Category: AML & CFT

Businesses, from that Kirana store across the street to the big names you see on the stock exchanges, all of them, are the cornerstone of our society. This week, however, we would like to shift your attention from the big fish to the little ones, such as our very own Micro, Small, and Medium-sized Enterprises, which, by the way, are very popular by their name, MSME.

If one takes a closer look at the products and services that reach the rural and out-of-touch corners of any country, they are mainly served by MSMEs. This situation holds true across the world, not just in India.  Of course, the role played by MSMEs could vary from one economy to another. 

You must be wondering why we are talking about MSMEs suddenly, right? It is because June 27 is MSME Day. To begin with, let us see who declared this day.

The United Nations, MSME, and their 2 cents on it:

To highlight the enormous contributions made by MSMEs to the accomplishment of the Sustainable Development Goals (SDGs), in 2017, the UN General Assembly declared June 27 to be “Micro-, Small-, and Medium-sized Enterprises Day”.

The UN General Assembly had comprehended the significance of MSMEs and realized it was time to put the focus on this sector explicitly. According to the data published by the Assembly: 

– 90% of the registered businesses globally are, in some form or another, MSMEs;

50% of the employment opportunities globally can be attributed to MSMEs; 

40% of the GDP of the emerging economies is contributed by MSMEs.  

The UN very proudly states that, particularly for women, youth, and vulnerable populations, micro, small, and medium-sized businesses are important sources of employment, revenue, and local development. Their scale and adaptability contribute to the development of robust, equitable, and sustainable communities.

No one is questioning what MSMEs bring to the table, but the road ahead is not easy for this segment. As pointed out by the UN, the political unrest, climate change, and technological advancements have made their lives even more difficult. 

If the UN’s data is to be believed, many are now at risk due to supply chain problems, increased expenses, and volatile markets. And most of all, despite obvious growth prospects, there is still a significant global funding shortfall.

There is a lot said about the MSMEs by our very noble UN and its wings. And only time will tell how MSMEs globally navigate through the bottlenecks as pointed out by the UN. 

This is what the UN thinks; let us now take a closer look at what MSME means to India. Before getting into the deep talks around MSME, how about we take you through the basics of it first? 

Who are these MSMEs?

Everything starts from here. In order to be recognized as any of the micro, small, or medium enterprises, one needs to meet the criteria for the turnover and investment limits.

 

Title	Manufacturing Enterprises and Enterprises rendering Services
	Turnover		Investment
	Erstwhile	Revised*	Erstwhile	Revised*
Micro Enterprises	Rs. 5 crore	Rs. 10 crore	Rs. 1 crore	Rs. 2.5 crore
Small Enterprises	Rs. 50 crore	Rs. 100 crore	Rs. 10 crore	Rs. 25 crore
Medium Enterprises	Rs. 250 crore	Rs. 500 crore	Rs. 50 crore	Rs. 125 crore

*Revised w.e.f. April 1, 2025

The 2025–2026 budget reclassified these figures in an effort to increase productivity, technological adoption, and job creation. 

The first step is to apply the above parameters and see where you fall, category-wise, and then take any call ahead! 

But why should one register as a micro, small, or medium enterprise?

Over the years, the MSME sector in India has made a substantial contribution to the GDP of the country by continuously exhibiting exceptional resilience and adaptability. 

MSMEs’ Gross Value Added (GVA) to India’s GDP increased from 29.7% in 2017–18 to 30.1% in 2022–2023. Despite the COVID-19 pandemic’s extraordinary obstacles, the industry managed to maintain a 27.3% contribution in 2020–21, rising to 29.6% in 2021–22.

This is just one facet. MSMEs are setting higher standards in every area, and so there are humongous benefits/exemptions that are allowed to this sector.

Benefits of being an MSME in India:

Here are a few of the top benefits of being an MSME in India:

No Collateral Security for Bank Loans:  A bank loan without any security sounds weird, isn’t it? But you can avail yourself of a no-collateral-security-attached bank loan if you register as an MSME in India. This kind of loan, which seems unreal in the world of high interest rates, can be availed by both new as well as existing businesses. This initiative provides small and micro companies with financial assurances. 

The Credit Guarantee Trust Fund Scheme was established by the Ministry of Micro, Small, and Medium Enterprises, the Small Industries Development Bank of India (SIDBI), and the Government of India. This program (Credit Guarantee Program) is in place for all micro and small businesses.

