What is VARA?

The Dubai Virtual Assets Regulatory Authority (VARA) was established and authorised by Law No. 4 of 2022 Regulating Virtual Assets in the Emirate of Dubai.

VARA is the competent authority in charge of regulating, supervising, and overseeing Virtual Assets activities throughout the Emirate of Dubai, including Special Development Zones and Free Zones but excluding the Dubai International Financial Centre (DIFC). VARA is important to the development of Dubai's advanced legal framework for investor protection and the establishment of worldwide standards for Virtual Asset industry regulation.

VARA has issued the Virtual Assets and Related Activities Regulations which provide a comprehensive Virtual Assets framework for companies operating or planning to operate in Dubai.

Who should abide by VARA?

Since the introduction of VARA regulations in the UAE, companies dealing with Virtual Assets, whether within the UAE or internationally, have shown a significant interest.

VARA covers Virtual Asset Service Providers (VASPs) dealing with Virtual Asset and providing: Advisory Services, Broker-Dealer services, Custody services, Exchange services, Lending and Borrowing services, Management and Investment services, and other Virtual Asset services.

What are the key compliance requirements for VASPs pursuing VARA license in UAE?

VARA has extensively addressed the Compliance and Risk management procedures within VASPs, demonstrating VARA's commitment to minimizing compliance risks.

The key compliance requirements are outlined as follows:

1- Appointment of a Compliance Officer:
- The VASP must appoint a Compliance Officer capable of managing the Compliance and Anti-Money Laundering/Counter Financing of Terrorism (AML/CFT) program and fulfilling all duties specified by VARA.
- The Compliance Officer may hold multiple non-client-facing roles, including but not limited to MLRO (Money Laundering Reporting Officer) and Head of Risk.

2- Appointment of an MLRO:
- The VASP is required to appoint an MLRO capable of handling all duties specified by VARA.

3- Maintenance of Compliance and AML/CFT Policies:
- The VASP is required to maintain Compliance Manual and AML/CFT Policies detailing compliance processes within the company.
- These policies must adhere to VARA rulebooks, UAE Federal Laws, and Financial Action Task Force (FATF) recommendations.

4- Client Due Diligence and Transaction Screening:
- This involves screening clients, Ultimate Beneficial Owners (UBOs), Virtual Asset transactions, and Virtual Asset wallet addresses.

5- Transaction Monitoring and Suspicious Transaction Reporting:
- The VASP is obligated to monitor transactions and report suspicious transactions to the Financial Intelligence Unit (FIU) and VARA through GOAML.

6- Travel Rule Compliance:
- Compliance with the FATF travel rule is required. The VASP is obliged to showcase its commitment to the Travel Rule by providing a demonstration of compliance, along with the submission of relevant policies and controls.

7- UAE EOCN Registration:
- The VASP must register with and adhere to the UAE Executive Office for Control & Non-proliferation (EOCN) to get timely alerts on sanctions.

8- Record Keeping:
- Documents and information to be stored in a readily retrievable format for a duration of eight years. Records pertaining to the national security of the UAE may be required to be retained indefinitely.

9- Training:
- Adequate training is essential and should be extended to both employees and senior management.

How can Rasma Legal help?

Rasma Legal provides comprehensive support to a wide-range of companies operating in the Virtual Assets space. Our services extend to both local players and international VASPs seeking entry into the market. Rasma Legal guides VASPs and offers support in various aspects such as incorporation, policies and manuals preparation, addressing regulator queries, and providing overall assistance until the successful launch and operation of the VASP license.

We also assist in meeting the annual, quarterly, and monthly obligations the VASP has, even after getting the license and initiation of operations.