Article (1): Definitions

Fed Law 14/2018 Effective from 31/10/2018

In the implementation of provisions of this Decretal Law, and unless the context otherwise requires, the following words and expressions shall have the meanings cited against each:

The State: The United Arab Emirates.

The Government: The UAE Federal Government.

The Ministry: The Ministry of Finance.

The Minister: The Minister of Finance.

The Central Bank: The Central Bank of the United Arab Emirates.

The Regulatory Authorities in the State: The Central Bank, the Securities and Commodities Authority.

The Board of Directors: The Board of directors of the Central Bank.

The Governor: The Governor of the Central Bank.

The Public Sector: The Federal Government, governments of Union member emirates, and their fully owned agencies and public institutions and companies, which provide public services and do not, primarily, carry on any activities relating to money and financial markets.

Government Related Entities: A Juridical person wherein the Government, any of the governments of the Union member emirates, or any of their respective subsidiaries, owns more than fifty percent (50%) of its capital.

Financial Free Zones: Financial free zones subject to the provisions of Federal Law No (8) of 2004, Regarding Financial Free Zones, and amending laws.

Licensed Financial Institutions: Banks and Other Financial Institutions licensed in accordance with the provisions of this Decretal Law, to carry on a Licensed Financial Activity or more, including those which carry on the whole or a part of their business in compliance with the provisions of Islamic Shari’ah, and are either incorporated inside the State or in other jurisdictions, or have branches, subsidiaries or Representative Offices inside the State.

Banks: Any juridical person licensed in accordance with the provisions of this Decretal Law, to primarily carry on the activity of taking deposits, and any other Licensed Financial Activities.

Other Financial Institutions: Any juridical person, other than Banks, licensed, in accordance with the provisions of this Decretal Law, to carry on a financial activity or more, of the Licensed Financial Activities.

Higher Shari’ah Authority: The Authority referred to in Article (17) of this Decretal Law.

Exchange House: A juridical person licensed in accordance with the provisions of this Decretal Law to carry on money exchange activity, and conduct funds transfers within and outside the State, and any other businesses determined by the Central Bank.

Representative Office: An office licensed in accordance with the provisions of this Decretal Law, to carry on representation of a financial institution incorporated in other jurisdictions.

Licensed Financial Activities: The financial activities subject to Central Bank licensing and supervision, which are specified in Article (65) of this Decretal Law.

Authorized Individual: Any natural person authorized in accordance with the provisions of this Decretal Law, to carry on any of the Designated Functions.

Designated Functions: Functions of the Authorized Individual at, or for the benefit of, a Licensed Financial Institution of influential nature on the institution’s activities.

Own Funds: The Central Bank’s capital and reserves referred to in Article (5) of this Decretal Law.

Foreign Reserves: Foreign assets held by the Central Bank denominated in any reserve currency and deployed to back its liabilities.

Primary Dealers: Any bank which, acting as a principal or on behalf of another Person, purchases, sells or redeems any securities issued inside the State by the Public Sector, in accordance with the terms and conditions set by the Central Bank.

Standing Facilities: Monetary Policy tools made available to Licensed Financial Institution, to enable management of its liquidity in accordance with the controls and instructions issued by the Central Bank, in accordance with the provisions of this Decretal Law.

Financial Infrastructure System: Means either (1) a Clearing and Settlement System or (2) a Retail Payment System, established, operated, licensed, or overseen by any of the Regulatory Authorities in the State.

Designated System: Any Financial Infrastructure System designated by the Central Bank as systemically important, in accordance with the provisions of this Decretal Law.

Clearing and Settlement System: Any system established for the following purposes: (1) Clearing or settlement of payment obligations or (2) Clearing or settlement of obligations to transfer specific book-entry securities, or transfer of such securities.

Retail Payment System: Any fund transfer system and related instruments, mechanisms, and arrangements that typically handles a large volume of relatively low-value payments in such forms as cheques, credit transfers, direct debit, or card payment transactions.

Stored Value Facilities: non-cash facilities, in electronic or magnetic form, which is purchased by a user to be used as means of making a payment for goods and services.

Participant Person: In respect of a Financial Infrastructure System, shall mean any Person who is party to the arrangements for which the system has been established.

Settlement Institution: In respect of a Financial Infrastructure System, shall mean a Person (1) providing settlement accounts to the Participant Persons and to any Central Counterparty, in a Clearing and Settlement System, in order to settle Transfer Orders through the system, and provide credit facilities for settlement purposes, if necessary or (2) providing settlement services for any Retail Payment System.

