Ruler of Dubai issues Law No. 4 of 2016 on the Dubai Economic Security Center
On 18 April 2016, the Ruler of Dubai issued Law No. 4 of 2016 on the Dubai Economic Security Center (“DESC Law”) with a view to furthering such objectives as supporting Dubai’s financial stability, protecting Dubai’s economy and enhancing investor confidence in Dubai.
The law has created a new government authority in Dubai under the name of the Dubai Economic Security Centre (“DESC”) with the main purpose of enhancing economic security in Dubai. To achieve this, DESC has been given wide jurisdiction to supervise local government agencies, charities and any commercial organisations in Dubai. Notably, DESC’s jurisdiction is wide enough to cover Dubai free zones and, specifically, the Dubai International Financial Centre.
Combating corruption, fraud, money laundering and other financial crimes is at the top of the list of DESC’s competencies, which also includes such functions as monitoring market abuse and financial irregularities, monitoring financial markets and institutions, commercial sectors and free zones, supervising the trading of currencies, commodities, precious metals and listed and unlisted securities, supervising donations sent or received by charities etc.
Whilst DESC does not have its own authority to seize funds, property or documents, it can request the public prosecutor to do so. DESC officers are also authorised to request assistance of policy and other government bodies in their investigations. It also has wide powers in relation to suspension of trading and regulation of the financial markets.
The DESC Law is also the first Dubai law to deal with the protection of whistleblowers, an issue that has previously been overlooked in legislation, although a whistleblower is narrowly defined as a person who reports to or cooperates with the DESC. The law aims to protect a whistleblower’s identity and whereabouts, as well as to provide a whistleblower with protection at his/ her workplace by providing that the reporting to the DESC of actions that may affect Dubai’s economic security shall not constitute a breach of any confidentiality agreement and that no legal or disciplinary action shall be permitted against the reporter unless the report is false.
The establishment of the DESC is part of Dubai’s efforts in combating financial crime and is a welcome development in the region. As the DESC has only recently been formed, the practical impact of its establishment and the extent of its cooperation with other financial regulators in Dubai are yet to be witnessed.