Loans at reduced bank rates: You will wear out your footwear by visiting a gazillion banks before you finalize the one from whom you want to take a home loan. Avoid the exaggeration but you can resonate with the underlying feeling. 

You can get cheaper loans for your businesses by just being an MSME. In fact, priority credit has been upheld for the MSME sector. 

Concessions on Electricity Bills: This is an odd one but completely true. You can get discounts on your electricity bills if you are a registered MSME. This can actually help businesses to expand their production and take on additional orders without having to worry about paying for maintenance and other capital expenses like energy. 

Concessions for Technology Upgradation: For the MSME sector, the government reimburses project expenditures as well as costs associated with applying clean technology, creating audit reports, and offering subsidies for product licensing in accordance with national and international standards. 

Tax Benefits to MSMEs: Who likes paying taxes? Unless you are Akshay Kumar, right? But you can put that frown away if you are registered as an MSME. Different MSMEs have different types of exemptions.

Income Tax Exemption: Income hurts the most, especially individuals who are into businesses. If you are one of those, I don’t need to tell you why! This problem is also dealt with in Section 80 of the Income Tax Act, which grants firms this MSME tax exemption. 

Businesses are eligible for the exemption for seven years after they are incorporated.

Tax Holiday: Under Section 80-IB, MSMEs that manufacture goods like fertilizers, natural gas, and mineral oil are eligible for this tax exemption. MSMEs are eligible for the tax exemption for five years following the year that production began.

Reduced Tax Rates: Under Section 115BA, MSMEs with yearly sales exceeding a certain threshold are allowed to pay tax at a reduced rate. This encourages businesses to increase their turnover. 

Benefits of GST: Under the Goods and Services Tax regime, MSMEs with yearly sales above ₹1.5 crores are eligible to take advantage of the Composition Scheme.  

These are a few of the many benefits that can knock on your door if you register yourself as an MSME, which are both monetary and non-monetary. Your business’s commercial and entrepreneurial success will surely multiply if you choose to register as an MSME in India. 

A Brief on Becoming an MSME:

Applications for MSME registration are open to all manufacturing, service, wholesale, and retail businesses that meet the updated MSME classification requirements of yearly sales and investment. 

So, anyone from startups to entrepreneurs, company owners, private and public limited companies, limited liability partnerships (LLPs), cooperative communities, trusts, etc., can register for an MSME certificate.  

For registering as an MSME, you just need to go to the Udyaam Portal and the rest is mostly self-explanatory. It is an entirely online process with NO FEES!

MSME Samadhaan: MSME’s very own Dispute Resolution Mechanism

Cash flow is of utmost significance. It affects the financial stability of any business house. MSMEs were facing many issues with their payments. To deal with this situation at hand, the government introduced the 45-day Rule. This move was opposed by many big players, as it was brought about with the prime intent of bringing them, the payers, in line. 

Any buyer, irrespective of its size, procuring any goods or services from the MSMEs, was mandated under this 45-day Rule to make the payment within 45 days of the invoice or agreement date. 

The consequences of the delay on the part of the buyer were twofold: 

• Loss of Tax Deduction
• Interest on Delayed Payment

In case of delay, the buyer is mandated to pay interest, which was at a rate three times the bank rate that the RBI had announced. Sinful, isn’t it? Yes, but this is the law. 

A two-way win for MSMEs— The government has left no stone unturned to favor its favorite kid.

As per the provisions of the Companies Act, 2013, every company—mind you, every company that has purchased goods or services from an MSME supplier and has not made a payment for more than 45 days must disclose it to the ROC by filing a return called MSME-1 every half year. When this law was put out for all companies to follow, the message was very crisp: 

• Maintain a record of the companies that owe MSMEs money.
• Make sure MSMEs are paid on schedule.
• Prevent small businesses from suffering financial losses.

Further, on October 30, 2017, the Ministry of MSME launched a new platform called “MSME SAMADHAAN” to address the problem of MSMEs.

To date, about 242,201 applications have been filed by MSEs. Of these:

• 22,660 are mutually settled; 

• 58,347 applications are yet to be reviewed by the Micro and Small Enterprise Facilitation Council (MSEFC), and 

• 48,520 are disposed of. 

Budget of 2025-26 and MSMEs:

This sector is becoming the government’s most adored child, and why not! 

There are enough statistics to demonstrate the exemplary contribution made by the MSME sector in writing the story of India’s economic growth. That is exactly why it even got a special place in our budget, with tons of measures/schemes/reliefs written to its name.

