Could you provide a brief journey of how you arrived where you are today?
I retired as director of the US Federal Deposit Insurance Corporation’s Division of Supervision in 2006, after a 29-year career in prudential bank supervision, where I was responsible for the safety and soundness oversight of 5,500 banks. I joined the Dubai Financial Services Authority (DFSA), the independent sole regulatory authority for authorized firms in the Dubai International Financial Center (DIFC), in April 2006. The DIFC is located in a 110-acre financial free zone in Dubai. The DFSA has assembled a team of experienced, internationally respected regulators who have set up a regulatory system that meets the highest international standards. The DFSA’s 135 authorized firms include most of the world’s largest financial services companies.
What does your role involve?
I am responsible for the DFSA’s supervision of authorized firms. This is done through a program of regular on-site risk assessments of firms’ activities and compliance with laws and regulations. Supervised entities include banks, insurance companies and other financial services providers such as operators of mutual funds and hedge funds, investment banks and asset management companies. The Islamic finance activities of these entities are subject to special licensing criteria and ongoing supervision.
What is your greatest achievement to date?
Successfully transforming the Federal Deposit Insurance Corporation’s bank examination and risk assessment process to a risk-based approach – that is, focusing resources on identifying and controlling the most significant risks to prevent the development of problem banks. This experience has been very beneficial in developing DFSA’s approach to risk-based supervision.
Which of your products/services deliver the best results?
Our supervised firms’ feedback is that our on-site risk assessment process is beneficial and constructive. We evaluate firms’ capital adequacy, risk levels, effectiveness of corporate governance, compliance with laws and regulations, internal controls, anti-money laundering initiatives and efforts to prevent terrorist financing. Avoiding problems and detecting and arresting incipient problems helps to prevent reputational or financial damage to supervised firms.
What are the strengths of your business?
We have a highly capable and experienced team whose members have accomplished track records. Team members are drawn from respected regulatory bodies in the UK, Australia, the US, Canada, Germany, Hong Kong and other jurisdictions, bringing diverse views and experience to strategic decisions and problem solving. Also, the DFSA has made a concerted effort to avoid unnecessary process and bureaucracy.
What are the factors contributing to the success of your company?
The DFSA started out as a new regulator in September 2004. As a new regulator, we had no “legacies” and were able to develop a regulatory regime from a “clean slate.”
I mentioned above that we have assembled a highly talented team. DFSA leaders emphasize that results (versus process) orientation and individual and team performance is rewarded based on results that align with the organization’s priorities and strategic objectives.
What are the obstacles faced in running your business today?
The success of the DIFC has created a demand for talented people, so recruiting and retaining top quality staff is a priority not only for authorized firms, but also for the DFSA. We also have a focus on continuous learning so our team can constantly update their skills to stay abreast of the developments in the industry we supervise.
Where do you see the Islamic finance industry, maybe in the next five years?
I see the industry continuing to expand, with Kuala Lumpur, Dubai and others solidifying their position as regional hubs, as demand for Islamic finance products increases.
The DIFC will continue to be a leading center for Sukuk issuance. London and other large international financial centers will provide strong competition as they continue their efforts to become centers of Islamic finance activity.
Name one thing you would like to see change in the world of Islamic finance?
A larger pool of qualified Shariah scholars may accelerate the product approval process and make it easier for firms to respond to market demand.
The Dubai Financial Services Authority (DFSA) is an independent regulator for the Dubai International Financial Center (DIFC). The DFSA authorizes, licenses and registers institutions and individuals interested in conducting financial and ancillary services in or from the DIFC. The DFSA also supervises regulated participants and monitors their compliance with the laws, regulations and rules that apply, while enforcing legislations that have been administered.