The Insights of a Regulatory Authority

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There are various leading financial services regulators across the world – from Europe to Asia to Latin America and the Middle East and Africa (MEA). The FinTech Times looks at one, the Dubai Financial Services Authority (DFSA), and speaks to their CEO Bryan Stirewalt.

Bryan Stirewalt is the CEO at Dubai Financial Services Authority (DFSA)

Bryan Stirewalt is the CEO at Dubai Financial Services Authority (DFSA)

Bryan Stirewalt is the CEO at Dubai Financial Services Authority (DFSA) IMAGE SOURCE PROVIDED

Bryan Stirewalt is the Chief Executive of the DFSA. Appointed in October 2018 after nearly eight years as the Managing Director of the DFSA’s Supervision division, Bryan steers the work of the DFSA, further developing its capability as a robust regulator delivering world-class financial regulation in the Dubai International Financial Centre (DIFC).

The DFSA is the independent regulator of financial services conducted in and from the DIFC, a purpose-built financial free zone in Dubai. The DFSA’s regulatory mandate covers asset management, banking and credit services, securities, collective investment funds, custody and trust services, commodities futures trading, Islamic finance, insurance, crowdfunding platforms, money services, an international equities exchange and an international commodities derivatives exchange. In addition to regulating financial and ancillary services, the DFSA is responsible for administering Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) legislation that applies to regulated firms and Designated Non-Financial Businesses and Professions in the DIFC.

Navigating the regulatory landscape in 2020

Dubai is recognised as one of the world's leading financial hubs

Dubai is recognised as one of the world's leading financial hubs

Dubai is recognised as one of the world’s leading financial hubs. Pictured is the Dubai International Financial Centre (DIFC) IMAGE SOURCE GETTY

Over the course of the past several years, technology has been a significant and progressive disruptive force in all industries, but particularly in the financial services industry. This year, businesses around the world have undergone accelerated digital transformations, as a result of the pandemic. Prior years of technology investments by the financial services industry have paid off during this difficult period. Some of the key lessons the financial and business world have learned from this episode are the importance of agility and operational resilience.

As regulators, we have had to make significant and necessary changes to ensure that we continue to be effective in meeting our regulatory objectives. We moved quickly to understand the impact of current events on financial institutions, adjusting certain regulatory requirements in order to enable financial institutions to utilise new technologies. We have balanced this with requiring the same institutions to ensure that new technologies maintain appropriate protection for clients and markets. As always, our focus has been to safeguard the interest of market participants, increase transparency and efficiency, maintain financial stability and avoid unnecessary regulatory burden for businesses. While digital financial services are clearly the future of finance, consumer protection, financial literacy and cyber awareness remain top priorities for the DFSA. The financial sector thrives only when consumers have sound awareness of their investment choices and have strong confidence in their account protections.

Related to cyber risks, in January, we launched our Cyber Threat Intelligence Platform (DFSA TIP). It is the first regulator-led platform of its kind in the region and has created an information sharing system for firms in the Dubai International Financial Centre (DIFC) through a public-private partnership. Since its launch, over 150 organisations have registered to use the platform and 1.6 million attributes for 56,806 cyber threats are now posted to it. We continue to grow the platform and are looking to extend it to the wider financial services community in the region.

Supporting the development of technology and encouraging innovation within the DIFC forms an important part of our focus under our “Future of Finance” strategy. Fostering a culture of innovation through our Innovation Testing Licence (ITL) Programme enables us to diversify the ecosystem of the DIFC and the types of financial services offered. Cooperation across borders is equally as important. As founding members of the Global Financial Innovation Network (GFIN), the global regulatory sandbox initiative which was launched by the UK’s FCA in 2018, we participate in setting the strategic direction of the initiative and we are involved across various work-streams, including cross-border testing, where we are currently testing with a number of firms and other regulators across multiple jurisdictions.

Preparing the DFSA and wider DIFC for the future

Earlier this year, the DFSA introduced a comprehensive Money Services Regime, providing a regulatory framework for a wide range of mobile payment activities, as well as other technology-enabled payments and a wide range of innovative business ideas. The introduction of these activities was to meet demands by providers, many of whom are wanting to service those who did not have cost effective or reliable access to payment services.

Access to capital is an essential part of the DIFC and Dubai innovation ecosystem and venture capital can play a key part in that. The DFSA is introducing a regime later this year tailored to the specific features and needs of the venture capital sector. When the new regime is in place, the DFSA will process applications to set up fund managers and funds swiftly, using well-tested processes involving online application forms, while enhancing these through the greater use of technology to automate processing wherever possible.

The DFSA is also working to create a framework for Digital Assets, which we expect to consult on later this year or early next year. This framework will focus on the regulation of Security Tokens, with a particular focus on Offers, Listing and Trading, Settlement and Custody.  The framework will also address the full range of risks associated with such activities, including risks relating to money laundering and financial crime, consumer protection, and technology governance.

The DFSA works closely with the DIFC Authority, its regulatory counterparts in the UAE and other Dubai government bodies such as the Dubai Future Foundation and the Dubai Electronic Security Centre to introduce and implement future-focused strategies in the DIFC. In January 2019, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai approved ‘DIFC 2.0’ which will see the DIFC triple in size. DIFC 2.0 will play a significant role in enabling innovation and driving Dubai’s economy forward and in line with Sheikh Mohammed’s Fifty-Year Charter.

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