A regulatory reprieve has been promised for under-fire Dubai-based financial institutions, although companies must also ‘do more’ to combat money laundering, according to Ian Johnston, chief executive of the Dubai Financial Services Authority.
Johnston, who heads the DFSA, the financial services regulator for businesses based in the Dubai International Financial Centre, said that the majority of the banks and financial firms are working hard on their anti-money laundering practices, but with heightened risks, particularly due to advancing technologies, firms need to be “more aware”, he said, in a video interview with Bloomberg TV yesterday.
Johnston, pictured left, said that both Dubai-based financial regulation and general global financial services regulations have reached a peak, following on from the financial crisis in 2008 has. And he admitted that the DFSA is now bidding to ensure that its regulatory focus in on enforcement and supervision rather than creating more new regulations.
‘Enough new regulations’
“In response to the financial crisis theres been enough new regulations,” he said. “Proper implemtantion of rules and proper risk assessment and supervision will be the focus rather than new regulation.”
On money laundering, he said that financial firms, and banks in particular, can “do more” to quell the concerns around dirty money, but pointed that free movement trade is necessary to drive the region’s economy.
“How do you have trade if you haven’t got the money to drive this,” he said. “We took a step back and produced a report on trade finance, but in a very open economy there are always going to opportunities for money laundering. We want banks to be more aware of these risks.”
Johnston said that the advancement of fintech innovation in Dubai’s Smart City and the DIFC’s own Fintech Hive was thriving in the region, pointing that the infrastructure in now more of an “accelorator, not an incubator”.
And on fintech regulation, he said that the collaborative approach that does not restrict innovation is necessary. “When do you allow businesses to innovate and when do you regulate?,” he said.
He added that the region is less reliant on oil than, say, Saudi Arabia, but this is due to ongoing advances already made, rather than recently introduced changes.
“A number of years ago Dubai started to diversify,” said Johnston. “Oil is a small part of the GDP. We are certainly not an oil based ecomomy. The DIFC is a region whereby financial businesses can come in and have a common law system and be regulated as an international business.
“We are very much open for business,” he added.