The effective implementation of administrative and financial sanctions is necessary for the proper functioning of the enforcement of the Decretal Federal Law No. (14) of 2018 Regarding the Central Bank & Organization of Financial Institutions and Activities as amended (the Central Bank Law).

The Central Bank Law set out the administrative and financial sanctions to be applied to Licensed Financial tostitutions. Those sanctions apply to all violations under the Central Bank Law and require a reasoned assessment of the appropriate sanction and the level at which it is to be applied٠ However, some violations, by their very nature, do not require such an assessment, as the responsibility on the Licensed Financial Institution to comply with the legal requirement does not necessitate any excuse or explanation, except in case of an event of force majeure. Such violations are strict liability violations.

Strict liability is imposed on elements of a variety of regulatory obligations. Typically, such obligations relate to routine, administrative activities that have to be performed often, if not at appointed periods of time. The repetitive nature of the activity does not however belie its importance on the regulatory obligation of the Licensed Financial Iostitutions.

The objective of this Regulation is to establish a regime for imposing financial sanctions for strict liability violations.
Once a violation has been committed, the appropriate financial sanction will be applied immediately and the Licensed Financial Institution will be informed accordingly. No further investigation, review, representations or appeal process will be applied.

This Regulation applies to all Licensed Financial institutions. It is issued in accordance with Article (137) of the Central Bank Law.

This following are referred to in this Regulation:

• Decretal Federal Law No. (14) of 2018 Regarding the Central Bank & Organization of Financial Institutions and Activities dated 30 September 2018, as amended;
   
• Regulation No. 29/2011 Regarding Bank Loans & Other Services Offered to Individual Customers dated 23 February 2011;
   
• The Standards for the Regulations Regarding Licensing and Monitoring of Exchange Business, dated February 2018 (The Standards);
   
• The Central Bank Notice No. CBUAE/BSD/N/2018/759 dated 23 May 2018;
   
• The Central Bank Document Code -UAEFTS-AUX804- Version 2017-001;
   
• The Central Bank Notice No. CBUAE/BSD/N/2018/758 dated 23 May 2018;
   
• The Central Bank Document Code - U.TS-AUX700- 2018-001-01 dated November 2018;
   
• The Central Bank Notice No. CBUAE/BSD/N/2019/2900 dated 18 July 2019;
   
• The Central Bank Notice No. 157/2013 dated 11 April 2013;
   
• The Central Bank Circular No. 13/189/2013 dated 2 December 2013;
   
• The Central Bank Notice No. CBUAEESD/2018/3004 dated 15 October 2018.

The following terms and phrases shall have the definitions assigned to them for the purpose of this Regulation:

1. UAE; The United Arab Emirates.
    
2. Central Bank: The Central Bank of the UAE.
    
3. Central Bank Law: Decretal Federal Law No. (14) of 2018 Regarding the Central Bank & Organization of Financial Institutions and Activities, as amended).
    
4. Licensed Financial Institution: as defined in the Central Bank Law.
    
5. Working day/s: Monday to Friday excluding public holidays.
    
6. The weekends: Saturday and Sunday.
    
7. The Integrated Regulatory Reporting System: (https://131.5.15.15/cbuaeirr/) is a unified data collection & reporting framework to collect & analyse data submitted by all the Licensed Financial Institutions.
    
8. Card Transactions: All cashless payment modes including but not limited to virtual wallets, digital cards, plastic cards e.g. debit cards, credit cards, store cards, prepaid cards and all other such card payments.
    
9. ATM: Automated Teller Machine.
    
10. CDM: Cash Dispensing Machine, Cash Deposit Machine, and/or Cheque Deposit Machine.
     
11. CARD BINS: Bank Identification Number (“BIN”)
    
    The terms mentioned in the Central Bank Law shall bear the same meanings ascribed thereto in the said Law when used in this Regulation, unless a definition otherwise is stated herein.

1. The official currency of the UAE is the Dirham and the issuance of the currency shall be the exclusive right of the UAE.
    
2. That right is exercised exclusively and solely by the Central Bank.
    
3. Article 55 (2) of the Central Bank Law states that “No person shall issue or put into circulation Currency Notes, Currency Coins, or any instrument or token payable to bearer on demand having the appearance of, or purporting to be, or are likely to pass as, or be confused with legal tender in the State or in any other country.”
    
