Evaluation of Compliance Procedures in the United Arab Emirates Financial Services Industry

1 Evaluation of Compliance Procedures in the United Arab Emirates Financial Services Industry: A Comparative Analysis of Reem Finance P.J.S.C. and Acquara. Name of Student Institutional Affiliation Course Institutional Affiliation Date

2 Table of Contents I. INTRODUCTION ....................................................................................... 3 II. COMPANY 1: REEM FINANCE P.J.S.C ......................................................... 3 A. B ACKGROUND INFORMATION ON R EEM F INANCE .................................................. 3 B. S UMMARY OF R EEM F INANCE ' S COMPLIANCE POLICY ............................................ 4 C. A NALYSIS OF R EEM F INANCE ' S COMPLIANCE POLICY ............................................. 5 K EY FEATURES OF A GOOD COMPLIANCE POLICY FOR A BANK IN THE UAE ...................................... 5 E VALUATION OF THE SCOPE AND COVERAGE OF R EEM F INANCE ' S COMPLIANCE POLICY ...................... 6 A SSESSMENT OF COMPLIANCE BEST PRACTICES EMPLOYED BY R EEM F INANCE .................................. 6 A DDITIONAL RECOMMENDATIONS FOR ENHANCING R EEM F INANCE ' S COMPLIANCE POLICY ................... 6 III. COMPANY 2: ACQUARA .......................................................................... 6 A. B ACKGROUND INFORMATION ON A CQUARA ........................................................ 6 B. S UMMARY OF A CQUARA ' S COMPLIANCE POLICY ................................................... 8 C. A NALYSIS OF A CQUARA ' S COMPLIANCE POLICY .................................................... 9 K EY FEATURES OF A GOOD COMPLIANCE POLICY FOR A BANK IN THE UAE ...................................... 9 E VALUATION OF THE SCOPE AND COVERAGE OF A CQUARA ' S COMPLIANCE POLICY ........................... 11 A SSESSMENT OF COMPLIANCE BEST PRACTICES EMPLOYED BY A CQUARA ....................................... 12 A DDITIONAL RECOMMENDATIONS FOR ENHANCING A CQUARA ' S COMPLIANCE POLICY ........................ 13 IV. COMPARISON AND CRITIQUE OF THE COMPLIANCE POLICIES .................. 14 S IMILARITIES AND DIFFERENCES BETWEEN THE COMPLIANCE POLICIES OF R EEM F INANCE AND A CQUARA .................................................................................................. 14 D ESPITE THESE SIMILARITIES , THERE MAY BE DIFFERENCES IN THE SPECIFIC APPROACHES AND DETAILS OF THE COMPLIANCE POLICIES : ........................................................ 14 CRITIQUE OF THE STRENGTHS AND WEAKNESSES OF EACH COMPLIANCE POLICY .................................................................................................... 15 R EEM F INANCE ' S C OMPLIANCE P OLICY ............................................................... 15 A CQUARA ' S C OMPLIANCE P OLICY ...................................................................... 16 SUGGESTIONS FOR IMPROVING THE COMPLIANCE POLICIES OF BOTH COMPANIES ............................................................................................. 16 V. CONCLUSION ....................................................................................... 17 REFERENCES ........................................................................................... 18

4 outline mandatory requirements and guidance for all CBUAE licensed banks regarding their corporate governance framework and practices, is one way to evaluate the policy. The CB Guidelines cover regions, for example, obligations of the board, board creation and capabilities, board construction and advisory groups, senior administration, inward controls, the risk to the executives, pay, exposure, and straightforwardness. B. Summary of Reem Finance's compliance policy Reem Finance has fostered a far-reaching consistency strategy to guarantee adherence to the UAE's material regulations and guidelines, including those given by the Central Bank 3 of the UAE (CBUAE). Furthermore, the approach aligns with worldwide guidelines and best practices in the monetary business. The consistency strategy covers critical regions, for example, hostile to illegal tax avoidance, counter-psychological oppression supporting, sanctions, extortion anticipation, information security, client an expected level of investment, and moral lead. A portion of the critical elements of a decent consistency strategy for a bank working in the UAE, as per the CB Guidelines, are: 1. The ultimate responsibility for establishing and regularly reviewing comprehensive compliance policies and procedures should fall on the board. 2. The board should create a compliance committee or delegate this responsibility to another existing committee, such as the audit or risk committee. 3. A qualified and independent compliance officer with sufficient authority and resources to carry out their responsibilities should be appointed by the board and report directly to the board or the relevant committee. 4. The compliance officer should develop and implement a compliance program covering all aspects of compliance risk, including identification, assessment, monitoring, reporting, training, and remediation. 5. The consistency program should align with the bank's technique, goals, risk craving, and culture. 6. New laws, standards, and best practices should be regularly incorporated into the compliance program. 7. The bank's compliance program should be effectively communicated to all employees and stakeholders. 8. The consistency program should depend on autonomous surveys and reviews by interior and outer evaluators. 3 CBUAE. 2023. CBUAE | Regulations - United Arab Emirates dirham. CBUAE. Available at: https://www.centralbank.ae/en/regulations/ [Accessed 29 May 2023]

