A committee has been formed to prepare a law regulating and developing the use of financial technology (fintech) in non-banking financial activities, according to Chairperson of the Financial Regulatory Authority (FRA) Mohamed Omran.
The FRA has received a number of proposals regarding the rules and controls for establishing, operating, and managing electronic platforms for crowdfunding, which grants financing directly to a project or company in the form of lending.
The proposals also cover methods of financing that occur indirectly, where the project will take the form of a company with financing made available through the issuance of securities, such as shares and bonds.
The committee is set to review the proposals before the presentation of a selected number to the FRA’s Board of Directors. The move will bring into focus the authority’s need to embrace innovative fintech startups, and allocate a separate article to them in the draft law.
Omran said that the authority’s vision includes defining the rules for monitoring and supervising financial activities, especially the conditions, controls and procedures for granting a licence.
This would include a legal form, the technological infrastructure’s requirements, the technical competence and information systems, and the minimum requirements for activity to occur. It would also cover the organisational structure, and the requirements for the practical experience and professional competence of those in charge to manage the activity.
The controls include the rules of disclosure and clarifying a client’s identify, the data to be published, how and when the data is published, as well as the observance of provisions under the Anti-Money Laundering and Terrorism Financing Law.
Omran stressed that with the attention being given to digital financing, the authority is equally oriented towards digital oversight and targeting financial technology in performing a supervisory role (SUPTEC).
This is being undertaken with the aim of collecting and verifying data digitally and analysing its indicators through programmes prepared for this purpose.
The FRA is also keen on using artificial intelligence (AI) and other digital methods to reveal violations of laws governing non-banking financial activities, including suspicions of money laundering. This is set to create an early warning system for the risks related to liquidity, credit, or other financial stability matters.