A strategic plan to help the MSME sector in India is laid out in the Union Budget 2025–2026, with a focus on sector-specific initiatives, expanded loan availability, and support for entrepreneurs. 

Significant changes to the classification criteria, improved credit guarantees, and specially designed financial products, such as microenterprise credit cards, are expected to spur innovation and expansion in this sector.

The key initiatives as laid down by our budget are 

• Udyam Registration Portal, 
• PM Vishwakarma scheme, 
• Prime Minister’s Employment Generation Programme (PMEGP), 
• Scheme of Fund for Regeneration of Traditional Industries (SFURTI), and 
• Public Procurement Policy 

One can obtain more information about it at https://www.pib.gov.in/PressReleasePage.aspx?PRID=2099687. 

Road Ahead for MSMEs: 

We have a very ambitious and far-sighted government. Our growth story of the last decade is the best example of it. The Indian government aspires to double the country’s GDP to $7 trillion USD by the year 2030. It is only obvious to state that it hopes and is confident about MSME playing a huge part in this success journey.

Employment generation is one of the biggest boons given by MSMEs. As a result, the government has started promoting MSMEs in an effort to add jobs in the industry. The government also wants to increase MSMEs’ export share and GDP contribution.

Keeping goals is one thing but to achieve that, equal or more efforts will also be required from the end of the Indian government.

Signzy- a friend to Banks/Institutions providing Credit to MSMEs

By now, we have put a huge focus light over the MSMEs. But before we conclude, we want you to comprehend how vital the role of the banks or financial institutions that are entrusted with the responsibility to provide financial assistance to these MSMEs is.

Imagine the truckload of applications such institutions must be receiving on a daily basis—and the number of man-hours they have to put on the job to clear the applications. Is the KYB (Know Your Business) of the MSMEs also a painstaking issue you are facing? 

Then we’ve got your back. At Signzy, we have devised tools that will help you fetch the business information by plugging in basic details like PAN, registered phone number, FSSAI, and/or SNEC, and a combination of these.

We need to talk about something that’s been bugging us for years – and it’s hitting everyone trying to serve MSMEs.

Every day, we see financial institutions getting absolutely crushed by MSME onboarding processes that were clearly designed by people who have never actually dealt with Indian business complexity. 

You know the drill – proprietor submits documents with different business names across registrations, phone number links to multiple enterprises, your KYC team can’t figure out which entity they’re actually onboarding, compliance nightmare begins…

That’s literally why we built what we built. We’re Signzy, and we’ve spent the last few years obsessing over one question: What if onboarding MSMEs was… normal?

Turns out, we found some answers. 

First, here’s why you should believe us when we say we’ve fixed this.

Why Signzy Understands MSME Onboarding Better Than Anyone

Look, we could tell you we’re experts, but numbers don’t lie. Here’s what we’ve actually done:

• 10 million+ customer onboardings monthly – Including tons of MSMEs for our banking and fintech clients who trust us with their most complex verification challenges.
• 99% success rate across all onboarding types – When your clients’ businesses depend on getting customers onboarded fast, you can’t afford the industry standard of “it usually works.”
• Selected by RBI for regulatory sandbox – The central bank picked us to test unassisted video KYC because our approach actually meets their compliance standards.
• Trusted by India’s four largest banks – Plus 540+ other financial institutions who’ve ditched their old onboarding processes for our platform.
• 8+ years solving Indian onboarding problems – We’ve seen every possible way verification can break, and we’ve built APIs to fix most of them.
• Built specifically for Indian business complexity – While others try to adapt global solutions, we designed everything around Udyam, GST, PAN linkages, and the Indian businesses.

All these successful onboardings happened because we first had to understand exactly what wasn’t working. And trust us, the problems run deeper than most people realize.

So What’s Actually Broken

The problem isn’t that MSMEs are “difficult customers” – it’s that small business registration creates these weird identity puzzles that nobody talks about. 

For example, why does the same business owner have three different name variations across their documents? Why are phone numbers shared between family businesses? Why does every proprietorship seem to exist in some parallel documentation universe where nothing matches anything else?

There’s no playbook for this stuff because every MSME is broken in its own special way. That’s why we had to build everything from the ground-up.

Signzy’s MSME Onboarding Solution Stack

We’ve built actual APIs that are already working for 100s of financial institutions to solve those pain points.