4. Accordingly, all Licensed Financial Institutions are required to ensure that they do not circulate counterfeit and/or forged notes, at the point of collection or at the point of transaction or by delivery to its account at the Central Bank.
    
5. If counterfeit and/or forged notes are circulated by the Licensed Financial Institution, whatever the circumstances, whether deliberately, recklessly or negligently, the Licensed Financial Institution will be in violation of Article 55(2) aforementioned.
    
6. Currency notes or currency coins which are legally in circulation in the UAE but are subsequently withdrawn or replaced, are not counterfeit notes or counterfeit currency coins.
    
7. Failure to prevent the circulation of counterfeit and/or forged currency will result in a fine of AED 10,000 for counterfeited note and/or currency plus the face value of the currency and/or currency coin.

1. On 18 March 2018, the Central Bank introduced the Court Cases Management System, an automated process to facilitate the monitoring of the processing of court orders by stakeholders issued against all Licensed Financial Institutions operating in the UAE. The stakeholders are the courts under the Ministry of Justice, the Dubai Courts, the Ras Al Khaimah Courts and Prosecution and the Rental Disputes Centrel of Dubai.
    
2. Despite the introduction of the Court Cases Management System, numerous orders, issued by different courts were not being processed in a timely manner.
    
3. To address this matter, on 15 October 2018, the Central Bank issued Notice No. CBUAE/BSD/2018/3004, to inform the banks of their obligations to process court orders within the time limits set out in the Notice.
    
4. The Notice also informed the banks that the Central Bank would send reminders about the court orders that become due and would take appropriate measures if no action is taken to comply with the Notice.
    
5. Accordingly, failure to comply with the Notice will result in the Central Bank imposing a fine of AED 1,000 per violation against the concerned bank.
    
6. A daily rate of AED 1,000 will be applied for the delay of each working day that continues after the violation, with a maximum threshold of AED 50,000 for each violation.

1. The Central Bank has the mandate to prepare and publish the statistics of the balance of payments and the international investment position for the UAE in line with international standards.
    
2. To enhance the quality of the data for cross-border transactions and ensure better control of the relevant flows, instituting a purpose of payment is critical. To that end, the Central Bank has established a mandatory requirement in its reporting process to capture the purpose of the payment for all cross-border transactions in a reliable and accurate way. This facilitates the collection of the required information directly from the customers of the Licensed Financial Institutions and facilitates the collection of information to account for all transactions in and out of UAE borders by residents of the UAE.
    
3. The Licensed Financial Institutions are required to provide customers with the full list of purpose codes as published by the Central Bank without merging or amending the list and to comply with the following requirements:
   
   a) To provide purpose codes when initiating SWIFT cross-border payment transactions under Central Bank Notice No. CBUAE/BSD/N/2018/759 dated 23 May 2018; that is: “to assist the Central Bank in the compilation of the balance of payments, all SWIFT transfers messages need to include a payment purpose code according to the list of codes that are published on the Central Bank’s website under the balance of payments guidelines, along with a description, explanation by code and examples”;
   
   b) To register for the Fin-toform services as required, enabling the Central Bank to collect information from the SWIFT messages initiated by the Licensed Financial Institutions as required, under Central Bank Notice No. CBUAE/BSD/N/2018/759 dated 23 May 2018, that is: “the Licensed Financial Institutions need to report to the Central Bank on a transaction by transaction basis:
    
   1. i. Swift messages: All customer transfer messages between Licensed Financial Institutions from the UAE to overseas institutions in all currencies (Outflows) or from overseas institutions to the UAE (Inflows)
      
      ii. Non-Swift messages: All customer transfer messages between Financial Institutions in the UAE from resident accounts to non-resident accounts within the UAE banking system in all currencies and from nonresident and resident accounts; And/or cross border transactions between their own branches, residents in the UAE and outside the UAE”
   
   
   2.  
   c) To provide the required information by using the required purpose codes as specified in the official list of SWIFT Scope purpose codes.
   
   d) Licensed Financial Institutions can provide the required purpose codes by using any of the following options:
    
   1. i. Option 01: using TAG 77B
      ii. Option 02: using TAG 72
      iii. Option 03: using TAG 70
      iv. Option 04: using TAG 26T
   
   
   2.  
   “TAG” in this Article refers to a specific place holder in a SWIFT message that contains specific data.
   
   e) Technical notes on transaction codes for the compilation of the balance of payments is published on the Central Bank website: Document Code - UAEFTS- AUX700 - 2018-001-01 dated November 2018.
   
   f) The exchange houses that send transfer messages from the UAE, to institutions outside the UAE, in all currencies or receive transfer messages from institutions outside the UAE, in all currencies, must report to the Central Bank, transaction by transaction including the purpose code.
    
