1. What are the sources of payments law in your jurisdiction?
The sources of payments law in the UAE depend on whether the payment service is governed by the laws of the United Arab Emirates (the "UAE"), or by the laws of distinct jurisdictions such as the Dubai International Financial Centre (the "DIFC") or the Abu Dhabi Global Market (the "ADGM") (the "Financial Free Zones"), all of which have their own payment laws.
The Regulatory Framework for Stored Values and Electronic Payment Systems 2017 (the "2017 Regulations") governs the provision of payment services subject to the jurisdiction of the UAE.
The 2017 Regulations was issued by the UAE central bank pursuant to the authority granted to it under Union Law No. 10 of 1980 concerning the central bank, the monetary system and organization of banking.
These regulations set out the requirements imposed upon four main types of payment services providers:
- Retail payment services provider: Authorized commercial banks and other licensed payment services providers offering retail, government, and peer-to-peer digital payment services as well as money remittances;
- Micropayment payment services provider: Payment services providers offering micropayments solution facilitating digital payments targeting the unbanked and underbanked segments in the UAE;
- Government payment services provider: Federal and local government statutory bodies offering government digital payment services; and
- Non-issuing payment services provider: Non-deposit taking and non-issuing institutions that offer retail, government, and peer-to-peer digital payment services.
These regulations exclude from their scope technical service providers, defined as entities facilitating the provision of payment services to payment services providers, whilst excluded at all times from possession of funds (or transference thereof) ("Technical Service Providers"). A payment gateway operator could fall under this category.
The Dubai Financial Services Authority (the "DFSA") rulebook (the "DFSA Rulebook") governs the provision of payment services subject to the jurisdiction of the DIFC. The DFSA is the financial regulatory authority of the DIFC.
Section 2.6 of the DFSA Rulebook (General Module) defines the provision of money services as "providing currency exchange or money transmission". Money transmission is defined as "selling or issuing payment instruments, selling or issuing stored value, or receiving money or monetary value for transmission, including electronic transmission, to a location within or outside the DIFC".
Despite inclusion as a financial service, at the date of writing, no DFSA regulations exist specifically addressing requirements to establish a money transmission business. We are aware that the DFSA is currently working on such regulation which should be published in the near future.
The Financial Services and Markets Regulations 2015, as amended (the "FSMR 2015"), governs the provision of payment services subject to the jurisdiction of the ADGM. Further information regarding requirements for payment services providers in the ADGM can also be found under the Financial Services Regulatory Authority (the "FSRA") rulebook (the "FSRA Rulebook"). The FSRA is the financial regulatory authority of the ADGM.
The FSMR 2015 and FSRA Rulebook set out requirements for the provision of financial activities in the ADGM including dealing in investments, insurance, accepting deposits, credit, operating trading facilities, managing assets, and providing money services.
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