• Udyam Verification API

Skip the manual portal searches that slow down your team. Verify any Udyam registration in seconds. Get instant confirmation whether an MSME is legitimately registered and currently active.

• Phone-to-Udyam Lookup

Ever had customers apply with a phone number that’s somehow connected to five different businesses? This API shows you every enterprise linked to a contact number upfront, so there’s no confusion about which business they’re actually registering.

• Udyam Premium

Why make two separate API calls when you can get business validation and owner details in one go? Speeds up your KYC process by connecting registration data to actual ownership without extra steps.

• FSSAI Verification

Food businesses need valid FSSAI licenses. Instead of manually checking certificates, verify any license number instantly across all Indian states. Works for restaurants, manufacturers, distributors – any food-related MSME.

• SNEC Fetch API

Verify business establishment details and check if registrations are still valid. Helps you stay compliant by confirming the business is properly registered and hasn’t expired without manual documentation reviews.

Start Improving Your MSME Onboarding Today

The APIs are live. You can test individual endpoints or integrate the full stack – most clients start with Udyam verification since it handles the biggest bottleneck, then add other pieces based on their workflow needs.

Implementation is straightforward with our API documentation and integration support. Whether you want to automate just the verification steps or build complete MSME onboarding flows, everything is designed to work with your existing systems.

If you want to see how this works with your actual use cases, we can show you. Grab a demo slot here and we’ll walk through it with your real MSME applications.

You know that feeling when something seems a little off, but you’re unsure if it’s worth bringing up? 

For example, a small business in India gets a substantial payment from a new customer. They don’t think much of it, but down the road, it turns out to be a red flag for something bigger.

This happens more often than you’d think, and that’s why FIU-IND reporting exists. 

It’s about keeping things transparent, not just for big corporations but for every business involved in financial transactions. 

Reporting to FIU-IND isn’t complicated, and with the right steps, it’s just part of the process. In this guide, we’ll unpack everything you need to know: who needs to report, what transactions to flag, and how easy it can be once you know the basics.

But first, let’s start with nuts and bolts.

What is FIU Reporting in India?

FIU Reporting in India is when businesses, mainly in the financial space, report certain transactions to the Financial Intelligence Unit – India (FIU-IND). 

FIU-IND is the government agency responsible for collecting and disseminating information related to suspicious financial transactions. Its main goal is to combat financial crimes by tracking suspicious activities across the financial system. 

If there’s a transaction that stands out, like a large cash deposit, a significant cross-border transfer, or just something that feels off, it needs to be flagged.

It’s all part of India’s efforts under the Prevention of Money Laundering Act (PMLA), 2002. So, banks, insurance companies, and NBFCs (basically anyone working in financial services) must report these transactions to FIU-IND. FIU-IND takes these reports and then passes the info along to law enforcement if something needs deeper investigation. 

In short, it’s a way for businesses to keep the financial system clean. If something doesn’t feel right, it’s on them to report it. 

Who Needs to Report to FIU in India?

FIU-IND’s reporting obligations apply specifically to entities that handle transactions where the risk of money laundering or terrorism financing is higher. 

These entities are required to submit reports on any suspicious or large transactions.

Entities falling under this umbrella include:

1. Banks (Public & Private Sector, Cooperative Banks, etc.)
2. Non-Banking Financial Companies
3. Insurance Companies
4. Securities Market Intermediaries (Stock Brokers, Mutual Funds, etc.)
5. Payment Service Providers (Digital Wallets, Payment Gateways, UPI Services, etc.)
6. Cryptocurrency Exchanges
7. Foreign Exchange Dealers

Essentially, if your business deals with financial transactions that could be used for money laundering or terrorism financing, you’re on the hook to report them to FIU-IND.

What Are the Key Reporting Obligations?

Now that we know what FIU Reporting is and who is obliged, let’s take a look at those key reporting obligations to understand what needs to be flagged.

1. Cash Transaction Reports (CTR)

If there’s a cash transaction that exceeds ₹10 lakh, it has to be reported. 

This also applies to any series of connected transactions within a month, even if individually they don’t cross the threshold, but together they do. Banks and other financial institutions are particularly responsible for keeping an eye on these high-value cash transactions. 

The goal here is to catch any potential layering of illicit funds, where cash is being moved in and out in ways that might not make sense on the surface.

2. Suspicious Transaction Reports (STR)

Any transaction that raises suspicion (whether it’s due to its complexity, the amount, or the nature of the person involved) needs to be flagged as an STR. 