4. Failure to provide the required information and to use the designated TAG with the correct purpose codes is a violation of the aforementioned Notice and will result in a fine of AED 1,000 for each violation.

1. The Central Bank has the mandate to prepare and publish the statistics of the balance of payments for the UAE in line with international standards. To assist the Central Bank in the compilation of the balance of payments and enhance the quality of the information of all Card Transactions, particularly in relation to travel services, the information must be reported on a transaction by transaction basis.
    
2. Under Notice No. CBUAE/BSD/- N/2018/758 dated 23 May 2018, the Licensed Financial Institutions are required to notify the Central Bank of all Card Transactions conducted at:
   
   a. ATM/CDM/KIOSKs
    
   1. i. where the transaction is for the customer of the bank owning the terminal and/or
      
      ii.the transaction is not routed to the issuer via the UAE SWITCH to the issuer for authorization
   
   b. Point of Sale terminals:
    
   1. i. where the transaction is for the customer of the bank owning the terminal and/or
      
      ii. the transaction is routed to the issuer via the schemes to the issuer for authorization
    
3. Licensed Financial tostitutions are required to upload the files of NON-UAE SWITCH and point of sale transactions on a daily basis even if there are no transactions to report.
    
4. Licensed Financial Institutions are required to use format and variables for each of the files at paragraph 2 (a & b) of this Article following technical details provided in the Document Code U.FS-AUX884- Version 2017-001 UAE Funds Transfer System NON-UAE SWITCH Transaction Details Upload.
    
5. In addition to allowing the Central Bank to identify the issuing countries and the usage countries on Card Transactions, the Central Bank issued Notice No. CBUAE/BSD/N/2019/2900 dated 18 July 2019, requiring Licensed Financial Institutions to:
   
   a. provide CARD BINS information to the Central Bank of all Card Transactions issued in the UAE;
   
   b. provide Customer Account Details for all Card Transactions issued by banks in the UAE; and
   
   c. report data on Card Transactions conducted through e-commerce (online transactions).
    
6. Failure to provide the required information aforementioned in accordance with the Central Bank’s Notices and the Document Code mentioned in this Article, is a violation and will result in a fine of AED 1,000 for each violation.

1. Licensed Financial Institutions must report to the Central Bank the following:
   
   a. Currency notes (cash); and
   
   b. Sales and purchases of foreign currency classified by currency.
    
2. The above report shall be sent to the Central Bank by the end of the working day every Friday. Failure to submit the report/reports as required will result in a fine of AED 1,000 for each violation.

1. A routine function of all banks in the UAE is to provide their customers with liability statements and clearance letters, otherwise known as a certificate, within 7 working days of the customer’s application.
    
2. The purpose of the certificate is to provide confirmation of the customer’s financial position with the bank to enable the customer to rely on the confirmation for personal reasons or to terminate their financial relationship with the bank and to move their account to another bank.
    
3. Article 9 (b) of Regulation No. 29/2011 states that “Commercial banks may open all types of accounts for their customers, but in such cases, they must abide by the standard agreement mentioned under Article (12) [Conditions for Opening of Accounts, Providing Credit Cards and Granting Loans & Bank Facilities] of these Regulations. In case a customer requested closing of the account and termination of the business relationship with the bank, the bank should do that without imposing a penalty if the account opening date goes back to more than one year. In all cases, an account must be closed and an appropriate certificate must be issued within, maximum, seven days (7) from date of submission of the application”
    
4. In addition, Central Bank Circular No. 13/189/2013 dated 2 December 2013 states that “As a normal banking practice, issuance and delivery of certificates and letters should not take more than 7 working days”.
    
5. Accordingly, banks are required to provide certificates to their customers within 7 working days of the customer’s request. For the purposes of this Article, customers are retail customers, not corporate customers.
    
6. Failure by the bank to issue the certificate within the requisite period is a violation and will result in a fine of AED 10,000 for each violation.
    
7. A daily rate of AED 10,000 will be applied for the delay of each working day that continues after the initial violation with a maximum threshold of AED 100,000 for each violation.

