Latest news with #DFSA
Fintech News ME
6 hours ago
- Business
- Fintech News ME
DFSA Report: Quantum Computing and AI Introduce New Risks to Finance
As implementation of emerging technologies accelerates, operational resilience, technology risk management, and adaptive oversight will be fundamental to maintaining stability in financial markets. Regulators and institutions must act to raise awareness of emerging threats, enhance readiness, and strengthen technology governance, global financial regulators and experts said during a closed-door meeting. The session, hosted by the Dubai Financial Services Authority (DFSA) at the Dubai Fintech Summit 2025 in May 2025, bought together 70 representatives from 18 financial regulatory authorities from across the globe, alongside senior experts from the Bank for International Settlements (BIS) Innovation Hub and the International Monetary Fund. These participants examined how cybersecurity, AI, and quantum technologies intersect, discussing practical measures to address the evolving risk landscape, and reflecting on current progress and persistent gaps. An evolving cyber threat landscape Participants warned of the evolving cyber threat landscape, highlighting that cyber threats are becoming more sophisticated and harder to control because they easily cross borders and affect many different industries at once. They emphasized the shift from ransomware encryption towards double extortion, which combines data encryption with threats to leak stolen information, as well as the growing use of AI for social engineering. They also noted that threat actors are increasingly attacking newer technologies such as Internet-of-Things (IoT) devices with physical sensors and supply chains, and are using legitimate tools to evade detection mechanisms. To manage these risks, these experts agreed on the need to balance innovation with robust cybersecurity. They advised on strengthening basic defenses, such as keeping software up to date, dividing networks to limit damage, training employees to spot threats, using strong access controls and multifactor authentication, sharing information about threats, and carefully managing risks from third parties like suppliers and partners, while also emphasizing the importance of cross-sector and public-private collaboration as cyber-attacks become orchestrated at industrial scale and are no longer isolated events. Regulators, meanwhile, should provide guidance on quantum and AI-related risks, and raise awareness about these threats. They should also embed cybersecurity into supervisory assessments, and build their own skills and suptech tools to monitor and respond to cyber and emerging technology risks. Quantum risk evolution Quantum risks were another key topic of discussion. Quantum computers, which utilize quantum mechanics to process information, have the potential to revolutionize fields like cryptography, drug discovery, and complex optimization by solving problems exponentially faster than classical computers. However, these same capabilities also pose significant cybersecurity risks. Such powerful quantum computers could theoretically break widely used encryption methods that currently secure online banking, payment systems, and other digital payments. And while these computers, called cryptographically relevant quantum computers (CRQCs), don't exist yet, they could emerge by 2030-2040, emphasizing the urgency to prepare for a post-quantum world now. Participants warned that the financial sector is likely to be among the prime targets for quantum threats because of the high value of financial assets transactions financial institutions process. Though the space benefit from strong governance structures and prudential frameworks, important gaps persist, including limited awareness of quantum threats, incomplete inventory of vulnerable systems, and slow global standardization and interoperability. Against this backdrop, experts highlighted that regulatory authorities have a vital role to play in raising awareness on quantum threat, and supporting gradual transition planning. They should also consider introducing regulatory sandboxes for experimentation, cross-border collaboration, and scenario planning that simulate quantum-risk impacts to better prepare for the challenges that quantum technologies may bring. AI risk oversight Finally, the group examined the risks associated with the growing adoption of AI in financial services. First, they noted that financial institutions process large volumes of highly sensitive personal and financial data that are increasingly used to train complex machine learning (ML) models. This enhances the risks of data breaches and intellectual property theft. They also emphasized that AI expands the attack surface for cyber threats, and introduces new points of failure not present in traditional information and communication technology infrastructure, such as data pipelines and ML models. Meanwhile, threat actors are increasingly incorporating AI into their offensive toolkits to enhance, automate, and scale cyberattacks, as well as to adapt to counter-defensive measures. Experts also highlighted the growing resilience on a limited number of dominant AI providers, contributing to supply chain concentration risk and heightening the risk of systemic disruptions in the event of supply chain incidents. They also drew attention to the expanding influence of bigtech companies across the AI ecosystem. Participants encouraged regulators to map supply chains and assess concentration risks across critical technology providers. They also stressed the importance of balancing innovation with adequate oversight, advising for principle-based approaches, and an adaptive, learning-focused posture to respond more effectively to the evolving nature of AI applications. The potential of quantum computing and AI Quantum computing and AI are transforming technologies poised to transform the financial services and banking industry by accelerating secure transaction processing, revolutionizing risk analysis, optimizing complex portfolios, and enhancing fraud detection. McKinsey estimates that quantum computing use cases in the finance industry could create US$622 billion in value by 2035. Meanwhile, generative AI (genAI), a subset of AI that creates new content, could add as much as US$340 billion a year in additional value, representing 2.8% to 4.7% of total industry revenues, largely through increased productivity. However, genAI also introduces risks, such as deepfake and fraud. Deloitte's Center for Financial Services predicts that genAI could enable fraud losses to reach US$40 billion in the US by 2027, from US$12.3 billion in 2023. Despite these challenges, adoption is accelerating rapidly. According to the latest McKinsey Global Survey on AI, 78% of respondents said that their organizations used AI in at least one business function as of late 2024, up from 55% a year earlier. Boston Consulting Group (BCG)'s AI Radar found that one in three financial institutions plans to spend over US$25 million on AI in 2025, and some will spend in the range of 0.5% to 1% of revenues towards AI technologies.
