities and carrying on its businesses in accordance with the provisions of Islamic Sharia shall form an
independent internal audit committee called "Internal Sharia Audit Committee"
comprising experts and specialists of Islamic financial and banking transactions. Said
committee shall provide Sharia supervision over and approval of all businesses,
activitie s, products, services, contracts, documents and covenants of the institution
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 49
concerned. The committee shall formulate necessary Sharia controls within the
framework of rules, principles and standards set and formulated by the HSA to ensure
their compliance with Islamic Sharia provisions. Consultations and opinions of said
committee shall be binding.
2. Internal Sharia Audit Committee shall be formed by the general meeting of the Licensed
Financial Institution concerned in accordance with the provisions of Commercial
Companies Law mentioned hereinabove. Names of nominated members of the Internal
Sharia Audit Committee shall be presented to the HSA for approval prior to presentation
of the same to the General Meeting and making a decision approving their app ointment.
3. Members of the Internal Sharia Audit Committee are not permitted to occupy any
executive position in the institution aforementioned in Clause (1) of this Article, or to
conduct any businesses falling outside the scope of work of the Committe e. They may
not be shareholders in said institution, and neither they nor any of their first -degree
relatives may have any interest therein.
4. In case that any disagreements about any legal issue arise among the members of
Internal Sharia Audit Committe e or between the Internal Sharia Audit Committee and
the board of directors of the institution concerned, the matter shall be referred to the
HSA which opinion thereon shall be final.
5. Every institution provided for in Clause (1) of this Article shall establish an internal
department or division, commensurate with the size of businesses and activities of the
institution concerned. Said department or division shall be responsible for Internal
Sharia Audit and for monitoring the compliance of the institut ion concerned with the
legal consultations "Fatwa" and opinions of the Internal Sharia Audit Committee. This
department or division shall report to the board of directors of the institution concerned.
Their staff may not have any powers or executive respon sibilities towards the
businesses, activities and contracts which they review or audit from Sharia perspective.
Said department or division shall be chaired by a Sharia Auditor to be appointed by the
board of directors of the institution concerned.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 50
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (80)
Internal Sharia Audit Committee's Report
1. Internal Sharia Audit Committee shall prepare an annual report to be presented at the
general meeting of the Licensed Financial Institution performing all or part of its
activities and businesses in accordance with Islamic Sharia. The report shall be prepared
using the form prepared by the HSA, and shall indicate the extent of compliance of
management of the institution concerned with the provisions of Islamic Sharia in terms
of all its activities, businesses, offered products, contracts concluded thereby, and
documentation used. Said report shall include the following:
b. A statement on the extent of independence of the Internal Sharia Audit Committee in
discharge of its function;
b. A statement on compliance of policies, accounting standards, financial products and
services, operations and activities in general, together with the memorandum,
articles of association, and financial statements of the relevant institution with the
provisions of Isla mic Sharia throughout the last fiscal year;
c. A statement on the compliance of distribution of profits, bearing of losses, costs, and
expenses among and by shareholders and investment account holders with the
Fatwas and opinions of the Internal Sharia A udit Committee; and
d. A statement on any other breaches to provisions of Islamic Sharia and to the controls
established by the HSA.
2. Internal Sharia Audit Committee shall submit its report to the HSA within no more than
two (2) months as of the end of the fiscal year in order for the HSA to express its opinion
thereon prior to holding the general meeting of the institution concerned.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (81)
Supervision by the State Audit Institution (SAI)
In case that a Licensed Financial Institution performing all or part of its businesses and
activities in accordance with Islamic Sharia is supervised by the State Audit Institution
pursuant to t he Re -organization of the State Audit Institution law aforementioned, the SAI
responsibilities shall be confined to post -auditing, and shall not interfere in the conduct of
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 51
business or in the policies of these institutions.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (82)
Contravention of Islamic Sharia Provisions
Whenever it is established that a financial institution performing all or part of its businesses
and activities in accordance with the provisions of Islamic Sharia does not comply with such
provisions, as per Fatwas and opinions o f the Internal Sharia Committee, and Fatwas and
opinions of the HSA, the Central Bank shall inform the institution concerned accordingly
after consulting with the HSA, and shall request the institution to adjust its status under
supervision of the Internal Sharia Audit Committee within thirty (30) business days as of the
date on which it is notified of the same. The Central Bank shall adopt the appropriate corrective measures and actions in case of failure of the institution concerned adjust its
status.
