Abu Dhabi in Action Strengthening Market Integrity Across the Emirate

Thank you very much. Uh good afternoon everyone. Uh I'm sure uh and I hope you have had a good lunch and you're ready for uh the second round uh post lunch. So um I want to start with a question that I want to ask you. Um and I want to tell you a very short story before we get into uh the meat of the discussion.

Uh the question I want to ask you is what do you think is the most important capital execution or vision? And we will come back to this theme as we go through the panel. So again, capital, execution or vision. And to share the story about 40 years ago, there was a young man in a South Asian city who had some dreams and he moved to a coastal town. And the coastal town had a couple of hundred,000 people, decent infrastructure, but nothing extremely impressive.

You fast forward that 40 years, that gentleman or that young man is now a multi-billionaire. That coastal town has three and a half million people. The GDP of that coastal town is over 300 billion. And it brings me back to the same question that I asked you earlier, which is, is it capital? Is it execution or is it vision that leads to that outcome?

So having said that and keeping this in mind, I want to turn to our panelists. We are not going to do the intros. Uh you've already you can read that and you uh the panelists have been introduced [snorts] and I want to start with a question. uh your excellency in terms of the compliance and regulatory framework. What do you think and what is Abu Dhabi as an emirate doing in relation to the most important elements of regulation to bring market integrity?

Some of the new ideas, the new initiatives that your authority is implementing. So we want to we want to paint a picture u of how everything fits together.

Thank you Jabaj. First of all I need to know the answer of this question. Which one is visionary or execution or capital? Do you have the answer or you are waiting for the audience to answer that?

I think we will wait for the audience to answer that question and we'll ask you also the same question. [laughter]

Everybody good afternoon. I hope you are enjoying the vibes here in this Abu Dhabi financial week uh which is amazing uh event for us and thank you for attending our sessions. First of all, let me put it this way. when uh the government of the UAE mandated the compliance regulations, Abu Dhabi government created uh a body called ADRA, Abu Dhabi registration authority which is mandated to supervise all compliance activities related to registars in the mainland and the commercial free zone except our friend here Tim. He's away from me.

[laughter] Uh so uh we started with implementing the regulation that was mandated by ministry of economy and the general secretary of uh AMLCFT PF uh back in 2021 onwards. I'm uh improving the requirements, enhancing the requirements and uh making sure that that implementing the easiest uh requirements that we can do. Having said that, we build kind of unorchestrated uh let's say pro processes and procedures to make sure that we comply with federal regulations in line with the FATF recommendations 24 and 25 and the immediate outcomes expected by uh FATF also number five. So this is our main goal is to get aligned with global and uh worldwide regulations in line with our uh own culture requirements and all environment our own environment requirements which is the federal regulations.

Fantastic. Thank you. I I think what you have said is is extremely important because how do you build uh integrity in the system and how do you build confidence? Um and what we have seen is basically the certainty of outcome.

Yeah.

When you give people certainty of outcome, that's what builds a lot of confidence, right? And that's what promotes uh business. So uh having having uh uh uh hear that perspective and and I do have to make a a disclaimer here that uh Tim is uh our regulator as well. So I can only poke him so many ways. Uh but maybe it's a good opportunity for me to do that.

So Tim coming to you. ADGM obviously is at the forefront of uh u bringing in a large number of international players, regional players to the to the ecosystem. And in this day and age, data and analytics are a key part of how you uh position yourself,

how you regulate firms and how you attract uh firms. So what is ADGM doing in relation to using the data the analytics to supervise and also at the same time promote uh the center so more and more uh folks can come.

Sure. Thanks Johans uh and your excellencies distinguished guests. Um thank you for joining uh us at this discussion today. Um [snorts] so at ADGM in the registration authority we're in the midst of a transition at the moment. We're we're moving away from activity for activity's sake towards what I would call intelligenceled supervision.

Um and and that means taking data and turning it into intelligence so that as a regulator we can identify where the genuine risks are and then target our supervision there accordingly. Um to give you some examples of uh what indicators would elevate risk for us as a regulator, you've got say law firms holding client money uh or company service providers offer offering nominee directorship services or audit firms that are auditing public interest or listed companies um blockchain foundations with thousands of token holders. These are all very different activities with different risks. And the more data that we can get that we can turn into regulatory intelligence, the greater we can we can target our supervision um in an effective way. The the real sort of utopia that we want to get to is if we can do this in real time.