Khaleej Times
3 days ago
- Business
- Khaleej Times
St. James's Place Middle East marks two years in Dubai
As the UAE continues its emergence as a global financial centre, the UK's largest financial advisory business and international wealth manager, St. James's Place has marked its second year in the emirate, predicting further growth as capital flows into the region. May marked the second anniversary since SJP Middle East obtained regulatory approval from the Dubai Financial Services Authority (DFSA) and established its base at the Dubai International Financial Centre (DIFC). Since establishing its base in Dubai, the firm has experienced rapid growth, driven by the need for individuals to manage complex international assets across borders, says partner Daniel George. The UK-headquartered firm, which manages over $258 billion for more than one million clients worldwide, has also benefited from the significant number of Britons relocating to the UAE in recent years, drawn by its thriving job market. "The UAE is clearly a hotspot for individuals looking for a high-growth, pro-business environment," says George. "We are seeing clients move to the UAE for different reasons. It is great that we can help internationally mobile individuals manage their wealth across borders and make the most of the opportunities this region affords." SJP expects further growth in the coming years as clients look to relocate to the UAE, attracted by its competitive tax landscape and attractive lifestyle. "We are extremely positive about the growth prospects for this region and continued economic growth across the UAE," George added.
Gulf Business
3 days ago
- Business
- Gulf Business
Dubai Financial Services Authority's Charlotte Robins on how its Tokenisation Sandbox is gaining traction
Image: Supplied Charlotte Robins, MD of Policy and Legal at the Dubai Financial Services Authority ( In this interview, Robins discusses the models that stood out, how the initiative aligns with Dubai's D33 economic agenda, and how the DFSA is balancing innovation with robust regulation to position the DIFC as a top-four global financial hub. The Tokeni s ation Regulatory Sandbox attracted 96 expressions of interest from six jurisdictions. What does this level of global interest tell you about the future of tokeni s ation and DFSA's regulatory positioning? The global interest in our Tokenisation Regulatory Sandbox signals the importance of, and growing appetite for, responsible innovation, and recognises the appeal of DFSA's regulatory approach to innovation. As a regulator, our role is to support innovation and its positive contribution to the financial markets in ways that maintain market integrity and protect the public interest within the DIFC. By working closely with local and global firms through the sandbox, we are encouraging responsible innovation and helping to ensure that new ideas are tested against regulatory expectations. What were some of the most promising or innovative tokenisation models proposed by applicants? Were there any particular sectors — like sukuk or property funds — that stood out? The expression of interest process provided the DFSA with valuable insight into the diversity and maturity of tokenisation models being developed globally . The DFSA received nearly 100 responses – including proposals to tokenise financial assets and instruments, such as bonds (including Islamic bonds, or sukuk), units in a fund (including money market funds and property funds), and the trading and safe custody of those assets – reflecting the broad potential of tokenisation across the financial ecosystem. The initiative attracted strong interest from both established financial institutions wishing to explore tokenisation use cases and innovative start-ups looking to scale breakthrough digital asset solutions in a regulated environment. Applications were received from within the UAE and from other regions such as the UK, EU, Canada, Singapore and Hong Kon . Can you walk us through the evaluation process? What key factors determined whether a firm was invited into the Innovation Testing Licence programme versus granted full authorisation? As a brief recap, the e xpression of interest (EOI) period ran from March– April this year. Thereafter we conducted an initial assessment of the submissions received and whether the tokeni s ation activities fall within our regulatory perimeter of financial services activities that can be conducted in the DIFC. Following these assessments, the DFSA had discussions with a majority of the applicants and shortlisted those that were sufficiently clear on their business model , ready to do business in and from the DIFC and ha d a level of familiarity with DFSA rules, and therefore ready to progress to the next stage. In June, a number of firms were then invited to prepare their applications, either for the Innovation Testing Licence programme (ITL), which is our regulatory sandbox , or where the business model is sufficiently matured and tested in other markets, for a full licen c e . The DFSA assesses the firms' readiness to