Section Four
Provisions on Undertaking Designated Tasks Entailing the Central Bank
Authorization
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (83)
Designated Tasks
1. The Board of Directors may issue regulations, rules, standards, conditions, and
instructions specifying Designated Tasks sub ject to Central Bank authorization, and
concerning the individuals who shall be required to obtain Central Bank authorization to undertake said tasks including requirements of fitness and properness, and requirements for exemption from certain standards or requirements;
2. Without prejudice to the provisions of Clause (1) of this Article, Designated Tasks subject
to Central Bank authorization shall include such functions carried out by board
members, chief executive officers, senior managers, executives, and Authorized
Individuals of Licensed Financial Institutions;
3. No one may undertake any of the Designated Tasks at a Licensed Financial Institution
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 52
unless the Central Bank's prior authorization is obtained;
4. Licensed Financial Institutions shall adopt and take all measures and actions to ensure
that no officer, employee, or any other individual representing them shall undertake any
of the Designated Tasks without prior authorization of the Central Bank;
5. Any person authorized pursuant to the provisions of this Article shall abide by limits of
powers vested therein under the authorization; and
6. No person shall introduce itself as an Authorized Peron unless he is so authorized by the
Central Bank.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (84)
Application for Authorization to Undertake Designated Tasks
1. A Licensed Financial Institution may submit an application to the Central Bank for
authorization of any individual to undertake any of the Designated Tasks or to
undertake additional Designated Tasks.
2. The Central Bank may require the applicant to provide all necessary information enabling it to decide on the application.
3. A Licensed Financial Institution shall notify the Central Bank of any material changes
concerning the requirement for granting authorization to undertake the Designated
Tasks.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (85)
Deciding on of Application for Authorization to Undertake Designa ted
Tasks or to add others
1. Application for authorization or extension of the scope of authorization shall be decided
on within no more than twenty (20) business days as of the date of meeting all
conditions and requirements for authorization. Lapse of said period without making a
decision on the application shall be considered an implicit rejection thereof.
2. The Board of Directors may reject an application for authorization or for addition of
other Designated Tasks to an Authorized Person if the Bo ard of Directors deems that
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 53
rejection thereof would serve public interest, or that the authorization conditions and
requirements are not fulfilled.
3. The applicant shall be notified of the rejection decision by way of an official notice within no more t han twenty (20) business days from date making said decision. The
notice shall include the following:
a. Content of the decision;
b. Reasons for the decision; and
c. A statement advising the applicant of its right to file a grievance against the rejection
decision with the Grievances and Appeals Committee pursuant to the provisions of
this Decree by Law.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (86)
Imposing Conditions and Restrictions on the Authori zation to Undertake
Designated Tasks
1. The Central Bank may decide to add conditions or restrictions to the Authorization to undertake Designated Tasks;
2. Prior to making the decision aforementioned in Clause (1) of this Article, the Central Bank may request the Licensed Financial Institution concerned to provide its notes on
the reasons of the decision within such period to be specified by the Central Bank;
3. The Licensed Financial Institution shall be notified of the decision by way of an official
notice within no more than twenty (20) business days from date making said decision.
The notice shall include the following:
a. Content of the decision;
b. Reasons for the decision; and
c. A statement advising the Licensed Finan cial Institution concerned of its right to file a
grievance against the decision with the Grievances and Appeals Committee pursuant
to the provisions of this Decree by Law.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 54
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (87)
Suspension, Withdrawal, or Revocation of an Authorization to Undertake
Designated Tasks
1. The Central Bank may suspend, withdraw, or revoke the authorization granted to an
individual undertaking Designated Tasks under an official notice in the following cases:
a. If the Authorized Individual ceases to meet or becomes in violation of one or more of
the fitness and properness criteria and other conditions or restrictions imposed on
the authorization to undertake Designated Tasks;
b. If the Authorized P erson violates any of the laws and regulations in force in the UAE,
or the regulations, rules, standards, or guidelines issued by the Central Bank;
c. If the Authorized Person fails to adopt or take any measures or actions provided for
by the Central Bank;
d. If the Central Bank deems that full or partial withdrawal, revocation, or suspension of
the authorization helps in achieving objectives and discharging the functions thereof;
e. If the Authorized Person is declared bankrupt; or
f. If the Authorized Person refuses to cooperate with the officials, representatives, or
inspectors of the Central Bank, or refrains from providing required information or
records.
