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Post By: admin September 13 2024

All About VARA Audit in Dubai

Dubai has been promoting the virtual asset transaction with the motive of strengthening its position as a global hub for the virtual assets. In order to ensure its smooth functioning and provide protection to the users and the investors, the authorities have implemented the VARA regulations to ensure a sustainable development of the virtual asset transaction and its growth. The entities engaged in any kind of virtual asset-related services like advisory services, broker dealer services, etc. must comply with the rule book issued under VARA.

Major compliance, which is to be ensured, includes the auditing, which is to be mandatorily conducted by the VASPs (Virtual Asset Service Providers). The entities are required to conduct an internal audit and an external audit for the services they provide.

Key Highlights of the VARA Audit

In this section, we can briefly discuss the key highlights of the VARA Audit: 

Vulnerability Assessments

The main aim of conducting the VARA audit is to detect any prevailing vulnerabilities in the organization before any new system, product, or application is introduced to ensure its effectiveness and robustness. The VASPs are instructed by the authority to implement effective internal functions as part of the internal audit system to measure and monitor the operations of the entities.

Compliance With Cyber Security Policy

The audits are to be conducted in order to ensure the compliance of the VASPs with the Cyber Security policy under the VARA. The service providers are required to implement stringent policy that prioritizes the security of the customer details; it must promote the best industry practices and data protection norms.

The VARA audit oversees the procedures and the security systems implemented by the VASPs and ensures if they are as per the rule book.

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Ensuring Compliance and Risk Management

The VARA audit includes the evaluation of the compliance framework of the VASPs and also the operations conducted by the entities. The motive of the audit includes the testing of the procedures and the system to confirm if they are in line with the VARA rulebook. The audit report is to be provided to the authority when required, ensuring compliance with the rules.

Evaluation of Market Conduct

The further areas of the VARA audit include the evaluation of the market conduct, which focuses on the evaluation and monitoring of the nature of transactions dealt by the VASPs, the integrity and transparency of the service provider, the anti-money laundering and counter-terrorism financing strategies implemented, etc. The audit focuses on improving the market conduct and keeping a watch over the illegal activities, if any.

Responsibilities of VASPs under VARA audit

The service providers must ensure they meet certain responsibilities in order to facilitate a stringent and effective audit. The responsibilities to be met by the VASPs include the following:

  • The VASPs must appoint an independent auditor for the audit to be conducted with utmost quality and integrity.
  • All the required testing of the controls and procedures must be done to ensure the quality and effectiveness, the result of which must be furnished to the VARA upon the request.
  • It is the responsibility of the service providers to ensure the implementation of effective internal controls as a part of the internal audit function for continuously monitoring the procedures and operations performed.
  • The required documents related to the test results and the procedures conducted must be maintained and furnished to VARA for inspection.
  • The service providers must ensure that they are audited regularly as per the regulations of the VARA, ensuring the effectiveness of the systems prevailing in the organization, and furnishing the report of such an audit to the VARA upon demand.

Procedures for an Effective Audit

The VASPs can ensure an effective audit by following the listed procedures, which increase the quality of the audit and improve the credibility of the entity.

  • Reviewing and understanding regulation under the rule book: The VASPs should have a clear understanding of the regulations and laws under the rulebook of VARA, whereby ensuring compliance with these. The service providers must stay updated regarding the regulations to ensure effective compliance.
  • Assessment of compliance and risk management framework: The VASPs must conduct a stringent evaluation of the compliance framework to avoid any risk of non-compliance and penalties; further, the risk management systems must be evaluated to detect any loopholes, weaknesses, or any area of improvement. The documentation of these assessments must also be maintained.
  • Implementation of required measures: If there are any deficiencies that are detected under the assessment process, then the service providers are required to adopt corrective and preventive measures for countering such issues, improving their effectiveness, and resolving them.
  • Maintaining the required documentation and evidence: The service providers must maintain the records, reports, and documentation of the procedures and tests conducted along with the results to highlight compliance with the requirements under the rulebook.
  • Co-operating with the auditors: The last process that the VASPs must conduct is the cooperation with the auditor by providing them with all the required documents, reports, information, and evidence that might be needed during the audit.

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How Can CDA Assist You?

CDA has been providing auditing and accounting services to its client in Dubai, UAE, for more than a decade, making it one of the leading auditors in the UAE. CDA’s team of experts can assist your business by serving the stringent audit services along with the strategic suggestion to improve the virtual asset services. Our team can serve you with the personalized auditing process, whether it be an internal audit or an external audit. We assure you the improved compliance framework for your business, taking it to the next level in the market.

To know more about our auditing service, approach our personalized team now.