apply for the Tokenisation S andbox based on the ITL eligibility criteria that we have in place, such as : •S ufficiency of resources (financial and operational) to operationali s e • R eadiness to test its innovative products and services • C ommitment to deploy products and services in the DIFC and broader UAE during and after the sandbox testing period How does the DFSA strike a balance between enabling financial innovation and ensuring market integrity, particularly with emerging technologies like tokenisation ? At the DFSA, we recognise that robust, balanced, and proportionate regulatory frameworks have a key role to play in creating an environment in which innovative firms can thrive. On this basis, we create, and tailor our regulatory regimes appropriately and don't seek to impose unnecessary regulatory burden, and inadvertently stifle innovation. To that end, we always publicly consult on any changes to our rulebook to ensure that our approach to regulation: Is proportionate and risk-based enough to foster beneficial innovation, yet robust enough to avoid a race to the bottom and a loss in trust and confidence; Evolves and adapts in line with market developments, adopting the principle of 'same activity, same risk, same regulatory outcome'; and Focuses on regulatory outcomes that meet the needs of local markets rather than adopting a 'one-size-fits-all' regulatory approach. Additionally, on an ongoing basis we proactively engage with market participants, their advisors, and industry bodies, for example, to ascertain how our regulatory regime can be enhanced and improved e.g., via industry webinars, roundtables, outreaches, and consultation. In such an area where rapid change appears to be a permanent feature of the environment within which these markets operate, we see both collaboration and industry engagement as being essential. From investment tokens to stablecoin approvals, the DFSA has taken progressive steps in digital asset regulation. How will insights from this sandbox phase inform future regulatory developments? Insights from our sandbox – the Innovation Testing License , will allow us to observe how innovative technologies perform in a controlled environment. This will enable us to identify potential risks, benefits and gaps in existing regulation, which will in turn lead to more informed balanced, and adaptive policymaking that supports innovation while protecting consumers. W e are continuously developing our models and policies to ensure that they don't stifle growth whilst ensuring investor protection and responsible innovation. In May 2025, we published an explainer guide to clarify the process of apply ing to the ITL sandbox so that we can continue to empower innovators with the knowledge they need to engage with the DFSA and bring transformative financial services to market in the DIFC. We're seeing more interest in innovation / crypto – firms coming to us and we collaborate with other regulatory standard-setter via groups such as the Global Financial Innovation Network (GFIN) to ensure that we share-knowledge and best practices. As a regulator, it's important that we are balance growth and innovation whilst continuing to protect our stakeholders, investors and the market. In terms of what we are seeing in the innovation space – Tokenisation is probably at the top of the list. How does the Tokenisation Regulatory Sandbox align with Dubai's D33 economic agenda? In your view, what role will tokenisation play in helping DIFC become one of the world's top four financial hubs? The DFSA's regulatory ITL Sandbox aligns with Dubai's D33 economic agenda by enabling safe experimentation with tokeni s ed and innovative financial products – positioning the DIFC at the forefront of FinTech innovation. As Dubai aims to become one of the world's leading financial hubs, our sandbox serves as a practical mechanism for translating policy into real-world outcomes. Attracting global players while shaping regulation which is ready for the future. By embedding tokenisation within a transparent framework, we are not only fostering innovation, but setting global standards , cementing Dubai as a leading jurisdiction for digital finance. DFSA has been opening its regulatory sandbox to non-traditional financial institutions and tech startups. What strategies are you deploying to ensure diverse participation—and how is that shaping your regulatory toolkit? To ensure diverse participation of non-traditional financial institutions (NBFIs) and tech start-ups in the ITL programme , DFSA implements a combination of outreach, design flexibility, incentivi s ation and support mechanisms. Some o f the key strategies implemented by the DFSA include : • I ntroducing themed sandbox such as the T okenisation S andbox launched earlier this year ; • A llowing fintechs to participate in the sandbox with proportionate regulatory re quirements including waivers and modi fications from re gulations during the testing period ; • D esigning streamlined and transpa rent application process with clear timelines and expectations ; • P roviding