The Central Bank of the United Arab Emirates (CBUAE) has introduced the 'Open Finance Regulation (“'Open Finance Regulation”) outlining a framework for managing, overseeing, and operating an Open Finance Framework in the UAE.

Key Highlights:

1. The issuance of Open Finance Regulation results in an amendment to the Retail Payment Services and Card Schemes Regulation.

2. The Open Finance Regulation consists of a Trust Framework, an API Hub, and Common Infrastructural Services, which provide Open Finance access for the cross-sectoral sharing of data and the initiation of Transactions, on behalf of Users.

3. Licensees mandated to provide Open Finance access will be onboarded in phases, starting with all Banks, including branches of foreign banks, and Insurance Companies (national companies and foreign branches) only.

4. Open Finance Providers must separately obtain or hold the additional regulatory licenses required to undertake any other licensed activity or activities.

5. All Licensees, whether or not they are engaged in the provision of Open Finance Services, must comply with the requirements of the Open Finance Regulation with regard to Data Sharing and Service Initiation by Users through Open Finance Providers and specifically the requirements in Articles 18 to 22 of the Open Finance Regulation.

6. Participation in the framework is mandatory for all Licensees concerning the products and services they offer. Licensees, acting as Data Holders and Service Owners, must grant others in the Open Finance Framework access to customer data and the ability to initiate transactions on customer accounts and products, subject to user consent, security measures, and safe communication.

7. Additionally, the Central Bank may issue further regulations to ensure the continuous improvement and adaptation of Open Finance Services.

8. The 'Open Finance Regulation' will be published in the Official Gazette and will come into effect gradually, as notified by the Central Bank.

Conclusion

The introduction of the Open Finance Regulation by the Central Bank of the UAE marks a significant milestone in the evolution of financial regulation in the country. By establishing a framework for Open Finance, the regulation promotes transparency, interoperability, and innovation in the financial sector. It sets the stage for enhanced competition, improved consumer services, and strengthened financial inclusivity. With its phased implementation and emphasis on compliance, the regulation underscores the Central Bank's commitment to ensuring a robust, dynamic, and resilient financial ecosystem in the UAE. As Open Finance takes root, it promises to unlock new opportunities and efficiencies, ultimately benefiting consumers and businesses alike.