2. In all cases, the authorization shall be revoked in case that the License d Financial
Institution where the Authorized Person works files a revocation application or in case of
termination of the Authorized Person's relationship with said institution.
3. The Licensed Financial Institution where the Authorized Person works shall be notified
of the decision to withdraw, revoke, or suspend the authorization within no more than twenty (20) business days from date of making a decision to this effect. Such notice shall
include the following:
a. Content of the decision;
b. Reasons for the decision;
c. Date of entry of the decision into force; and
d. A statement advising the Licensed Financial Institution of its right to file a griev ance
against the decision with the Grievances and Appeals Committee pursuant to the
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 55
provisions of this Decree by Law.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (88)
Prohibition of Undertaking Designated Tasks at Licensed Financial
Institutions
1. The Central Bank may prohibit any individual from performing or undertaking
Designated Tasks related to Licensed Financial Activities if the Central Bank considers
the individual concerned not fit and proper to perform or undertake such Designated
Tasks.
2. The Licensed Financial Institution concerned shall be notified of the decision to prohibit the individual concerned from performing or undertaking Designated Tasks therein by
virtue of an official notice within no more than twenty (20) business days as of date of
making said decision. Such notice shall include the following:
a. Content of the decision;
b. Reasons for the decision;
c. Date of entry of the decision into force; and
d. A statement advising the Licensed Institu tion and the person concerned of their right
to file a grievance against the decision with the Grievances and Appeals Committee
pursuant to the provisions of this Decree by Law.
Chapter Three
Responsibilities of Licensed Deposit -Taking Financial Institut ions
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (89)
Compliance with the Central Bank's Instructions
1. Licensed Deposit -taking Financial Institutions shall comply with all rules, regulations,
standards, circulars, directives and instructions issued by the Central Bank in connection
with lending or other matters deemed necessary for achieving the Central Bank
objectives.
2. The Central Bank may adopt and take all necessary measures and actions, and may use
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 56
all means which would ensure proper conduct of business at Licensed Deposit -Taking
Financial Institutions. Such instructions, directives, measures, procedures, or means may
either be g eneral for all Licensed Financial Institutions, or be specific for certain Licensed
Financial Institutions.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (90)
Risk Bureau at the Central Bank
The Risk Bureau at the Central Bank shall collect, exchange and process of credit
information obtaine d from Licensed Financial Institutions or any other party as deemed
necessary by the Central Bank. This bureau shall operate in accordance with the conditions and controls determined by the Board of Directors.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (91)
Protection of Depositors' Intere sts
1. Each Licensed Deposit -Taking Financial Institution shall prepare a quarterly statement,
in the form specified by the Central Bank, indicating all the credit and financing facilities
granted by said Institutions to:
a. Any member of its board of di rectors;
b. Any establishment or company where the institution concerned is a partner, director,
agent, guarantor or warrantor;
c. Any company where any board member of the institution concerned is a director or an agent;
d. Any company where an employee, expert or representative of the institution
concerned is a director, executive officer, agent guarantor or warrantor;
e. Any Person holding a controlling interest in the institution concerned, or in a
company related theret o as per provisions of article (95) of this Decree by Law;
f. Any subsidiary of the group owning the institution concerned;
g. Any company related to the institution concerned as per the controls set by the
board of directors;
h. Any person related directly or indirectly to any board member in the institution
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 57
concerned as per the controls set by the board of directors; and
i. Any other Person determined by the board of directors as per its controls.
2. The Central Bank shall be provided with copy of the statement aforementioned in Clause
(1) of this Article within ten (10) days as of end of each quarter of the fiscal year, or as of
the date of request made by the Central Bank to this effect.