1. An important function of the Central Bank is to receive data from Licensed Financial Institutions on various aspects of the Licensed Financial Institution’s activities by way of the Licensed Financial Institution’s reporting requirements. The reporting requirements relate to a broad range of the Licensed Financial Institutions’ business activities and it is critical to receive complete and accurate information in a timely manner to enable the Central Bank to maintain effective supervision of regulated entities.
    
2. The obligation to file regulatory returns or reports to the Central Bank is set out in Central Bank Notice No. 157/2013 dated 11 April 2013.
    
3. All Licensed Financial Institutions are under an obligation to file regulatory returns or reports under the Central Bank’s Integrated Regulatory Reporting System as per the required frequency and format.
    
4. The reporting obligations stated in this Article are subject to change as notified by the Central Bank to Licensed Financial Institutions. Such changes will be informed to all Licensed Financial Institutions via https://13L5.15.15/cbuaeirr/ under “Alerts”.
    
5. It is mandatory for Licensed Financial Institutions to monitor the “Alerts” during the working day to ensure that the reporting obligations are met.
    
6. Licensed Financial Institutions must have a formal process to ensure they are able to comply with the reporting requirements. Failure to meet the filing requirements is a violation of the Licensed Financial Institutions’ obligations.
    
7. Licensed Financial institutions reporting requirements are as follow:
   
   a. The Bank’s Reporting Requirements are as follows :
    
   1. i. Monthly Reports - The first batch of monthly reports must be filed within 7 working days (excluding weekends and public holidays) after the month end;
      
      ii. Monthly Reports - The second batch of monthly reports must be filed within 11 working days (excluding weekends and public holidays) after the month end;
      
      iii. Monthly Reports - The third batch of monthly reports must be filed by the 25th following each month end or the following working day if the 25th is a holiday;
      
      iv.Quarterly Reports - The first batch of quarterly reports must be filed by the 25th following each calendar quarter end or the following working day if the 25th is a holiday;
      
      v. Quarterly Reports - The second batch of quarterly reports must be filed by the 30th/31st following each quarter end or the following working day if the 30th or 31st is a holiday;
      
      vi. Half Year Reports - The first batch of half-yearly reports must be filed by 31st July and 31st January or the following working day if the 31st is a holiday;
      
      vii. Half Year Reports - The Second batch of half-yearly reports must be filed by 31st July and 31st January or the following working day if the 31st is a holiday;
      
      viii. Yearly Reports- Must be filed by 31st January following the year end or the following working day if the 31st is a holiday;
      
      ix. Quarterly Islamic Returns - Must be filed by 30th or 31st of the month end following the quarter end; or the following working day if the 30th or 31st is a holiday;
      
      X. To submit any additional daily, weekly, fortnightly and other reports as required in the Integrated Regulatory Reporting System, or by law as applicable;
      
      xi. Failure of the bank to comply with its reporting obligations will result in a fine of AED 1,000for each violation.
      
      xii. A daily rate of AED 1,000 will be applied for the delay of each working day that continues after the initial violation with a maximum threshold of AED for each violation; and
      
      xiii Submitting erroneous data in any of its reporting requirements will result in a fine of AED 50,000for each violation.
   
    
   b. The Exchange House’s Reporting Requirements are as follows:
    
   1. i. Monthly reports: The first batch of monthly reports must be filed within 15 working days (excluding weekends and public holidays) after the month end;
      
      ii. Monthly reports: The second batch of monthly reports must be filed within 15 working days after the month end;
      
      iii. Monthly reports: The third batch of monthly reports must be filed within 15 working days after the month end;
      
      iv. Quarterly reports: Must be filed within 15 working days after the quarter end;
      
      v. To submit a Certificate of Remittance Value issued by the External Auditor, within two (2) months from the end of every financial year;
      
      vi. To submit any additional daily, weekly, fortnightly and other reports as required in the Integrated Regulatory Reporting System or by law as applicable;
      
      vii. Failure of the Exchange House to comply with its obligations to submit their reporting requirements in a timely manner as required is a violation of the Standards and will result in a fine of AED 250 for each violation;
      
      viii A daily rate of AED 250 will be applied for the delay of each working day that continues after the initial violation with a maximum threshold of AED 25,000 for each violation; and
      
      ix. Submitting erroneous data in any of its reporting requirements will result in a fine of AED 12,500 for each violation.
   
   c. The Finance Company’s Reporting Requirements are as follows:
    