So for example, law firm today may not be holding client money, but it may start holding client money tomorrow. But we may through our traditional methods we might not know that until the next time we come back around for an inspection which could be two years later. If we can uh work on finding a way to get intelligence or get data in real time then we can pinpoint the firms that we need to focus on again for our supervision to make sure it's effective and that way we don't bother firms that don't need to be um supervised as much. Um and and my last point would be just again in the registration authority at ADGM we're really lucky in that we're not only the company registar but we're the land registry the uh professional services regulator the technology regulator the insolveny service the privacy commissioner all under one roof and in most other jurisdictions that's separate bodies or authorities but we have that one view we can join the dots so we need to take advantage of of and harness that information that we have um in order to drive more effective, more efficient regulatory outcomes so that we can manage risk better and then the benefit for firms is that we can leave firms alone that don't need to be supervised.

Wonderful. Um so Tim, thank you for that. Your excellency, I know that Abu Dhabi is investing a lot of money into technology, into AI, into systems. uh how would you at the back on on the back of uh Tim's comments how would you sort of share with us what is happening from a technology standpoint um at the authority that you look after

act actually um Abu Dhabi is is always at the forefront of technology implementation and we have a very visionary leadership here in the UE we are we are we are blessed with that seriously. Uh so it's mandated. It's not it's not a choice. It's mandated that we implement technology all the way throughout all the processes regardless of the challenges and limitation even budgets and sufficiency whatsoever you have to implement technology. When we implemented the UBO uh declaration forms uh we started implementing that and we came up we faced a challenge which is how would we ease this process you know it's a very detailed process of data requirements documentation requirements and so on so forth and in other we benchmark even other jurisdictions we found out that only lawyers are the the the the the people who are able to submit declaration on behalf of their clients.

We said no we don't want that. What we wanted is to enable the investor our client to directly access to our portal service centers and make sure that they they can they can apply. So as a result of that we started to digitalize our forms to uh to make sure that we integrated our own requirements. So if it's a if the information is available in any government in uh entity we can go and there and extract it digitally. We don't want you to to have lots of inputs.

So whenever you submit an information any other government entity we can extract it and provide it for you. you can edit it. So this is the implementation of technology. In addition to that we have so we are mandated as ADRA to integrate all to centralize all the data for mainland and commercial free zones. So we centralize that and we can see now the typologies trends deficiencies whatsoever and we can enhance our processes.

So we don't need to send for example our our investors to our uh inspections to um unknown places. All the data is there all the the uh all the requirements are there and we can exchange it. Actually I was discussing with Tim few minutes ago that we need to integrate to here just here sitting here we need to integrate our our services to make sure that we enable dual licenses from ADGM to open in Abu Dhabi and vice versa. So instead of the data is there yes it's secretly it's it's a secret it's top confidential but the customer can ask to transfer those data to our systems and vice versa so this is the the simplest implementation of technology maybe in the future we'll see AI embedded there also

this is a real pet bug bear of mine um and as a AML regulator I fully appreciate the importance of KYC, CDD and so on. But it it it really seems so antiquated that if someone wants to set up a company with the DED or ADRA and also set up a company with ADGM that we're both asking them for the same information.

Yes,

it there's got to be a better way. So we we definitely need to collaborate.

Yeah,

I I I couldn't agree more and I think and we have done some research on this. So approximately if you reduce the uh go lifetime by 30 days it has an impact of between 1 and 2% of revenue of that business on in general

uh in the in in the first year of doing business. So if that is the case you can imagine the number of companies that are coming in size of revenue

u and speeding all of this up can increase that part of the GDP quite quite a bit. So um on on the back of what has just been said, I think there's always a challenge between how do you this is a lifelong and eternal challenge. How do you manage compliance with being commercial? Generally regulators get accused of you're not commercial enough.

The regulators get accused of the authorities get accused of okay we are not you are not commercial enough. No,

the the other parties are trying to also do things very fast and they don't have a view of the wider picture about what leads to market integrity. So, how would you view that conflict and and how are you addressing that particular challenge that has haunted everybody forever?