3. If it is shown from reviewing th e statement aforementioned in Clause (1) of this Article
that any of the credit or financing facilities granted by the Licensed Financial Institution, or that any exposure of a particular person may harm the interests of depositors of the
Licensed Financial Institution concerned, the Central Bank may take one or more of the
actions listed below:
a. Require the institution concerned to allocate provisions for these facilities, or to reduce its exposure to a particular person for such period and pursuant to such
mechanism determined by the Central Bank; and
b. Prohibit the institution concerned from providing further credit facilities to the person concerned, or impose certain restrictions on facilities granted to the person
concerned, as deemed appropriat e.
Chapter Four
Prohibitions
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (92)
Prohibition of Conducting Specific Transactions
1. The Central Bank may prohibit Licensed Financial Institutions from conducting all or part
of the following:
a. Dealing in specific assets, investments, or monetary and financial instruments;
b. Making certain dealings, or conduct specific transactions or commercial businesses; or
c. Dealing with specific persons.
2. The Board of Directors may issue rules, regulations and standards concerning the
transactions and operations aforementioned in Clause (1) of this Article, and may adopt
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 58
and take necessary measures and actions, as deemed appropriate.
3. The Licensed Financial Institution concerned shall be notified of Central Bank's decision
by virtue of an official notice within a no more twenty (20) business days as of the date
of making said decision. The notice shall include the following:
a. Content of the decision;
b. Reasons for the decision;
c. Date of entry of the decision into force; and
d. A statement advising the Licensed Financial Institution of its right to file a grievance
against the decision with the Grievances and Appeals Committee pursuant to the
provisions of this Decree by Law.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (93)
Prohibition of Conducting Non -Banking Businesses
Banks may not conduct any non -banking businesses, including the following in particular:
1. Performing any commercial or industrial activities for its o wn account, or acquiring,
owning or trading in goods, unless acquisition or ownership of such goods is made by
way of settlement of debts due by third parties thereto, in which case the goods must be
disposed of within the period specified by the Central B ank.
2. Buying properties for its own account, except in the following cases:
a. Properties whose value does not exceed the percentage set by the Board of Directors of the total capital and reserves thereof.
b. Properties owned by virtue of direct settlement of debts exceeding the percentage aforementioned in paragraph (a) of this Clause, and in such case, the Central Bank
shall sell these properties within three (3) years. This period may be extended by an
appro val from the Central Bank based on the guidelines set by the Board of
Directors.
3. Buying, acquiring or dealing in shares of the Bank in excess of the ratios set by the Board
of Directors, unless the excess has been transferred thereto in settlement of a debt, in
which case, the Bank must sell the shares in excess of the said ratio, within two (2) years from date of acquisition thereof.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 59
4. Buying shares of commercial companies, except within the percentage of the Bank's own
funds set by the Board of Di rectors, unless said shares are acquired in settlement of a
debt, in which case the excess must be sold within two (2) years from date of acquisition.
5. The Board of Directors shall issue regulations for Banks designating the maximum limits for buying and dealing in securities issued by any foreign government or entities
affiliated thereto, or by any foreign commercial company. These maximum limits shall
not apply to securities issued or guaranteed by the Public Sector.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (94)
Restriction on Granting Credit Facilities
1. Notwithstanding the provisions of article (153) of the Commercial Companies Law referred to, Licensed Financial Institutions may grant credit facilities to their board
members or employees and their relatives as determined by the Board of Directors.
2. The Board of Directors shall determine conditions and controls of credit facilities which
may be granted to the categories referred to in Clause (1) of this Article.
3. No Licensed deposit -taking Financial In stitution may grant credit facilities to its
customers against their shares therein.
4. The Board of Directors shall issue regulations for the licensed deposit -taking financial
institutions regarding the maximum limits of credit facilities granted for th e purpose of
constructing residential or commercial buildings.
Chapter Five
Control and Supervision over Licensed Financial Institutions
Section One
Control and Supervision Provisions
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (95)
Provisions Concerning Holders of Controlling Interest
1. No person may hold or increase a controlling interest in any Licensed Financial
Institution, nor exercise any powers which would make it a holder of controlling interest,
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 60
at the discretion of the Central Bank, unless the Central Bank's prior consent is obtained.
2. Licensed Financial Institution may not allow any person to hold a controlling interest
therein unless said institution obtains the Central Bank's prior consent.