For instance, if a large amount of money is being deposited into an account without a clear source of income or if there are frequent international money transfers with no legitimate business reason, these should be reported. 

3. Non-Profit Organization Transaction Reports (NTR)

For Non-Profit Organizations (NPOs), any donation or fund transfer of more than ₹10 lakh needs to be reported. NPOs can sometimes be used as a channel to funnel illicit funds, so it’s crucial that financial institutions monitor these large transactions. Any red flags here could point to abuse of charitable giving for unlawful purposes.

4. Cross-Border Wire Transfer Reports (CBWTR)

Any cross-border wire transfer greater than ₹5 lakh (or its foreign currency equivalent) also must be reported. 

These reports are especially important because large international money transfers can be used to move illicit money across borders, which could potentially fund terrorism or other criminal activities. This is why any such transfers, whether inbound or outbound, need to be carefully monitored and reported.

5. Counterfeit Currency Reports (CCR)

If any counterfeit currency is detected during a transaction, it must be reported immediately. If someone tries to deposit or exchange fake currency, that’s a red flag. Financial institutions must report these transactions to help authorities track down the source of the counterfeit money and prevent it from entering circulation.

With these key obligations in mind, let’s explore what happens if you don’t report as required.

What Happens If You Don’t Report?

Under the Prevention of Money Laundering Act (PMLA), 2002, non-compliance can lead to hefty fines, legal action, and even criminal charges. Penalties for failing to report can be significant, including fines that can reach up to ₹1 lakh per unreported transaction.

Beyond the financial penalties, failing to report can severely damage your business’s reputation. Financial institutions that are caught neglecting their reporting obligations risk losing trust with regulators, customers, and business partners. 

Step-by-Step FIU Reporting Process

To ensure compliance with FIU-IND reporting obligations, businesses in the financial sector need to follow a structured process. 

Here’s how the FIU reporting process typically works, broken down into clear steps:

• Step 1 – Identify Reportable Transactions: These include large cash deposits, cross-border transfers, suspicious activity, or counterfeit currency. If any transaction meets the criteria set by FIU-IND (e.g., over ₹10 lakh in cash or transactions that seem suspicious), it must be flagged.
• Step 2 – Gather Transaction Details: Gather details like transaction amount, involved parties, and any supporting documentation. The more complete the information, the easier it will be for FIU-IND to process and analyze the report.
• Step 3 – Log into the FINGate 2.0 Portal: All reports must be submitted through the FIU-IND’s FINGate 2.0 portal. Before submitting, ensure you are registered with the portal and have your Reporting Entity Identification Number (REID).
• Step 4 – Fill Out the Required Forms: FIU-IND has specific forms for different types of reports, like Cash Transaction Reports (CTR), Suspicious Transaction Reports (STR), etc. Each form must be filled out with the necessary transaction details. 
• Step 5 – Submit the Report: Submit the report through the FINGate 2.0 portal. Once validated, the report is officially submitted and logged in FIU-IND’s database.
• Step 6 – Monitor and Follow Up: FIU-IND might contact the business for additional information or clarification if needed.
• Step 7 – Maintain Records: These records should be retained for at least 5 years, as mandated by the PMLA, in case they are needed for future reference or audits.

This process ensures you are staying compliant with FIU-IND regulations, helping to safeguard India’s financial system from misuse. 

How Regulated Entities Can Stay FIU-Compliant

So, we’ve walked through all the nuts and bolts; let’s now understand how businesses can stay FIU-compliant and avoid any potential issues moving forward.

1. Stay Updated on Reporting Requirements

Regulations change, and it’s important to stay on top of them. Make it a habit to regularly check for updates from FIU-IND so your business doesn’t miss any shifts in reporting guidelines. It helps you stay proactive and prepared for any changes.

2. Implement Transaction Monitoring Systems

Having a solid transaction monitoring system is essential. You need to be able to spot large or suspicious transactions quickly, and a sound system will help you do that in real-time. The faster you catch something that doesn’t look right, the easier it is to report it.

3. Maintain Detailed and Accurate Records

Record-keeping might seem like a chore, but it’s an essential part of staying compliant. Keeping detailed, accurate records of all transactions not only makes reporting easier but also ensures that you have everything you need if regulators come knocking.

4. Streamline the Reporting Process

Manual reporting can be a pain, and it leaves room for errors. Automating the process helps streamline things, making it faster, more accurate, and less stressful. The last thing you want is a missed deadline or an incomplete report.