Default Arrangements: In respect of a Financial Infrastructure System, means the arrangements in place within the system for limiting systemic and other types of risk in the event of a participant appearing to be, or likely to become, unable to meet his obligations in respect of a Transfer Order; and would include any arrangements that have been enforced by the system’s operator or its Settlement Institution for the following: (1) the Netting of obligations owed to or by a Participant Person; (2) the closing out of open financial position of a Participant Person, or (3) the realization of collateral securities to secure payment of obligations owed by the Participant Person.

Transfer Order: In respect of a Financial Infrastructure System, shall mean any of the following instructions: (1) instructions by a Participant Person to make funds available to another Participant Person, to be transferred, on a book-entry basis, in the accounts of the Settlement Institution for a Clearing and Settlement System; (2) or otherwise put funds within the control of a Participant Person in accordance with the rules and procedures of the Financial Infrastructure System, (3) instructions for discharge from obligation to pay, for the purposes of the operational rules of a Clearing and Settlement System; or (4) instructions by a Participant Person to either settle an obligation by transferring a book-entry security, or transferring those securities; or (5) instructions by a Participant Person that result in the assumption or discharge of retail operations payment obligation.

Netting: In respect of a Clearing and Settlement System, means the conversion of the various obligations owed to or by a Participant Person towards all the other Participant Persons in the system, into one net obligation owed to or by the Participant Person.

Reserve Requirements: The percentage of deposits held by deposit- taking licensed financial institutions, which the Board of Directors may decide to keep with the Central Bank, as per the terms and conditions it may determine.

Eligible Securities: Securities approved by the Central Bank, which Licensed Financial Institution may present as collateral for drawing from the Central Bank funds in accordance with the controls and instructions issued by the Central Bank, in accordance with the provisions of this Decretal Law.

Currency: The State’s official national currency in notes, coins, and digital form, units of which are referred to as the “Dirham”.

Monetary Base: It includes the following: (1) Issued Currency; (2) Aggregate balances of current accounts of Licensed Financial Institutions with the Central Bank, including the Reserve Requirements, in addition to any other funds deposited with the Central Bank for the purpose of clearing and settlement operations; and (3) the outstanding balance of securities and financial instruments issued by the Central Bank.

Grievances and Appeals Committee: The committee referred to in Article (136) of this Decretal Law.

Person: A natural or juridical person, as the case may be.

Year: The Gregorian calendar year.

_{This article has been amended by}_{Decretal Federal Law No. (25) of 2020}_{, and}_{Decretal Federal Law No. (9) of 2021}_and_{Decretal Federal Law No. (54) of 2023}_{respectively. You are viewing the latest version. To view previous versions, click the version boxes below}.

Version 3_{(effective from 26/07/2021 to 01/11/2023)}

In the implementation of provisions of this decretal law, and unless the context otherwise requires, the following words and expressions shall have the meanings cited against each:

The State: The United Arab Emirates

The Government: The UAE Federal Government

The Ministry: The Ministry of Finance

The Minister: The Minister of Finance

The Central Bank: The Central Bank of the United Arab Emirates

The Regulatory Authorities in the State: The Central Bank, the Securities & Commodities Authority.

The Board of Directors: Board of directors of the Central Bank

The Governor: The Governor of the Central Bank

The Public Sector: The Federal Government, governments of Union member emirates, and their fully owned agencies and public institutions and companies, which provide public services and do not, primarily, carry on any activities relating to money and financial markets

Government Related Entities: A Juridical person wherein the Government, any of the governments of the Union member emirates, or any of their respective subsidiaries, owns more than fifty percent (50%) of its capital

Financial Free Zones: Financial free zones subject to the provisions of Federal Law No (8) of 2004, Regarding Financial Free Zones, and amending laws

Licensed Financial Institutions: Banks and Other Financial Institutions licensed in accordance with the provisions of this decretal law, to carry on a Licensed Financial Activity or more, including those which carry on the whole or a part of their business in compliance with the provisions of Islamic Shari`ah, and are either incorporated inside the State or in other jurisdictions, or have branches, subsidiaries or Representative Offices inside the State

Banks: Any juridical person licensed in accordance with the provisions of this decretal law, to primarily carry on the activity of taking deposits, and any other Licensed Financial Activities

Other Financial Institutions: Any juridical person, other than Banks, licensed, in accordance with the provisions of this decretal law, to carry on a financial activity or more, of the Licensed Financial Activities

Higher Shari`ah Authority: The Authority referred to in Article (17) of this decretal law

Exchange House: A juridical person licensed in accordance with the provisions of this decretal law to carry on money exchange activity, and conduct funds transfers within and outside the State, and any other businesses determined by the Central Bank