3. The Board of Directors shall issue regulations, rules, standards, conditions, instructions,
and restrictions concerning controlling interests and instances of control.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (96)
Opening Bra nches inside the UAE and in Other Jurisdictions
Licensed Financial Institution may not open any branch or representative office thereof inside the UAE or in other jurisdictions, and may not relocate or closedown any existing
branch without Central Bank's p rior approval.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (97)
Providing Information and Reports to the Central Bank
1. Licensed Financial Institutions shall:
a. Provide the Central Bank with reports, information, statements, lists and other
documents determined and deemed necessary by the Central Bank for achieving the objectives and discharge of functions thereof;
b. Appoint qualified employees who shall be assigned to prepare the reports required by the Central Bank; and
c. Adopt appropriate measures to ensure that the persons assigned in accordance with the paragraph (b) of this Clause obtain the information required for preparation of the reports.
2. Licensed Financial Institutions may not ins truct, direct or agree with any of its directors,
officers, employees, agents representing it, or auditors of its accounts to refuse providing
the Central Bank with the requirements referred to in Clause (1) of this Article.
a. The Central Bank shall set rules and guidelines for regular compilation of information
from Licensed Financial Institutions.
4. The Central Bank shall specify the nature, forms and grace periods granted for submission of information. Licensed Financial I nstitutions shall provide such
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 61
information in accordance with the instructions issued by the Central Bank in this
regard.
5. The provisions of this Article shall apply to branches of foreign Licensed Financial Institutions operating in the UAE.
6. The Board of Directors shall set the regulations, rules, standards, and instructions
regarding provision of requirements referred to in this Article, and may adopt and take all measures and actions deemed appropriate against the institution concerned or any of
its employees aforementioned in Para. (b) of Clause (1) of this Article.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (98)
Reporting Violations
1. Licensed Financial Institutions, their legal representatives, compliance officers, and
auditors shall be responsible for immediate reporting of any of the following to the
Central Bank
a. Occurrence of any material or fundamental developments which would impact the institution's activities, structure, or ove rall position;
b. Occurrence of any violation to the provisions of this Decree by Law or the
resolutions, regulations, or instructions issued in implementation thereof.
2. The persons aforementioned in Clause (1) of this Article shall not be considered to have
breached any of the obligations imposed thereon in case of filing a report as per provisions of this article or providing information or opinion to the Central Bank if they
are acting in good faith. The Licensed Financial Institution may not dismiss any of the
persons aforementioned in Clause (1) of this Article without the approval of the Central
Bank.
3. The Central Bank shall create a mechanism for reporting any violations aforementioned
in Clause (1) of this Article.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 62
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (99)
Submission of Information Required by the Central Bank on Financial
Position
1. Each Licensed Financial Institution shall provide the Central Bank with the statements
and reports pertaining to its financial position.
2. Each Licensed Financial Institut ion shall provide the Central Bank, with the following
within a no more than three (3) months as of the end of the fiscal year, or within such
period as the Central Bank may specify:
a. Copy of the audited balance sheet showing use of assets and liabilit ies arising from
operations of the institution concerned.
b. Copy of the audited profit and loss statement accompanied by any relevant notes.
c. Copy of the report of auditors concerning the institution concerned.
d. Copy of report of the board of directors of the institution concerned.
3. The Central Bank may also request the Licensed Financial Institution to provide the
following:
a. Copy of the interim profit and loss statement on a biannual basis, or for other periods
specified by the Central Bank.
b. Any other additional information, reports, or statements deemed necessary.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (100)
Merger and Acquisition
1. Licensed Financial Institution may not merge with or acquire any other institution,
regardless of the nature of its activity, nor transfer any part of its liabilities to another
Person unless the Central Bank's prior approval is obtained.
2. Without prejudice to the statutes in force in the UAE concerning merger and acquisition,
the Board of Directors may issue all regulations, rules, standards, conditions,
instructions, and directives pertaining to merger and acquisition.