5 The bank's compliance policies and procedures should be publicized in its annual report and other relevant publications 4 . The compliance policy of Reem Finance 5 can be evaluated for its strengths and weaknesses using these criteria. The following are some potential criticisms: The compliance policy of Reem Finance states that the board is responsible for ensuring that laws and regulations are followed. Still, it doesn't say how the board will delegate or exercise this responsibility. It is still being determined whether there is a compliance officer who reports to the board or a relevant committee or if there is a separate compliance committee. Due to this, the roles and responsibilities of various parties involved in compliance oversight may need to be clarified. Reem Finance's compliance program must be specific about identifying, evaluating, monitoring, reporting, training, and addressing compliance risks in its compliance policy. Whether the consistency program matches the bank's technique, targets, risk craving, and culture is indistinct. It is likewise muddled whether the consistency program is refreshed routinely to reflect changes parents in laws, guidelines, norms, and best practices. The compliance function's effectiveness and efficiency may be hindered as a result. The compliance policy needs to mention how Reem Finance 6 communicates its compliance policy and practices to its employees and stakeholders. There must be more means of raising awareness, providing direction, and soliciting feedback regarding compliance issues. Different parties' comprehension and commitment to compliance may be affected. Reem Finance's consistency strategy must unveil how it surveys and reviews its consistency program. It is hazy whether there are autonomous interior and outer evaluators who assess the ampleness and execution of the consistency capability. The compliance function's transparency and accountability may suffer as a result. C. Analysis of Reem Finance's compliance policy Key features of a good compliance policy for a bank in the UAE Per the Corporate Administration Guidelines and Principles the CBUAE gave, a decent consistency strategy for a bank in the UAE should have a few key highlights. Effective communication, the appointment of an independent compliance officer, the alignment of the compliance program with the bank's strategy and risk appetite, regular updates to reflect changes in laws and best practices, the establishment of a compliance committee, and independent review and audit are just a few of these. 4 Noordin, N. H., & Kassim, S. 2019. Does Shariah committee composition influence Shariah governance disclosure? Evidence from Malaysian Islamic banks. Journal of Islamic Accounting and Business Research. https://www.emerald.com/insight/content/doi/10.1108/JIABR-04-2016- 0047/full/html 5 Reem Finance. 2023. Reem Finance, About. Available at: https://www.reemfinance.ae/en/ [Accessed 29 May 2023] 6 Reem Finance. 2023. Reem Finance, About. Available at: https://www.reemfinance.ae/en/ [Accessed 29 May 2023]