   1. i. Monthly reports: The first batch of monthly reports must be filed within 14 working days (excluding weekends and public holidays) after the month end;
      
      ii. Monthly reports: The second batch of monthly reports must be filed within 20 working days (excluding Saturdays and public holidays) after the month end;
      
      iii. Quarterly reports: Must be filed by the 25th following each quarter or the following working day if the 25th is a holiday;
      
      iv. Half-yearly reports: Must be filed by the 25th following each half year-end or the following working day if 25th is a holiday;
      
      v. Yearly reports: Must be filed by the 25th of the following month or the following working day if the 25th is the holiday;
      
      vi. To submit any additional daily, weekly, fortnightly and other reports as required in the Integrated Regulatory Reporting System or by law as applicable;
      
      vii. Failure of the finance company to comply with its obligations to submit their reports in a timely manner as required is a violation, and will result in a fine of AED 500 for each violation;
      
      viii. A daily rate of AED 500 will be applied for the delay of each working day that continues after the initial violation with a maximum threshold of AED 50,000 for each violation; and
      
      ix. Submitting erroneous data in any of its reporting requirements will result in a fine of AED 25,000 for each violation.
   
   d. Other Licensed Financial Institution’s reporting requirements are as follows:
    
   1. i. To submit any reporting requirements for daily, weekly, fortnightly reporting and other reports as required in the Integrated Regulatory Reporting System or by Law as applicable;
      
      ii. Failure of other Licensed Financial Institutions to comply with its obligations to submit their reporting requirements in a timely manner as required is a violation, and will result in a fine of AED 500 for each violation;
      
      iii. A daily rate of AED 500 will be applied for the delay of each working day that continues after the initial violation with a maximum threshold of AED 50,000 for each violation; and
      
      iv. Submitting erroneous data in any of its reporting requirements will result in a fine of AED 25,000 for each violation.

1. Licensed Financial tostitutions that conduct all or part of their activities and businesses in accordance with Islamic Shari’ah Law are required to provide the Higher Shari’ah Authority with an annual Shari’ah report that is prepared by the Internal Shari’ah Supervision Committee.
    
2. According to Article 80 of the Central Bank Law, the annual Shari’ah report is required to be provided to the Higher Shari’ah Authority before the end of February every year. The toternal Shari’ah Supervision Committee shall provide the Higher Shari’ah Authority with a copy of its report, no later than 2 months from the end of the financial year, in order for the Authority to express its remarks prior to the meeting of the general assembly of the concerned institution.
    
3. Failure of the Licensed Financial Institutions to comply with its obligation to submit the annual Shari’ah report is a violation and will result in a fine of AED 5,000.
    
4. A daily rate of AED 5,000 will be applied for the delay of each working day that continues after the initial violation with a maximum threshold of AED 500,000 for each violation.
    
5. A fine of AED 50,000 will be applied if the Licensed Financial Institution submits erroneous data in any of the regulatory returns.

1. Financial sanctions imposed on Licensed Financial Institutions under this Regulation will accrue as a debt of the Licensed Financial fostitutions. The Central Bank will notify the Licensed Financial Institution of the debt, as relates to the period of default deemed appropriate by the Central Bank. The debt will be automatically debited from the Licensed Financial fostitution’s account at the Central Bank 28 days after the notification or such alternative means of settlement of the debt as advised to the Licensed Financial Institutions.
    
2. Each obligation is considered separately and the appropriate fine will be applied for violating the specific regulatory obligation. A summary of the financial sanctions is attached at Appendix 1. Continued regulatory violations may result in further enforcement action under the Central Bank Law.
    
3. In the event the Central Bank introduces new reporting requirements or alters the obligations set out in this Regulation, by legislation, decree, notice, circular, or other notification and as amended in the Integrated Regulatory Reporting System, Licensed Financial Institutions are required to comply with those reporting requirements and obligations. Such reporting requirements and obligations shall fall within the scope of this Regulation.

1. In case of extraordinary events orcircumstances beyond the Licensed Financial Institution’s control that prevent the timely submission of the required information, such as contingencies regarding the Licensed Financial Institutions information technology system/s or the Central Bank’s inability to receive the same, the Licensed Financial Institutions must immediately notify the Central Bank and seek the Central Bank’s approval for the delay.

1. The Regulatory Development Division of the Central Bank shall be the reference for the interpretation of the provisions of this Regulation.

1. The Regulation shall be published in the Official Gazette in both Arabic and English and shall come into effect one month from the date of publication.

Summary of Financial Sanctions