Representative Office: An office licensed in accordance with the provisions of this decretal law, to carry on representation of a financial institution incorporated in other jurisdictions

Licensed Financial Activities: The financial activities subject to Central Bank licensing and supervision, which are specified in article (65) of this decretal law

Authorized Individual: Any natural person authorized in accordance with the provisions of this decretal law, to carry on any of the Designated Functions

Designated Functions: Functions of the Authorized Individual at, or for the benefit of, a Licensed Financial Institution of influential nature on the institution's activities

Own Funds: Central Bank’s capital and reserves referred to in Article (5) of this decretal law

Foreign Reserves: Foreign assets held by the Central Bank denominated in any reserve currency and deployed to back its liabilities

Primary Dealers: Any bank which, acting as a principal or on behalf of another Person, purchases, sells or redeems any securities issued inside the State by the Public Sector, in accordance with the terms and conditions set by the Central Bank

Standing Facilities: Monetary Policy tools made available to deposit-taking Licensed Financial Institution, to enable management of its liquidity in accordance with the controls and instructions issued by the Central Bank, in accordance with the provisions of this Decretal Law

Financial Infrastructure System: Means either (1) a Clearing and Settlement System or (2) a Retail Payment System, established, operated, licensed, or overseen by any of the Regulatory Authorities in the State

Designated System: Any Financial Infrastructure System designated by the Central Bank as systemically important, in accordance with the provisions of this decretal law

Clearing and Settlement System: Any system established for the following purposes: (1) Clearing or settlement of payment obligations or (2) Clearing or settlement of obligations to transfer specific book-entry securities, or transfer of such securities

Retail Payment System: Any fund transfer system and related instruments, mechanisms, and arrangements that typically handles a large volume of relatively low-value payments in such forms as cheques, credit transfers, direct debit, or card payment transactions

Stored Value Facilities: A non-cash facility, in electronic or magnetic form, which is purchased by a user to be used as means of making a payment for goods and services

Participant Person: In respect of a Financial Infrastructure System, shall mean any Person who is party to the arrangements for which the system has been established

Settlement Institution: In respect of a Financial Infrastructure System, shall mean a Person (1) providing settlement accounts to the Participant Persons and to any Central Counterparty, in a Clearing and Settlement System, in order to settle Transfer Orders through the system, and provide credit facilities for settlement purposes, if necessary or (2) providing settlement services for any Retail Payment System

Default Arrangements: In respect of a Financial Infrastructure System, means the arrangements in place within the system for limiting systemic and other types of risk in the event of a participant appearing to be, or likely to become, unable to meet his obligations in respect of a Transfer Order; and would include any arrangements that have been enforced by the system’s operator or its Settlement Institution for the following: (1) the Netting of obligations owed to or by a Participant Person; (2) the closing out of open financial position of a Participant Person, or (3) the realization of collateral securities to secure payment of obligations owed by the Participant Person

Transfer Order: In respect of a Financial Infrastructure System, shall mean any of the following instructions: (1) instructions by a Participant Person to make funds available to another Participant Person, to be transferred, on a book-entry basis, in the accounts of the Settlement Institution for a Clearing and Settlement System; or (2) instructions for discharge from obligation to pay, for the purposes of the operational rules of a Clearing and Settlement System; or (3) instructions by a Participant Person to either settle an obligation by transferring a book-entry security, or transferring those securities; or (4) instructions by a Participant Person that result in the assumption or discharge of retail operations payment obligation

Netting: In respect of a Clearing and Settlement System, means the conversion of the various obligations owed to or by a Participant Person towards all the other Participant Persons in the system, into one net obligation owed to or by the Participant Person

Reserve Requirements: The percentage of deposits held by deposit-taking financial institutions, which the Board of Directors may decide to keep with the Central Bank, as per the terms and conditions it may determine

Eligible Securities: Securities approved by the Central Bank, which Licensed Financial Institution may present as collateral for drawing from the Central Bank funds in accordance with the controls and instructions issued by the Central Bank, in accordance with the provisions of this Decretal Law

Currency: The State’s official national currency notes and coins, which its unit is referred as the “Dirham”

Monetary Base: It includes the following: (1) Issued Currency; (2) Aggregate balances of current accounts of Licensed Financial Institutions with the Central Bank, including the Reserve Requirements, in addition to any other funds deposited with the Central Bank for the purpose of clearing and settlement operations; and (3) the outstanding balance of securities and financial instruments issued by the Central Bank

Grievances & Appeals Committee: The committee referred to in Article (136) of this decretal law

Person: A natural or juridical person, as the case may be

Year: The Gregorian calendar year