7 to its extensive range of services, clients can get the financial tools and support they need to meet their needs. Acquara's solid monetary establishment and hearty foundation empower it to convey dependable and productive monetary administrations. The organization keeps a significant settled- up capital base, guaranteeing steadiness and monetary strength. Its solid capital structure is a solid foundation for risk management and long-term expansion. Acquara 10 actively contributes to the overall financial landscape's development and growth as a key player in the UAE financial services sector. By giving available and inventive monetary arrangements, the organization upholds financial exercises, works with speculation, has valuable open doors, and helps drive the country's financial advancement. In addition to its services, Acquara adheres to regulatory requirements and industry best practices as part of its commitment to excellence. Compliance with applicable laws and regulations issued by regulatory authorities, such as the UAE Central Bank, is a top priority for the company. Acquara maintains a robust compliance framework to ensure its operations meet the highest honesty, openness, and ethical behavior standards. Acquara 11 has built a solid reputation in the United Arab Emirates as a reliable financial partner thanks to its steady expansion and success. Customers, businesses, and institutions looking for dependable financial services in the region have chosen the company because of its commitment to innovation, compliance, and customer satisfaction. Acquara continues to significantly impact the UAE's financial services industry thanks to its extensive product line, solid financial backbone, and dedication to excellence. B. Summary of Acquara's compliance policy Acquara's operations are guided by a comprehensive compliance policy that the company has developed. The strategy frames the organization's obligation to consistency with material regulations and guidelines in the UAE, including those given by administrative specialists like the National Bank of the UAE. In addition, it incorporates international best practices and standards to guarantee a solid compliance framework. To uphold the highest standards of honesty, openness, and moral behavior, Acquara's compliance policy 12 covers various aspects of regulatory compliance. The strategy covers many regions, including not restricted to tax evasion, misrepresentation anticipation, information insurance, the client a reasonable level of investment, and moral behavior. The consistency strategy features the organization's obligation with complying to every single significant regulation and guideline appropriate to its activities in the UAE. It emphasizes compliance as a fundamental part of the company's culture, directing the actions and behavior of all 10 Acquara. 2023. Compliance consultants: Financial regulatory compliance services UAE. Aquara Management Consultant. Available at: https://www.acquara.com/uae/compliance/ [Accessed 29 May 2023] 11 Acquara. 2023. Compliance consultants: Financial regulatory compliance services UAE. Aquara Management Consultant. Available at: https://www.acquara.com/uae/compliance/ [Accessed 29 May 2023] 12 Acquara. 2023. Compliance consultants: Financial regulatory compliance services UAE. Aquara Management Consultant. Available at: https://www.acquara.com/uae/compliance/ [Accessed 29 May 2023]

8 levels of employees. By industry best practices, Acquara's consistency strategy lays out clear rules for the ID, evaluation, checking, and detailing of consistency gambles. Employees must follow specific procedures and protocols in the policy to ensure compliance with applicable standards and regulations. It emphasizes the significance of ongoing awareness and training programs to ensure employees know best practices and compliance requirements. To uphold and screen consistency, Acquara's strategy 13 assigns a devoted consistency official liable for supervising and carrying out the consistency program. The compliance officer has the resources and authority they need to do their job well. This entails conducting regular internal assessments and reviews to locate potential compliance lapses and implementing the appropriate corrective measures. Acquara's consistency strategy underlines the significance of keeping up with viable correspondence channels to advance consistency mindfulness among representatives. It ensures employees can raise concerns without fear of retaliation by establishing mechanisms for reporting potential compliance breaches or concerns. The policy fosters an organization-wide culture of accountability and integrity. To keep up with changing regulatory requirements, industry standards, and best practices, Acquara's compliance policy 14 is regularly reviewed and revised. By staying current on new laws and regulations and incorporating them into its policies and procedures, the company takes a proactive approach to compliance. By embracing a thorough consistency strategy, Acquara shows its obligation to work within the law's limits and keep up with the most noteworthy moral norms. Employees are provided with clarity and direction regarding their responsibilities regarding compliance with the policy, which serves as a guiding framework. Through compelling execution and nonstop improvement of the consistency strategy, Acquara endeavors to guarantee administrative adherence, relieve consistence gambles, and maintain trust among its partners. C. Analysis of Acquara's compliance policy Key features of a good compliance policy for a bank in the UAE The analysis can evaluate Acquara's compliance policy 15 in light of key characteristics that contribute to an efficient compliance framework by utilizing the Corporate Governance Regulations and Standards issued by the Central Bank of the UAE 16 . The appointment of a qualified and independent compliance officer, alignment of the compliance program with the company's strategy and risk appetite, regular updates to reflect changes in laws and best practices, effective policy communication, and independent review and audit of the compliance program are among these 13 Acquara. 2023. Compliance consultants: Financial regulatory compliance services UAE. Aquara Management Consultant. Available at: https://www.acquara.com/uae/compliance/ [Accessed 29 May 2023] 14 Acquara 2023 Compliance https://www.acquara.com/uae/compliance/ accessed 6 June 2023. 15 Acquara. 2023. Compliance consultants: Financial regulatory compliance services UAE. Aquara Management Consultant. Available at: https://www.acquara.com/uae/compliance/ [Accessed 29 May 2023] 16 CBUAE. 2023. CBUAE | Regulations - United Arab Emirates dirham. CBUAE. Available at: https://www.centralbank.ae/en/regulations/ [Accessed 29 May 2023]