And that’s where Signzy can help. We offer API-based solutions that make FIU compliance simpler and more efficient. Our KYC and transaction monitoring APIs help regulated entities make sure everything is flagged correctly without the usual hassle.

If you’re managing contracts manually, your cycle probably looks like:

• Chasing after signatures and approvals, and somehow always losing track of who’s signed and who hasn’t.
• Digging through stacks of paper or scrolling endlessly through folders, just to find that one contract you need.
• Juggling multiple stakeholders, each with their own priorities and timelines, makes everything take longer and feel more chaotic.
• Trying to keep up with compliance deadlines but missing some along the way due to manual tracking.
• Constantly re-entering data and updating documents because everything is still being handled on paper or in different systems.

Sound familiar? These inefficiencies are already costing you time and money. In fact, a survey confirmed this. On average, a company loses 9% of its annual turnover just from contract mismanagement (source: WorldCC). 

But the good news is, it doesn’t have to be this way. Grab your cuppa coffee, and let’s dive into how you can rethink contract management for better efficiency and less risk.

What is Contract Management?

When we talk about contract management, we’re referring to the structured process of overseeing every stage of a contract’s lifecycle. 

From its creation to execution, monitoring, and eventual renewal, contract management is a critical function that ensures all parties involved are held accountable to their commitments. 

In simple terms, it’s about managing the agreements your business enters into while making sure risks are minimized and opportunities are maximized.

Why is Contract Management Necessary for KYC and AML?

For industries like fintech, payment processing, and crypto, the ability to manage contracts effectively can make the difference between staying compliant and facing penalties.

• Clearly Defined Compliance Obligations

Contracts can specify the procedures for identity verification, due diligence checks, and the documentation required. By defining these obligations in the contract, businesses set clear expectations for both parties from the start, ensuring compliance is built into the process.

• Tracking KYC and AML Requirements

Contracts can outline the need for periodic updates, document revalidation, and reporting. With a well-managed contract, businesses ensure these regular obligations are not overlooked, helping maintain continuous compliance.

• Mitigating Risks with Clear Roles and Responsibilities

Contract management helps by defining who is responsible for carrying out KYC and AML checks, reducing the chances of oversight. Clear assignment of roles ensures that compliance duties are consistently fulfilled and helps avoid the risk of non-compliance, which can lead to financial penalties or reputational damage.

• Easier Audit Trails

Financial institutions are often subject to audits. 

Well-managed contracts ensure there is a clear, accessible record of compliance actions taken at every stage. This audit trail makes it easier to demonstrate that KYC and AML procedures were followed, ensuring transparency and accountability.

Now that we’ve defined what contract management is and why it’s necessary, let’s dive into the key stages that make up the contract lifecycle.

Key Stages of Contract Management

The contract management lifecycle consists of five key stages. Let’s walk through these stages, from identifying the need to successfully closing out and renewing the agreement.

1. Identification of Need and Requirements

The first step in contract management is identifying the need for a contract and defining its scope. Whether you’re onboarding a new client, forming a partnership, or signing with a vendor, this stage is about setting clear, measurable objectives. 

Key actions at this stage include:

• Assessing business needs and understanding the type of agreement required (e.g., service agreement, partnership, vendor contract)
• Gathering input from key stakeholders (legal, compliance, procurement)
• Defining clear goals, deliverables, and timelines

This stage is vital for ensuring that contracts comply with KYC/AML regulations and align with business objectives.

2. Drafting, Negotiation, and Legal Review

Once the need for a contract is identified, it’s time to draft the agreement and enter negotiations. This stage focuses on aligning both parties’ interests, refining terms, and ensuring the contract meets legal and regulatory standards. The process includes:

• Drafting the contract with agreed terms and conditions
• Negotiating deliverables, payment terms, and timelines
• Involving legal teams to review terms and ensure compliance with laws such as KYC, AML, and other regulatory frameworks
• Redlining and revising the document to meet both parties’ expectations

For financial businesses, this is a critical stage to ensure that all legal compliance requirements are addressed, particularly concerning data security, privacy, and regulatory frameworks.

3. Onboarding

After the contract is signed, the next step is putting the terms into action. This phase involves setting up the necessary systems, tools, and processes to ensure everything runs smoothly.

At this point, businesses need to ensure all teams are aligned, systems are in place to track progress, and compliance requirements, like KYC and AML checks, are implemented right from the start.

