New law has jail term, fine for those accepting illegal deposits

 10 Dec 2012 - 3:04


DOHA: A law passed last week specifies stringent punishment for people and entities found soliciting deposits from the public without a valid licence from the banking regulator.

Stiff punitive measures have also been specified for those who refuse to accept local currency bills and for issuing and circulating forged Qatari currency.

Anyone found accepting deposits from people or entities illegally is to face a jail term of up to five years or pay up a fine of QR5m or both, according to a law (Number 13 of 2012) that regulates the Qatar Central Bank (QCB) and Financial Services Institutions.

Similarly, the maximum prison term is three years and fine up to QR5m, or both, for those found guilty of refusing to accept the Qatari currency (legal tender), says the law. The same punishment is specified for those found using notes that are not in currency anymore. 

The legislation places, aside from banks and financial services institutions — including exchange houses — insurance companies and the Qatari bourse (Qatar Exchange) as well as Qatar Financial Centre-registered financial entities under the overall supervision of the QCB.

The law, which was passed by the Emir, H H Sheikh Hamad bin Khalifa Al Thani, last week, also covers financial services consultancies and has 10 chapters and 228 articles. A prison term of up to three years or fine not over QR200,000 (or both) has been specified for officials and auditors of QCB-licensed entities such as banks and financial services institutions for manipulating accounts. Issuing forged Qatari currency attracts deterring punitive action such as 10 years’ jail and QR10m fine or both.

More significantly, experts on the payroll of insurance firms who are deployed for inspection and estimation of damages in claims cases must be licensed by the QCB. An unlicenced expert or middleman is to be fined QR100,000, says the law. 

Also, no insurance provider based overseas will be permitted to underwrite any kind of risk against properties in Qatar. In such cases, the insurance provider must be based locally.

It has been made mandatory for all insurance providers who offer policies like life cover and investment-linked schemes to make their annual profit and loss accounts public.

As for Islamic banks and financial services institutions, they must have an Islamic Shariah (law) board with a minimum of three qualified members approved by the annual general meeting of their shareholders, and neither they nor their relatives — even distance ones — must be employed in that institution or hold the shares of that entity.

Foreign banks, financial services institutions or insurance providers applying for a license to operate in Qatar will be liable to pay a security deposit.

The law bans a bank or financial services company from disclosing to anyone account, credit or transaction details of a customer unless there is a court order or there is suspicion of money laundering.

The law authorises the QCB to frame rules and regulations for licensing companies that would like to operate credit information services in the country. It is presently illegal for any individual or entity to carry out such operations. The QCB has been mandated to set up a central credit database under the direct supervision of its Governor, who is of the rank of a Cabinet Minister. 

The proposed database is to collect and store information regarding credits dispensed to any individual or company by any of the entities licensed by the QCB.

The database would help banks and financial services institutions to manage risks involved in dispensing loans as they would have detailed information about the creditworthiness of a potential borrower. The QCB has also been mandated by the new legislation to set up a committee or committees comprising appellate court judges as heads and members, to hear grievances against it (the QCB) or settle disputes among the QCB-licensed entities.

The board of directors of the QCB has been armed with tremendous powers. It is to be headed by the Governor, who is to be appointed by the Emir. Its vice-chairman is to be the Deputy Governor. 

The board with a four-year tenure (renewable) is to have five members — a member each from the Ministry of Economy and Finance and the Ministry of Business and Trade.

The law confers the status of an independent entity on the QCB and places it directly under the Emir. Its capital has been raised to QR50bn ($14.28bn) and its financial year is from January 1 to December 31.

The legislation asks the QCB to set up a ‘fund’ to protect customer deposits on its own or in collaboration with the banks licensed by it. The idea is to help put in place systems and procedures to protect customers.

The Peninsula

QCB given more teeth

DOHA: A law (Number 13 of 2012) passed recently arms the banking regulator, Qatar Central Bank (QCB), with more powers and authorises it to work as a supervisory authority for various sectors.

These sectors include — aside from banking and financial services companies and exchange houses — insurance providers, financial consultancy firms, as well as financial entities registered with the Qatar Financial Center (QFC) and Qatar Exchange. 

“The legislation is part of the country’s efforts to upgrade the financial and banking institutions and support the role of regulators in this essential sector of the economy,” Qatar News Agency (QNA) reported yesterday citing a QCB release.

QCB will also set, supervise and implement all the policies relevant to the organisation, regulation and supervision of all financial services and activities conducted at or by the Qatar Financial Centre (QFC) while respecting the original objectives of its foundation, QNA said.

The legislation mandates the QCB to set up a high-profile ‘Financial Stability and Risk Monitoring’ committee that would be tasked with studying existing and future risks related to all banking, financial, insurance and stock market activities.

The committee is to be headed by the governor of the QCB. His deputy would be the vice-chairman, while the panel would have members from the Qatar Financial Markets Authority (that regulates Qatar Exchange), Qatar Financial Centre Regulatory Authority and experts and officials from the QCB itself and from different banks and financial services entities as well as insurance companies.

The panel is to coordinate closely with the QCB and frame general policies for the Ministry of Economy and Finance for implementation with a view to helping maintain financial and economic stability in the country. The law of the QCB and financial services institutions (Number 13 of 2012) was passed last Tuesday.

The new law also asks the QCB to frame sound rules for mergers and acquisitions. The law aims at creating an environment conducive enough to help attract more non-Qatari investment and help advance Qatar’s ranking on international indicators, QNA added citing the QCB release. The Peninsula