10 Independent review and audit of the compliance program : The independent review and audit of the compliance program are not mentioned in Acquara's compliance policy. Transparency and accountability are guaranteed when internal and external auditors independently assess the compliance program's adequacy and performance. Remembering arrangements for standard surveys and reviews for the approach would reinforce Acquara's consistency structure. These marks of examination feature regions where Acquara's consistency strategy could be upgraded to align with the critical highlights of a decent consistency strategy for a bank in the UAE. Acquara 19 can reinforce its consistency system, advance administrative adherence, and improve its gamble on the executive's abilities by tending to these areas. Evaluation of the scope and coverage of Acquara's compliance policy The analysis needs to look at the policy's scope and coverage to determine how effective Acquara's compliance policy is. This includes looking at how well the strategy tends to important administrative necessities and industry best practices. The analysis would examine fraud prevention, counterterrorism financing, data protection, customer due diligence, and ethical behavior to determine whether the policy covers everything. When evaluating the policy's scope and coverage, it is essential to consider the key areas Acquara's compliance policy addresses regarding regulatory requirements and industry best practices. The areas covered by Acquara's compliance policy include: Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) : The compliance policy implemented by Acquara demonstrates the company's dedication to the fight against terrorist financing and money laundering. It aligns with the UAE's import regulations and guidelines and consolidates industry best practices in AML and CTF 20 measures. To identify and prevent suspicious activities, the policy most likely includes robust Know Your Customer (KYC) procedures, transaction monitoring systems, and reporting mechanisms. Fraud Prevention: Acquara's consistency 21 strategy probably incorporates measures to forestall extortion inside the association and safeguard its clients. This might include laying out inside controls, carrying out extortion location frameworks, and giving preparation to representatives on perceiving and announcing fake exercises. The policy maintains Acquara's operations' integrity and safeguards stakeholders by focusing on fraud prevention. Data Protection: Financial institutions must have robust data protection measures in place in light of the growing emphasis on data privacy and security. Acquara's compliance policy is anticipated to 19 Acquara. 2023. Compliance consultants: Financial regulatory compliance services UAE. Aquara Management Consultant. Available at: https://www.acquara.com/uae/compliance/ [Accessed 29 May 2023] 20 Mukhtar A, ‘Money Laundering, Terror Financing and FATF: Implications for Pakistan’ (2018) 3(1) Journal of Current Affairs 27. 21 Acquara. 2023. Compliance consultants: Financial regulatory compliance services UAE. Aquara Management Consultant. Available at: https://www.acquara.com/uae/compliance/ [Accessed 29 May 2023]

11 address data protection requirements, such as collecting, processing, sharing, and storing sensitive and personal information. It frames measures to guarantee consistence with significant information insurance regulations and guidelines to protect client data and keep up with secrecy. Customer Due Diligence (CDD): Acquara's compliance policy likely includes extensive CDD procedures to check customers' identities and risk profiles. This might include directing careful historical verifications, maintaining precise client records, and executing continuous checking processes. By consolidating CDD measures, the arrangement mitigates gambles related to illegal tax avoidance, extortion, and other unlawful exercises. Ethical Conduct: Acquara's consistency strategy stresses moral direction and the significance of keeping up with high moral principles inside the association. It might provide guidelines regarding ethical decision-making, conflicts of interest, and professional conduct. Advancing direct morals assists work with trusting clients, controllers, and partners, adding to the organization's standing and long-haul achievement. The analysis can determine the degree to which Acquara's compliance policy complies with regulatory requirements and industry best practices by examining its scope and coverage in these areas. A comprehensive analysis would necessitate access to the entire policy documentation and a comprehensive comprehension of the organization's implementation. Assessment of compliance best practices employed by Acquara The adherence of Acquara's compliance policy to best practices should also be considered. This evaluation would include inspecting whether the organization integrates universally perceived principles and rules into its consistency system, guarantees ceaseless improvement, utilizes hearty gamble evaluation and relief measures, and cultivates a culture of consistency throughout the association. When evaluating Acquara's compliance best practices, the following factors must be taken into account: Incorporation of internationally recognized standards and guidelines : Acquara's consistency strategy should align with universally perceived norms and rules, like those set out by worldwide administrative bodies or industry affiliations. International data protection frameworks, ethical guidelines established by organizations like the International Chamber of Commerce, and the Financial Action Task Force (FATF) 22 recommendations for anti-money laundering and counter- terrorism financing are examples of these standards. Acquara demonstrates its commitment to meeting global compliance 23 expectations by incorporating these standards. 22 Ekwueme E, ‘Dampening Corruption and Money Laundering: Emissions from Soft Laws’ (2021) 24(4) Journal of Money Laundering Control 848. 23 PricewaterhouseCoopers. 2023. UAE - important regulatory updates and compliance requirements. PwC. Available at: https://www.pwc.com/m1/en/services/tax/me-tax-legal-news/2021/important-regulatory-updates-and-compliance- requirements-june2021.html [Accessed 29 May 2023]