4. Close-out 

The final stage of the contract lifecycle is the close-out phase. This is when the contract has been fulfilled, and all obligations have been completed. The contract is formally closed, and all records are archived for future reference.

5. Renewal

As the contract’s term nears its end, the renewal phase kicks in. This is an important stage, as it often presents an opportunity for renegotiation. Businesses can assess whether they are getting the value they expected from the contract, or whether it’s time to update terms.

As we’ve discussed, contract management spans 5 stages. However, to make this process more efficient and secure, the way contracts are managed becomes just as important. 

Now, let’s take a look at how manual and digital contract management compare, especially in the context of financial services and compliance.

Manual vs Digital Contract Management

 

Aspect	Manual Contract Management	Digital Contract Management
Speed and Efficiency	Slow and time-consuming due to manual processes and paperwork.	Faster, with automated workflows and quick access to documents.
Error Rate	High, due to human errors in tracking, filing, and updating.	Low, with automated checks, real-time updates, and version control.
Compliance	Difficulty tracking compliance obligations and deadlines manually.	Easier to ensure compliance with automated reminders, audits, and tracking features.
Visibility and Access	Limited visibility, with contracts stored in physical files or in different locations.	Centralized digital storage allows easy access and real-time visibility.
Security	Risk of document loss or unauthorized access, especially with physical storage.	Enhanced security features like encryption and access control for digital contracts.
Scalability	Challenging to scale as the business grows and contract volume increases.	Highly scalable, able to handle large volumes of contracts without compromising efficiency.

From differences, digital contract management clearly comes out as a winner. Even reports back this. Businesses incur an estimated cost of $122 for every hour an in-house lawyer spends reviewing contracts.

To avoid these inefficiencies, businesses can turn to digital solutions. For example, a digital contracting API can automate the signing process and eliminate the need for in-person meetings. The best part is that these solutions can streamline all this while enhancing security and providing an audit trail.

We are not sure about others, but Signzy’s Digital Contracting API is designed to do just that. Take a demo to learn more.

And that wraps up today’s discussion! Don’t forget to check out our other blogs for more expert advice on topics like KYC, AML, and digital transformation in the financial industry. 

Stay ahead of the curve and keep learning with us 🙂

$4.35 billion.

That’s the total amount of penalties paid by just five companies for data breaches and non-compliance with data privacy laws. Even the likes of Facebook and Amazon, with their massive cybersecurity teams, weren’t spared.

And those are just the most significant fines. There’s much more happening behind the scenes. 

Now, when it comes to the UAE, things are even more critical. A data breach here can result in legal action and significant penalties. And it goes without saying, a setback in a market as competitive and high-stakes as the UAE can have long-lasting consequences for your business.

Luckily, you don’t need to navigate this alone. There are tools, practices, and platforms to help you stay compliant and secure, giving you more time to focus on growing your business.

But first, if you are looking to cover all the basics, this blog has a lot of information for you. 

Let’s start right away. 

What Are the Data Privacy Laws in the UAE?

The UAE has really stepped it up when it comes to data privacy. They introduced the Personal Data Protection Law (PDPL) under Federal Decree-Law No. 45 of 2021, and it officially kicked in January 2022. 

Put simply, the law is about making sure personal data is handled properly, transparently, and with respect. 

So, what does this mean for your business? 

If you’re handling personal data in the UAE or dealing with data from UAE residents, you need to get up to speed with these regulations. 

This is the first comprehensive data protection law the UAE has rolled out, and it’s a big deal because it brings the country’s approach to personal data in line with global standards like the EU’s GDPR.

What Data Privacy Rules Do Companies Need to Follow?

The Personal Data Protection Law (PDPL) mandates that businesses comply with strict rules when it comes to processing personal data. Some of the most important rules are listed below.

• Obtain Clear Consent (Article 6)

Companies must obtain clear, explicit consent from individuals before processing their personal data. Consent should be unambiguous and recorded, ensuring the data subject knows exactly what data is being collected and for what purpose. It’s essential that businesses demonstrate they have obtained consent, as consent can be withdrawn at any time by the data subject.

• Limit Data Collection (Article 5)

The data collected must be sufficient, relevant, and not excessive for the specified purpose. Businesses are prohibited from collecting more data than necessary. This means that organizations need to carefully assess what data is essential to meet business needs and ensure that they aren’t over-collecting.

