Compliance is Not the Enemy: Christine Abou Assali on Fintech Regulation in the UAE

So I'm very excited to be joined in the studio today by Christine Abu Assali.

She's the co-chair Policy and regulation working group at the MINA FinTech Association and also partner at Alim Associates.

Christine, thanks so much for joining us today.

Thank you, Rachel.

Thank you very much for having me on your show.

So as mentioned, you do wear multiple hats.

You're a partner at a law firm and you chair up this policy working group.

What was it that initially drew you to this intersection of law, technology, and finance?

Yes, I would say that I was always drawn to complex areas of law.

I started my career working on derivatives and securitizations, which are complex areas of law, and I remember one of my first job interviews being asked what's the difference between from a lawyer's perspective between selling shoes and selling financial products.

So I mean, obviously shoes, you know what it's designed to do.

You know what can go wrong, the worst can go wrong.

You can even try it on, whereas whereas a financial product.

It's far more complex.

The risk may be opaque, and you can really lose a lot.

You can lose your savings and your money.

So, the more complex the product is, the more the impact of the lawyers and the regulators is important, and this really appeals to me quite a lot.

I would say today in the fintech space this is even more accentuated because regulators and And the lawyers are actually shaping the market.

They are not just reacting to it, and we are seeing, we are seeing this with companies looking to set up in jurisdictions where the regulatory framework is clear and certain, and this is one of the reasons a lot of companies are coming to set up.

So let's talk about the regulatory landscape because obviously here in the Middle East there are a number of regulators.

We have the, we have, we have.

You know, FSRA in the ADGM.

For a founder watching this, how do they even begin to navigate this landscape of all the different regulators?

I mean, that's a great question, and I think in the UE we are lucky to have multiple regulators, and it's a wealth, at least for the time being.

It's still a wealth, and I would tell the founder to first start by asking themselves three questions.

The first question What is my product?

So say you are in payment.

What's the product?

Are you keeping processing data for customers?

Are you handling client money?

Are you storing value?

So this is one question.

The second question is, what is my activity?

Say you are in digital assets.

Are you a broker dealer?

Are you enabling buyers and sellers to exchange on a platform, or are you keeping? custody.

The third question is, who are my customers?

Are my customers and where are they?

Are my customers the public, retail investors, or are they professional clients or are they market counterparties?

And where are they based?

Are they only in or the rest of the?

And how will I go to reach out to them?

And really, once you've considered these things, I would definitely recommend you speak with your advisor.

And together with these questions that will help you determine which regulator to approach.

And so in your view, from what you've seen, it's much better to ask yourself those questions up front and then just select one rather than having all those discussions with regulators first.

Really ask yourself, of course you can always approach regulators and regulators are very approachable in the and they want to engage.

So yes, please, by all means, and you may need to have to actually go and get approval from more than one.

Regulator and that is often the case in the, but I would definitely say do this work first.

Don't just decide without doing this work.

I'm going to just speak with one regulator and this is where I want to be.

Of course things like where I want to be set up, what's the ecosystem, the legal framework are important questions as well, but do not forget the other three questions because then you would find yourself having to then comply with more. regulations that you had anticipated at the outset.

Yes, and then the regulation could become burdensome to examine that case.

So final question for you.

There's been a wave of new rules around crypto licensing here in the UAE, and you have large experience fines for unlicensed players.

You are a qualified lawyer as well.

Do you worry that compliance costs could start to crowd out some of this innovation?

No, I really would not worry that compliance costs crowds out innovation.

Because it's an essential part of it.

You cannot have sustainable innovation without compliance, and let's take a simple analogy.

We wouldn't allow a doctor to operate on a patient without having a medical degree and years of training.

And similarly, we cannot, we cannot allow an unlicensed player operate in financial markets without a license.

Now, of course.

If regulations are not appropriate and inadequate, then that could add costs, but luckily in the the regulations are proportionate and risk-based, meaning depending on the level of risk what your activity entails to you and the stakeholders and the wider system, then the compliance cost.

And the compliance burden is higher.

So say you are operating in a sandbox.

In this case, your activity is limited.

Your stakeholders are very limited, and as such your compliance burden is much lower.

On the other hand of the spectrum, if you are fully operational, you are holding retail client money, you are at the highest end of the of the.

Compliance scale and that is completely understandable.

So I guess the compliance and compliance is necessary.

It's about whether the regulations are adequate, proportionate and risk-based or not.

Incredible.

Well, thank you so much for coming, Alicia.

It was really great to have your views from both the legal compliance perspective and also innovation.

So thank you so much.

Thank you.