The Securities and Commodities Authority (SCA), the United Arab Emirates’ regulator overseeing securities, commodities, and financial markets, and the Dubai Financial Services Authority (DFSA), the independent regulator of the Dubai International Financial Centre (DIFC), recently announced a Memorandum of Understanding (MoU) aimed at enhancing audit oversight and fostering greater regulatory cooperation between the two organisations. The agreement will help strengthen the regulatory oversight of the audit function, and will include areas such as firm registration and inspection, helping to improve financial reporting, market integrity, and boost investor confidence in the United Arab Emirates’ financial sector.
What is an MoU?
A Memorandum of Understanding (MoU) is a formal yet non-binding agreement between two or more parties, outlining present intentions, roles, and objectives, serving as a mutual acknowledgment of potential outcomes and processes. While not legally enforceable like contracts, MOUs indicate a commitment to work together in good faith, often toward establishing a binding agreement.
Objectives of an MoU
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Clarifying Intentions: MOUs help align parties on their shared objectives, goals and areas of collaboration, ensuring the parties are aligned on their purpose and desired outcomes.
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Establishing a Preliminary Framework: An MOU lays the groundwork for collaboration or joint effort, particularly in academic, scientific, or research fields where a formal relationship is underway.
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Facilitate Transparent Communications: An MOU is instrumental in promoting transparency and understanding among parties. It aids in setting clear expectations, minimizing potential misunderstandings, and fostering a cooperative atmosphere.
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Strategic Planning and Alignment: MOUs are useful for strategic planning, helping parties to align their efforts and resources towards a common goal. Alignment is important for the successful execution of joint initiatives and collaborative projects.
Role of the MoU
Under the MoU, the SCA and DFSA will collaborate on monitoring and supervising audit functions, sharing expertise, and strengthening the overall framework for audit oversight within their respective areas. This partnership comes at a time of rapid financial sector growth in the United Arab Emirates and is designed to address the increasing complexity of financial markets.
His Excellency Waleed Saeed Al Awadhi, Chief Executive Officer of the SCA, commented: “The signing of this MoU with the DFSA marks a new era of collaboration and transparency in audit oversight. As the United Arab Emirates’ financial market continues to grow, it is essential that we strengthen our regulatory frameworks and promote best practices in auditing. This agreement will enhance our collective efforts to safeguard the integrity of the financial system and support the confidence of investors in the United Arab Emirates.”
Aims of the MoU
The new agreement is expected to bring a more seamless and effective regulatory environment, where both authorities will share knowledge and resources to improve the enforcement of financial reporting standards and enhance the effectiveness of audit processes. Both authorities have expressed their commitment to fostering a strong, sustainable, and transparent financial market in the United Arab Emirates.
Leadership Insight
Mark Steward, Chief Executive of the DFSA, added: “This is the start of a new era of collaboration between the DFSA and SCA. Our agreement will strengthen audit standards across all securities firms operating in the United Arab Emirates and DIFC, including in the United Arab Emirates’ capital markets. My DFSA colleagues and I look forward to working more closely with our SCA colleagues."
This blog is for informational purposes only and does not constitute legal or regulatory advice. The information provided has been compiled from publicly available sources, and while we have made every effort to ensure its accuracy and relevance at the time of publication, we do not guarantee its completeness or applicability to specific situations. Readers are encouraged to seek independent professional advice before making any decisions based on the content herein.
Zubin Muriya is a seasoned Governance, Risk, and Compliance (GRC) professional with over two decades of cross-jurisdictional experience in banking regulatory compliance, financial crime risk management, corporate governance framework, and audit advisory. His work across India and the GCC (UAE, Qatar, Bahrain) reflects a career rooted in regulatory rigor and operational integrity.