3. Licensed Financial Institut ion shall be notified of Central Bank's decision rejecting the
proposed merger or acquisition by virtue of a notice within no more than twenty (20)
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 63
business days as of the date of making said decision. The notice shall include the
following:
a. Content of the decision.
b. Reasons for the decision.
c. Date of entry of the decision into force.
d. A statement advising the Licensed Financial Institution concerned of its right to file a
grievance against the decision with the Grieva nces and Appeals Committee, in
accordance with the provisions of this Decree by Law.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (101)
Cessation of Business
No Licensed Financial Institution may cease to operate fully or partially or cease to perform
all or part of its Licensed Financial A ctivities unless approval of the majority shareholders
thereof and approval of the Central Bank is obtained.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (102)
Authority to Issue Instructions and Directives for Prudential Purposes
1. For the purposes of prudential regulation, the Board of Directors may issue necessary
instructions and directives for one or more Licensed Financial Institutions falling within a
specific category concerning:
a. Compliance with Central Bank instructions and directives relating to prudential ratios determined by the Board of Directors concerning capital adequacy, liquidity
ratio or any other purposes.
b. Adherence to provisions, or processing of specific assets.
c. Adherence to limits of large exposures.
d. Adherence to limits of exposures to related parties.
e. Satisfaction of any additional requirements pertaining to reporting.
2. The Central Bank may take any actions in addition to those aforementioned in Clause (1)
of this Article.
3. The Central Bank may instruct any subsidiary of a Licensed Financial Institution to take
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 64
particular actions, or refrain from performing certain activities in case that:
a. The Central Bank is the consolidated regulatory authority over the institution
referred to in this Clause.
b. The Central Bank deems that such instruction is necessary for the exercise of
effective and consolidated prudential regulation of the institution referred to in this
Clause.
4. The instructions and directives aforementioned in Clause (3) of this Article may include
the following:
a. Obligating subsidiary of the Licensed Financial Institution concerned to suspend
provision of particular services or to abstain from performance of certain businesses
or activities including closure of any of its offices or branches outside the UAE if such
services, businesses or activities would expose the Licensed Financial Institution
concerned to additional risk, or to risks that may not be manage d effectively and
appropriately.
b. Obligating subsidiary of the Licensed Financial Institution concerned to take all
necessary actions to remove any impediments which would hinder effective
consolidated regulation.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (103)
Limits of Operations
The Central Bank may set limits whereto Licensed Deposit -taking Financial Institutions shall
adhere in their operations including the following:
1. The maximum of total discount operations or loans and advances the Licensed Financial
Institution is allow ed to make as of a certain date.
2. The maximum amount a Licensed Financial Institution may lend to a single person in
proportion to said person's own funds.
3. Any other limits the Central Bank may set.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 65
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (104)
Governance of Licensed Financial Institutions
1. The Central Bank shall formulate a general framework for governance of Licensed
Financial Institutions, and shall set rules and regulations organizing the works of their
boards of directors along with the requirements to be satisfied by nominees for
membership of their boards, and the requirements for appointment of their senior
officers; provided that Licensed Financial Institutions listed in the UAE's capital markets
shall adhere to the minimum requirements of corporate governance set b y the
regulatory authority concerned.
2. Licensed Financial Institutions must obtain Central Bank's prior approval of appointment
or nomination of any board member, renewal of board membership, an d appointment
senior staff, or renewal of the employment contract thereof.
3. The Board of Directors, as deemed necessary for the public interest, may reject appointment, nomination, or renewal of membership of any person in board of directors
of the Lic ensed Financial Institution, and may also reject appointment or renewal of the
employment contract of any of the senior staff of said institution.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (105)
Rule Book
The Central Bank shall prepare an electronic Rule Book containing all rules, regulations,
standards, resolutions, and circulars issued thereby pursuant to the provisions of this Decree
by Law. Said Rule Book shall be posted and updated regularly on the Central Bank's website.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (106)
Retroactive Effect of Central Bank Regulations and Resolutions
Regulations, resolutions, or instructions issued by the Central Bank pursuant to the provisions of this Decree Law shall not have a retroactive effect, and same shall not prevent
implementation of agreements between Licensed Financial Institutions and their customers
concluded prior to issuance of said regulations, resolutions or instructions. The Central Bank
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 66
shall set the grace periods necessary to enable said institutions to adjust their stat uses in
accordance with the provisions of this Decree by Law.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (107)
Inspection
1. The Central Bank may, at any time as, deemed necessary and appropriate, send any of its
employees or any third party authorized to act on its behalf to Licensed F inancial
Institutions, the companies owned thereby, or their subsidiaries to ensure soundness of their financial positions, and their compliance with the provisions of this Decree by Law, the regulations and resolutions issued in implementation thereof, an d with any laws and
regulations in force in the UAE.
