The UAE has been toughening laws regulating the banking and financial institutions following the collapse of Abraaj Group, the region’s largest private equity group. Abraaj’s investors had alleged that the leading buyout firm had mismanaged $1 billion funds, leading to arrest of its top executives including its founder Arif Naqvi and other executives Mustafa Abdel-Wadood and Sev Vettigetpillai on charges of fraud.
The Dubai Financial Services Authority (DFSA) recently said in a report that would take steps to strengthen its supervisory oversight going forward.
However, this system will apply only to those people working in the banking and financial sector and not the customers of the banks, who have defaulted on personal loans or any other debts.
“This [UAEPNG] system will not affect the customers of banks since it is not applicable to them. Details about the UAEPNG system shall be announced in due course,” said the central bank statement.
Ashish Mehta, founder and managing partner of Ashish Mehta & Associates, said this is another great initiative by the UAE visionary leadership which will further enhance the global credentials of the country’s financial system.
He said an individual who is persona non grata status would not be appointed to work in any financial institution in the UAE.
Mehta noted that the UAE Credit Bureau has been established to check credit worthiness of an individual when he applies for loan. “So there is no overlapping here as the credit bureau checks credit-worthiness of the banks and financial institutions’ customers whereas Persona Non Grata system is applicable to people working in the financial institutions,” Mehta added.
The system may cover all banks, finance companies, money exchange houses, financial advisory firms or any entity that fall under the jurisdiction of the UAE central bank, he added.
Priyasha Corrie, senior associate at Fichte & Co., said one of the challenges encountered by financial institutions in the UAE is the recruitment of suitable candidates who do not have an adverse history involving fraud or any gross misconduct.
“Currently, there is no red list in the UAE, particularly for senior finance personnel. Implementing a UAE Persona Non-Grata system has been on the radar in the UAE finance industry for a while; this is essentially a database of personnel who should not be employed in UAE financial institutions,” she said.
Corrie stressed that the objective of this system is to smoothen the recruitment process, ensure the quality of candidates in the finance industry, and limit risks to UAE financial institutions.
Citing it as a good move, she said employers often rely on personal networks and references during the recruitment process which may not be foolproof.
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