• Purpose Limitation (Article 5)

Personal data must be collected for specific, legitimate purposes, and must not be processed in a way that’s incompatible with those purposes. If the business intends to use the data for a different purpose later, fresh consent must be obtained.

• Accuracy of Data (Article 7)

Businesses are required to ensure that the data they process is accurate and up to date. If any data held is inaccurate or incomplete, it must be rectified without delay. This is crucial to avoid making decisions based on incorrect or outdated information.

• Data Security (Article 20)

Companies must implement technical and organizational measures to ensure personal data is secure. This includes protecting data against unauthorized access, accidental loss, or damage. The law mandates encryption, pseudonymization, and other security protocols to safeguard data in line with best international practices.

• Transparency (Article 8)

Businesses must inform individuals about how their data will be processed, the purpose of the collection, and any third parties with whom the data may be shared. This ensures transparency and helps businesses build trust with data subjects. Additionally, companies must provide a way for data subjects to easily exercise their rights, such as the right to access and correct their data.

• Data Subject Rights (Articles 13-18)

Data subjects are granted several rights, which businesses must respect:

• Right to Access (Article 13): Data subjects can request access to their personal data.
• Right to Rectification (Article 15): Data subjects can correct inaccurate data.
• Right to Erasure (Article 15): In specific circumstances, data subjects can request their data to be erased.
• Right to Restrict Processing (Article 16): Data subjects can restrict how their data is processed.
• Right to Object (Article 17): Data subjects can object to processing for direct marketing or other specific cases.

•  Data Breach Notification (Article 9)

If a data breach occurs, businesses must notify the UAE Data Office immediately and, in some instances, inform the affected data subjects. The breach report must include details of the nature of the breach, corrective actions taken, and the likely consequences of the breach.

• Cross-Border Data Transfers (Articles 22-23)

Personal data can be transferred outside of the UAE, but only to countries that have adequate data protection laws in place. If the destination country doesn’t provide sufficient protection, businesses must implement additional safeguards, such as contracts or agreements, to ensure that data is protected.

• Appointment of a Data Protection Officer (Article 10)

If your business handles large volumes of sensitive personal data or if automated decision-making (such as profiling) is involved, a Data Protection Officer (DPO) must be appointed. The DPO’s role is to monitor compliance, provide guidance on data protection, and act as a liaison with the UAE Data Office.

By following these rules, businesses can ensure that they are compliant with the PDPL, which is essential for maintaining trust and avoiding penalties.

Who Needs to Follow These Laws?

So, who exactly needs to be on top of the UAE’s Personal Data Protection Law? The answer is simple: pretty much anyone dealing with personal data in the UAE, regardless of whether you’re based here or operating internationally. 

• Businesses processing personal data in the UAE
• International businesses processing personal data of UAE residents
• Data controllers determining data processing purposes
• Data processors handling data on behalf of others
• Free zone entities (DIFC, ADGM, DHCC)

As you can see, it’s a responsibility that spans across sectors and borders, so make sure you’re on top of it.

Risks of Non-Compliance in the UAE

Non-compliance with UAE data privacy laws not only affects your business operations but can also lead to severe financial and reputational consequences.

While specific penalties are yet to be fully defined in the PDPL, businesses can face severe fines if they violate key provisions of the law. These can be specified by the UAE Data Office once the executive regulations are issued.

Unauthorized disclosure of personal data can result in criminal charges, including fines of at least AED 20,000 and potential imprisonment for up to one year.

Choosing the Right Privacy Compliance Solution

When selecting a privacy compliance solution, businesses need to ensure that the technology they adopt not only meets regulatory standards but also integrates seamlessly with their existing infrastructure. There should be two main priorities:

1. Security: A privacy compliance solution must ensure that data is protected at all stages: during transit, at rest, and during processing. It should include robust encryption, real-time monitoring, and thorough testing to safeguard against vulnerabilities. 
2. Scalability: As your business grows, so will the volume of data you need to manage. A scalable solution allows you to handle an increasing amount of data and users without sacrificing performance or security. 

 

Finding a solution that covers all these aspects without juggling multiple tools can be overwhelming. This is where Signzy makes a difference.

Signzy offers end-to-end suites while ensuring complete compliance with data privacy laws. No more scrambling around for multiple APIs from different vendors. With Signzy, you get everything you need. Built-in encryption, automated consent management, and continuous security testing through our DevSecOps cycle, all packed in one solution.