Yeah. Well, as I said is we are we are integrated with so many uh government entities. That's one. Second, we have a goal that effortless and actually the government of Abu Dhabi is providing is conducting uh I think a bianual uh uh competition between government entities for effort effortless. So, so as much as possible we simply simplify our processes uh in the front line and the back and the back end also for the the for the our own employees.

So we made sure that the transactions doesn't take that long. There are no days for you to wait. It's just maybe maximum of 1 hour, 2 hours maximum to review a complex structure. It's not an easy task. Believe me, we have an army back back there.

But we al we are also having an ar a well-trained army in our service centers to assist clients to go through the application to make sure that they deliver they they submit a proper application which is which can be approved easily. So simplifying requirements, simplifying uh processes, automating uh and data gathering as you said the data is important. So all of those combined together would give an an excellent I think uh customer experience.

Excellent. And and Tim, you and I were talking and and you were referring to integrity as the invisible market integrity as the invisible infrastructure. Mhm.

Uh and how do you again coming back to the same question slightly differently is how do you create an efficient infrastructure invisible infrastructure but efficient infrastructure that has market integrity without compromising on the principles yet being commercially viable. We are seeing this here already with a number of firms that are coming uh to Abu Dhabi and to ADGM. But how do you take this to the next level?

Sure. Um let me let me begin my answer to that with asking the audience um or sharing with the audience a riddle. Um so what has what is something that's very hard to measure. You can't see it. You can't touch it.

You only notice it when it's gone. But it has enormous value. My kids would probably say Wi-Fi, but you you can kind of measure that. Um, where I'm going with this is market integrity. It's it's intangible and and that's why I I refer to it as invisible infrastructure because when you have market integrity, um, cost of capital goes down, trust goes up, um, and and and transactions become frictionless in terms of doing business.

When market integrity is absent, conversely, then just doing business becomes harder. Trust goes down, cost goes up. Um and so market integrity is this business enabler, this business enablement infrastructure, but because it's intangible, um it's invisible. And some of the ways or the elements that we we try to employ in in ADGM to ensure market integrity are things like um holding auditors to high standards of order quality. um having a comprehensive whistleblowing regime.

Um ensuring professional standards for services firms and but also the the role of the registars in terms of um being proactive leveraging technology and where necessary taking proportionate enforcement action all demonstrates uh that this is a a jurisdiction that takes market integrity seriously and that's that's how we try to promote it. I think the the market integrity point is very important but that's also a function of harmonization and and your excellency so obviously you have a a wide remmit and you've talked about the harmonization and the data sharing um between the various free zones and the authority and so on. Paint a picture for the audience if if I may request you what do the next two three years look like? uh for people coming to uh Abu Dhabi and and how how much improvements because there always room for improvement. We are doing phenomenally well compared to a lot of other places but you can always grow and I think that's the ambition.

So what's the next step?

Well uh actually our vision is to attract investments and businesses. So the main principle for to do that is age of doing business and to reach to age of doing business you need to implement whatever tools that you have you are having and currently we are having AI and other technologies new technologies. So I think [snorts] harnessing technologies to make sure that Abu Dhabi at the forefront of the world and leading the diversification and the non-oil econom economy and making sure that businesses are easily accessing to the market without without any uh burdens or uh or barriers with make keeping in mind the market integrity. So technology is nowadays is the secret answer for for everything. Thank you so much.

Well, thank thank you very much and I would leave the audience with that thought again having heard uh the panelist again. I will encourage you to think about is it capital, is it execution or is it vision? So maybe we can we can finish with that. Your excellency, what do you think?

No, no, no. I wouldn't say you have to tell me. [laughter] I think if you ask me the priority always goes to the vision because if you don't have direction you really don't have anything you can deploy a lot of capital and execute in the wrong direction uh and it wouldn't get you anywhere but first obviously is the vision uh then the execution uh and capital is nice to have but if you have good vision and good execution you can actually create capital so that will be my view but with that uh I would like to thank your excellency Tim thank you very much for an excellent discussion. It's it's an honor to uh share the stage with you and I wish all of you a very happy afternoon and uh lots of more interesting panels. Thank you very much.

Thank you.

[music]