UAE Central Bank issues regulations to govern lenders' outsourcing activities
Banks in the UAE should obtain approval from the regulator before outsourcing any activity, according to the new rule
The Central Bank of the UAE issued new regulations on Tuesday to govern the activities that are outsourced by local lenders.
The regulations will ensure that banks are appropriately managing risk when outsourcing certain functions. Lenders in the UAE should obtain a notice of no-objection from the regulator before outsourcing any activity, the central bank said.
"We are confident that this regulation will amplify the ability of banks operating within the UAE to mitigate potential threats from outsourcing activities, ultimately ensuring the continued security of their institutions and consumers,” Khaled Balama, governor of the Central Bank of the UAE, said.
Banks in the UAE have outsourced some activities including security, marketing and sales to third parties. The latest regulations are being rolled out as lenders strive to increasingly digitise their operations and cut back on front-end staff numbers.
A bank's outsourcing arrangements should not affect its ability "to fulfil its obligations to its consumers and to CBUAE, nor impede on CBUAE’s supervisory provisions", the regulator said.
Customers' data must also not be shared outside the UAE without their approval, or that of the central bank.
The regulations will come into effect a month after their publication in the Official Gazette.
The Central Bank of the UAE has introduced various regulations over the last few months to protect consumers and detect misconduct. Earlier this week, the regulator set up a whistleblowing portal to allow employees and other third parties to report concerns about misconduct.
The portal is an encrypted channel that will allow users to anonymously raise any concerns "related to misconduct or policy violations" by any of the central bank's own employees, contractors or other representatives.
The Central Bank has also issued various anti-money laundering regulations and has been proactively penalising companies breaching its rules.
In April, the regulator fined an exchange house about Dh500,000 ($136,000) for failing to achieve appropriate levels of compliance with its anti-money laundering regulations.
Published: June 8, 2021 06:00 PM