regulatory guidance through closed supervision to enable participants' success in the programme . Initiatives such as the DFSA's Tokenisation Regulatory Sandbox underscores the DFSA's commitment to enable innovation in a way that is responsible, informed, and aligned with global regulatory best practice – supporting the DIFC's position as a leading hub for digital finance, and aligning with Dubai's Economic Agenda D33, which aims to make Dubai one of the world's top four global financial hubs by 2033 . As previously mentioned, our sandbox , will allow us to observe how innovative technologies perform in a controlled environmen t which will in turn enable us to identify potential risks, benefits and gaps in existing regulation – resulting to more informed balanced, and adaptive rulemaking . Read:
Khaleej Times
12-07-2025
- Business
- Khaleej Times
UAE: India's HDFC Bank officials summoned after alleged sale of risky bonds to some clients
Less than two weeks after Khaleej Times uncovered how India's HDFC Bank allegedly sold high-risk Credit Suisse bonds to ineligible overseas investors, including some in the UAE, Indian authorities have summoned the bank's top executives, including its managing director, for questioning. A notice dated July 11, seen by Khaleej Times, shows that the Economic Offences Wing (EOW) of Nagpur Police in Maharashtra has filed a complaint against four senior officials of the bank. The complaint was lodged by an investor who was prominently featured in Khaleej Times' June 27 report. The individuals named in the notice have been ordered to appear before the Economic Offences Branch in Nagpur at 11am on Saturday, July 12, for further inquiry. The complaint comes amid growing regulatory scrutiny of HDFC Bank in the UAE, where reports from multiple investors who claim they were misled into buying risky Additional Tier-1 (AT1) bonds through the bank's Dubai-based relationship managers have been filed with the Dubai Financial Services Authority (DFSA). The DFSA, when contacted, declined to confirm or deny any investigation, citing confidentiality provisions under Article 38 of the Regulatory Law. 'The EOW notice shows that the matter is being taken seriously,' said a Dubai-based investor who has also filed a police complaint against the bank in India. 'We're seeing action in more than one country now.' The bonds were wiped out when Credit Suisse collapsed in March 2023. Under DFSA rules, they can only be sold to 'professional clients' — those with a net worth above $1 million or proven experience in complex financial products. However, documents and testimonies reviewed by Khaleej Times suggest that some investors were classified as professional clients, often through inflated or manipulated Know Your Customer (KYC) forms. When approached earlier, HDFC Bank denied any wrongdoing, stating it has 'robust processes' to communicate product features and risks, and that it takes a serious view of any malpractice. The bank also dismissed as 'speculative' reports that its chairman had met DIFC regulators following a show-cause notice.
Hi Dubai
01-07-2025
- Business
- Hi Dubai
DFSA Highlights Rising Digital Threats and Global Oversight Push in New Risk Report
The Dubai Financial Services Authority (DFSA) has spotlighted the rising complexity of cyber and AI risks in its latest report, underscoring the urgent need for global regulatory collaboration amid accelerating digital innovation. Released on Monday, the report titled 'Cyber and Artificial Intelligence Risk in Financial Services: Strengthening Oversight Through International Dialogue' outlines the increasing convergence of cyber threats, AI adoption, and the potential disruption from quantum computing. It comes on the heels of DFSA's inaugural Cyber and AI Risk Regulatory College, held in May 2025, which convened 70 senior representatives from 18 global financial authorities. 'Digital risks are no longer peripheral — they are fast becoming systemic,' said Justin Baldacchino, Managing Director of Supervision at DFSA. He emphasized the growing international consensus on evolving regulatory approaches to meet the pace of innovation. The report delves into the cybersecurity landscape, emerging AI risks, and the implications of quantum computing on current security frameworks. It notes a surge in sophisticated cyberattacks and stresses the urgency of preparing for a post-quantum cryptography era as traditional encryption methods face obsolescence. AI's rapid integration into financial systems also raises governance concerns, prompting calls for stronger oversight, transparency, and third-party risk management. Herman Schueller, DFSA's Director of Innovation and Technology Risk Supervision, stressed the value of cross-border cooperation, stating that 'open dialogue is essential to adapting oversight practices in a fast-evolving digital environment.' The DFSA report reflects a growing momentum among global regulators to strike a balance between safeguarding financial stability and supporting responsible technological innovation. News Source: Emirates News Agency