13 consistency program, further developing correspondence channels for workers and partners, and leading ordinary free surveys and reviews of the consistency capability. The analysis can learn more about Acquara's strengths 26 and potential areas for improvement by thoroughly analyzing its compliance policy. These suggestions plan to upgrade the adequacy, productivity, and power of Acquara's consistency system and add to the organization's general consistence endeavors. IV. Comparison and Critique of the Compliance Policies Similarities and differences between the compliance policies of Reem Finance and Acquara A few similitudes and contrasts can be recognized while looking at the consistency approaches of Reem Finance and Acquara. The two organizations perceive the significance of consistency and have created complete arrangements to direct their tasks. They expect to comply with material regulations and guidelines, including those given by administrative specialists like the National Bank of the UAE. Both policies also cover anti-money laundering, fraud prevention, and ethical conduct. However, the specific approaches and specifics of the policies may differ. The alignment with international standards, the level of detail provided in the policies, the organizational structure for the compliance oversight, and the mechanisms for communication and training could all be examples of these variations. Reem Finance and Acquara share several similarities, such as their recognition of the significance of compliance in the financial services industry and their development of comprehensive policies to guarantee compliance with relevant laws and regulations. As a demonstration of a commitment to preserving integrity and mitigating risks, both policies likely address crucial issues like preventing fraud, ethical conduct, and money laundering. Despite these similarities, there may be differences in the specific approaches and details of the compliance policies: Organizational structure and oversight: How each company organizes compliance oversight may differ. Reem Money's strategy 27 must give unequivocal insights concerning the designation of consistency obligations or a devoted consistency board of trustees or officials. Conversely, Acquara's strategy might give greater clearness on the hierarchical construction for consistency oversight, for example, the foundation of a consistent board of trustees or the arrangement of a consistent official. Level of detail: The level of information provided by Acquara and Reem Finance's policies may differ. While Reem Money's strategy might give a wide outline of its obligation to consistency and the regions it covers, it might need explicit data about the execution of consistency measures, 26 Acquara. 2023. Compliance consultants: Financial regulatory compliance services UAE. Aquara Management Consultant. Available at: https://www.acquara.com/uae/compliance/ [Accessed 29 May 2023] 27 Reem Finance FY 2019, Reem Finance https://www.reemfinance.ae/wp- content/uploads/2020/10/Reem-Finance-FY-2019.pdf accessed 6 June 2023.