2. In case of inspecting companies owned by Licensed Financial Institutions and their
subsidiaries which are governed by Regulatory Authorities inside the UAE or in other
jurisdictions, the Central Ban k shall coordinate with the regulatory authority concerned
in this regard.
3. The Central Bank, in coordination with the entities concerned in the UAE, may inspect premises of any person suspected of performing any of the financial activities referred to
in article (65) of this Decree by Law without a license. In this respect, the Central Bank
may obligate the suspected person to provide all information, documents, and records
relating to the unlicensed Financial Activities, and may seize the same.
4. Licensed Financial Institutions, the companies owned thereby and their subsidiaries
shall provide the employees aforementioned in Clause (1) of this Article with all
information, records, books, accounts, documents and statements pertaining to the
matter su bject of inspection, along with any information he may request, on timely basis.
5. Within the framework of the inspection, the Central Bank employees may order any
person to appear on the time and place they may determine to provide them with information, data, documents, or records relating to the inspection process.
6. The Board of D irectors may issue regulations, rules, standards, directives and
instructions concerning the mechanisms and procedures for inspecting Licensed Financial Institutions.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 67
7. The Central Bank may adopt and take all measures and actions as deemed appropriate
for achieving objectives and discharging functions thereof pursuant to the provisions of
this Decree by Law, and in case of detection of any violation of the provisions of this Decree by Law, or the regulations and resolutions issued in implementation there of, the
Central Bank may, in particular:
a. Impose restrictions on certain transactions or activities performed by the Licensed
Financial Institution concerned.
b. Request the Licensed Financial Institution concerned to take necessary actions to rectif y the situation immediately.
c. Appoint a specialized expert or a qualified Central Bank employee to provide advice
to the Licensed Financial Institution concerned, or to provide supervision over some
of its operations for such period to be specified by the Central Bank. In this respect,
the Licensed Financial Institution concerned shall bear remunerations of such
appointee if it is an expert from outside the Central Bank.
d. Take or adopt any other action or measure, or impose any penalties as deemed
appropriate.
8. Licensed Financial Institutions shall bear all costs of inspection and investigations
entrusted to any third party by the Central Bank in case of violation by the said
institution of the provisions of this Decree by Law, and the regulation and resolutions issued in implementation thereof.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (108)
Inspection of Entities Affiliated to National Licensed Financial Institution
Operating in Other Jurisdictions
In cooperation and coordination with the regulatory authorities concerned in other
jurisdictions, the Central Bank may delegate one or more inspectors or experts to inspect
entities affiliated to national Licensed Financial Institution operating in other ju risdictions.
The inspection shall include entities affiliated to national Licensed Financial Institution
operating in Financial Free Zones, in cooperation and coordination with the regulatory
authority concerned in the Financial Free Zones.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 68
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (109)
Expert's Report
The Central Bank may assign an expert or a person qualified and specialized in Licensed
Financial Activities to provide it with a report on a certain matter pertaining to direct and
indirect businesses and activities of a certain Licensed F inancial Institution as specified by
the Central Bank. This assignment shall be made in accordance with the conditions and procedures established by the Central Bank at the expense of the entities referred to in this
Article.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (110)
Judicial Offic er Capacity
Judicial officer capacity shall be conferred upon the Central Bank staff to be appointed by
virtue of a resolution by the Minister of Justice in coordination with the Governor and they
shall be responsible for establishing acts committed in vio lation to the provisions of this
Decree by Law.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (111)
Requesting Intervention in Lawsuits and Judicial Proceedings and
Notification of Investigations
1. Subject to the provisions of Civil Procedure Law, the Central Bank may request to
intervene in any lawsuit filed with judicial authorities to which a Licensed Financial
Institution is party.
2. Law enforcement authorities and other authorities concerned shall notify the Central Bank of any investigations or proceedings initiated against License d Financial
Institutions. The Central Bank may provide said authorities with any clarifications,
statements, or information as deemed appropriate in this regard.
