The Board of Directors of the U.A.E.’s Central Bank has held its 3rd meeting for 2014, under the chairmanship of Khalifa Mohammed Al Kindi, Chairman of the Board.

The Board discussed major subjects proposed to be included in the new banking law currently being developed by the Central Bank. The meeting was attended by Khalid Juma Al Majid, Deputy Chairman, Sultan bin Nasser Al Suwaidi, the Governor, and Board Members, Younis Haji Al Khoori, Khalid Mohammed Salem Balama, Khalid Ahmed Altayer, Hamad Mubarak Bu Amim, and by Mohamed Ali Bin Zayed Al Falasi, Deputy Governor, Saeed Abdullah Al Hamiz, Assistant Governor for Banking Supervision, Saif Hadef Al Shamsi, Assistant Governor for Monetary Policy and Financial Stability and a group of senior Central Bank staff.

The Board reviewed a report on the latest developments concerning the Central Bank Information Technology strategy, which is being carried out by the Boston Consulting Group.

It also discussed a Monetary Policy and Financial Stability Department report on macro-prudential ratios for the banking system/ banking stability and liquidity indicators of the banking sector.

Also touched on was the Banking Supervision Department report on the financial and administrative status of banks and other financial institutions operating in the U.A.E. and instructions were given to take necessary action in this regard.

Earlier in the month The United Arab Emirates (UAE) was the latest country to tighten its anti-money laundering (AML) protections, when the nation’s Federal National Council passed new legislation to punish individuals and companies that conduct illicit transactions and finance terrorism. It will authorise financial penalties of up to Dhs500,000 (£86,000) for institutions found guilty of breaching the law, while individuals could face a similar fine, as well as prison terms of up to ten years,

“significant challenges [remain] around compliance, especially with regard to customer due diligence, transaction monitoring, and politically exposed persons identification”.

The UAE’s new law seeks to clarify money laundering, defining it as “when a person converts, transfers or deposits money with an intent to conceal its illicit origin and when they disguise the source of funds being transferred or deposited.” The legislation also details the duties of the bank’s Anti-Money Laundering and Suspicious Cases Unit and Financial Information Unit. All banks, money changers and other financial institutions operating in the UAE will now have an obligation to report any unusual transactions to the unit. –

In the United Kingdom Bank of England governor Mark Carney backed a plan by Britain’s biggest banks to set up a new body to improve standards in an industry rocked by a string of scandals.
The Banking Standards Review Council (BSRC), funded by, but independent from, the banks, is to be set up this year after banks accepted recommendations from Richard Lambert, a former director general of the Confederation of British Industry

This recently published survey will be of interest to Middle East banks for both the survey results and the analysis and commentary. To gain deeper insights into how banks are preparing to address the demands of a transforming and fast growing market, Accenture conducted a survey of 47 banks across six GCC countries. The report reveals a number of important findings regarding regulatory compliance and business systems as indicated by these extracts:

“Customer analytics with predictive analytics will be the major technology enabler for growth.

Business intelligence (BI) tops the list as the most critical and important technology with banks looking to leverage BI capabilities for customer analytics, risk analytics and marketing effectiveness. The survey shows that 61 percent of the respondents are either planning or are already investing in customer analytics with predictive analytics”

“Banks in the GCC fared better than their counterparts in the West during the recent global financial crisis. However, the consequent tightening of the global regulatory environment is likely to influence their business considerably. Nearly 80 percent of
the banks in the region perceive the evolving regulatory framework to become a major external challenge by 2015. Central banks are expected to place greater emphasis on corporate governance and transparency to protect the banking industry and its clients”.

“The Saudi Arabian Monetary Authority (SAMA), for example, has played a particularly proactive role in regulating and protecting the Saudi market from the current global economic turmoil and is expected to take the lead in regulatory reform across the GCC. By fostering a close working relationship with the local banking industry, SAMA has been able to create an open dialog within the industry.”

“The survey reveals that banks plan to align the risk strategy with their overall business strategy as they expect an increased focus on liquidity risk management on account of the Basel Capital Accord requirements. “

“With heightening competition and demanding customers, banks need the right skills to innovate and design”

“To make the most of analytics, at the primary level, banks in the GCC will have to establish a strong information management foundation by improving business processes and insights to achieve a “single source of truth” for all their information. And, as
a first step in this direction, banks will need to consider improving the quality of their databases.”

“Moving forward, banks should improve business intelligence capabilities that translate into improving business performance with appropriate, actionable and timely data and information. ”

“However, as IT departments of banks
in GCC countries tend to be small
and characterized by heterogeneous
architectures, they may well need to
integrate the architectures and silos
for greater business efficiency. More
importantly, as our experience with
clients has shown, business outcomes
can be achieved better in organizations
where the IT department’s role is
that of a strategic business partner. ”

“….the impact of Basel Capital Accord will be felt more in terms of liquidity risk management than on capital requirements. Banks will need to take a proactive stance in understanding these new requirements and their implications for their current product and service offerings and management of liquidity. …..To position themselves to prepare for regulatory changes, banks should focus on allowing space for the finance and risk department at the strategy table. The risk department will need to move away from its traditional support/service provider role toward being a true business partner. In this capacity, they can drive real value and support in taking advantage of regulatory change.

To access the full content of the report : http://www.accenture.com/gccbanking