14 methodology, and controls. On the other hand, Acquara's policy might provide more in-depth instructions with specific procedures and controls for compliance-related activities. Alignment with international standards: The degree to which the approaches line up with worldwide norms and best practices may likewise contrast. Acquara's consistency strategy may unequivocally consolidate globally perceived principles and rules, like those set out by administrative bodies or industry affiliations. On the other hand, the policy of Reem Finance needs to specify how it complies with international standards. Communication and training: The policies may differ in how they communicate and enforce compliance requirements within the organizations. Acquara's approach might frame systems for powerful correspondence, preparing projects, and mindfulness missions to guarantee that workers and partners are informed about consistent commitments. There must be specifics about Reem Finance's communication and training initiatives in the policy. It is essential to note that these differences are speculative and based on general expectations without access to both companies' complete policies. A thorough examination of each organization's policies' contents and implementation would be necessary for a comprehensive and accurate comparison. Critique of the strengths and weaknesses of each compliance policy Reem Finance's Compliance Policy Strengths • Expresses the organization's obligation to consistency with appropriate regulations and guidelines 28 . • Includes anti-money laundering, anti-terrorism financing, and data protection as areas of compliance. • Specifies adherence to global principles and best practices in the monetary business. Weaknesses • Absence of lucidity regarding the assignment and exercise of consistency obligations by the board. • More adequate subtleties are needed for the consistency program's execution and arrangement with the organization's procedure and chance hunger. • Deficient data 29 on how the arrangement is imparted to representatives and partners. • No notice of an autonomous survey and review of the consistency program. Acquara's Compliance Policy Strengths • Recognizes the significance of adhering to all applicable laws, including those promulgated by regulatory bodies. 28 Reem Finance. 2023. Reem Finance, About. Available at: https://www.reemfinance.ae/en/ [Accessed 29 May 2023] 29 Reem Finance. 2023. Reem Finance, About. Available at: https://www.reemfinance.ae/en/ [Accessed 29 May 2023]

16 meeting regulatory requirements, mitigating risks, safeguarding customers, and preserving the financial system's integrity. Institutions can demonstrate a commitment to ethical practices, monitor and reduce compliance risks, and establish robust internal controls with the assistance of compliance policies. Compliance policies are especially important in the United Arab Emirates because of the stringent regulations that apply to the financial sector. Companies can use them to get around the complicated regulatory landscape, abide by laws made by regulatory bodies like the UAE Central Bank, and follow international standards and best practices. Reem Finance and Acquara's compliance policies show they understand the importance of following regulations and are committed. However, areas in both policies need to be strengthened further. Clarifying roles and responsibilities, providing more in-depth information about compliance programs, enhancing communication channels, and carrying out independent reviews and audits are all suggestions for improvement. Both businesses must continuously evaluate and enhance their compliance policies to adapt to changing regulatory requirements, emerging risks, and industry best practices. Reem Finance and Acquara can do this to strengthen their compliance frameworks, show that their organizations have a strong compliance culture, and help build a reliable UAE financial services sector. Financial institutions must have effective compliance policies to maintain trust, safeguard stakeholders, and uphold the industry's integrity. By constantly refining their consistency systems, Reem Finance, Acquara, and different organizations in the area can reinforce their functional strength and guarantee long-haul progress in an always-changing administrative scene.

17 References Acquara. 2023. Compliance consultants: Financial regulatory compliance services UAE. Aquara Management Consultant. Available at: https://www.acquara.com/uae/compliance/ [Accessed 29 May 2023] CBUAE. 2023. CBUAE | Regulations - United Arab Emirates dirham. CBUAE. Available at: https://www.centralbank.ae/en/regulations/ [Accessed 29 May 2023] Ekwueme E, ‘Dampening Corruption and Money Laundering: Emissions from Soft Laws’ (2021) 24(4) Journal of Money Laundering Control 848. PricewaterhouseCoopers. 2023. UAE - important regulatory updates and compliance requirements. PwC. Available at: https://www.pwc.com/m1/en/services/tax/me-tax-legal- news/2021/important-regulatory-updates-and-compliance-requirements-june2021.html [Accessed 29 May 2023] Mukhtar A, ‘Money Laundering, Terror Financing and FATF: Implications for Pakistan’ (2018) 3(1) Journal of Current Affairs 27. Noordin, N. H., & Kassim, S. 2019. Does Shariah committee composition influence Shariah governance disclosure? Evidence from Malaysian Islamic banks. Journal of Islamic Accounting and Business Research. https://www.emerald.com/insight/content/doi/10.1108/JIABR-04-2016- 0047/full/html Reem Finance. 2023. Reem Finance, About. Available at: https://www.reemfinance.ae/en/ [Accessed 29 May 2023] Reem Finance FY 2019, Reem Finance https://www.reemfinance.ae/wp- content/uploads/2020/10/Reem-Finance-FY-2019.pdf accessed 6 June 2023