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 69
Section Two
Financial Accounts
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (112)
Licensed Financial Institution Fiscal Year
The fiscal year of a Licensed Financial Institution shall commence on the first day of January
and shall end on the thirty first of December every year except for the first fiscal year, which
shall begin on the date of registration thereof and shall end by the end of the following fiscal
year.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (113)
Licensed Financial Institutions Accounts
1. Branches of foreign Licensed Financial Institutions shall maintain separate accounts for
their total operations in the UAE, including the balance sheet and profit- loss account.
2. Branches and departments affiliated to a local or foreign Licensed Financial Institution
operating inside the UAE shall, for the purposes of bookkeeping, constitute one financial
institution.
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finance and banking | Federal Decree by Law No. (14) of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities | Article (114)
Licensed Financial Institutions Auditors
1. Each Licensed Financial Institution shall, every year, appoint one or more auditors
approved by the Central Bank for auditing its accounts. Should the Licensed Financial
Institution concerned fail to appoint an auditor, the Central Bank shall appoint and
determine the remuneration of an auditor for the institution concerned which shall bear such remuneration.
2. Auditors' tasks shall include preparation of a report on the balance sheet and the profit and loss accounts for the shareholders, provided that said report shall state whether the
annual balance sheet and profit and loss accounts are true and acceptable, and whether the Licensed Financial Institution concerned has provided them with all the information and clarifications required for performance of their mission. The Licensed Financial
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 70
Institution concerned shall provide the Central Bank with a copy of the auditors' report
accompanied by a copy of the balance sheet and the profit and loss account at leas t
twenty (20) business days before convening the General Meeting.
3. The General Meeting of a Licensed Financial Institution may not be convened prior to receipt of Central Bank's notes on the report. Within ten (10) business days as of the date
of recei pt of the report aforementioned in Clause (2) of this Article, The Central Bank
may make a decision not to approve the dividends proposed for distribution to
shareholders due to any shortfall in provisions, decline in the capital adequacy ratio
below the m inimum required ratio, or due to any reservation stated in the auditors'
report or any reservation of the Central Bank, which would impact distributable
dividends.
4. The auditors' report, together with the report of the board of directors of the License d
Financial Institution shall be read to the shareholders at the Annual General Meeting if
the institution concerned is incorporated in the UAE. Three (3) copies of each report shall be provided by the institution to the Central Bank within twenty (20) bus iness days as of
the date of holding the General Meeting. For Licensed Financial Institution incorporated in another jurisdiction, a copy of the auditors' report shall be forwarded to its head office,
and three (3) copies thereof shall be submitted to the Central Bank within twenty (20)
business days from date of issuance of the report.
5. The auditors may not be members of the board of directors of the Licensed Financial
Institution for which they are appointed to audit its accounts. They may not be
employees thereof or provide consulting services thereto.
6. A Licensed Financial Institution shall not grant credit facilities of whatever nature to the
auditors of its accounts. An auditor approved by the Central Bank may not commence its
tasks at a Licensed Financial Institution unless any obligations it may have towards such
institution are settled.
7. The auditors shall be r esponsible for the contents of their reports on the financial
statements of the Licensed Financial Institution concerned. In case of their failure to
perform the tasks entrusted thereto properly, or in case they violate the provisions of this Decree by Law , and the regulations and decisions issued in implementation thereof, the
Federal Decree- Law No. (14) of 2018 Concerning the Central Bank and the Regulation of Financial Institutions
and Activities 71
Central Bank may take any necessary measures or procedures, in collaboration and
coordination with the authorities concerned in the UAE, to deregister the auditors.
Further, the Cent ral Bank may, at its own discretion, take any administrative or legal
actions against the negligent or violating auditors.
8. The Central Bank may require auditors of a Licensed Financial Institution and the
companies owned thereby or subsidiaries thereo f to submit a report, at the expense of
the Licensed Financial Institution concerned, on their compliance with the provisions of
this Decree by Law and the regulations issued in implementation thereof.
9. The Board of Directors shall issue regulations an d create a register of approved auditors
who are authorized to audit the accounts of Licensed Financial Institutions.
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