Regulatory Architecture
Qatar’s financial sector is supervised by a dual regulatory structure comprising the Qatar Central Bank (QCB) and the Qatar Financial Markets Authority (QFMA). Each institution has distinct supervisory mandates, though they coordinate on matters of systemic importance, financial stability, and cross-cutting policy.
Within the Qatar Financial Centre, a parallel regulatory regime operates under the QFC Regulatory Authority (QFCRA), which supervises financial services firms registered in the QFC under its own prudential and conduct standards.
Qatar Central Bank
The Qatar Central Bank, established under Law No. 13 of 2012, is the primary regulator and supervisor of the banking sector, insurance companies, and payment systems. The QCB’s mandate encompasses monetary policy, currency issuance, banking supervision, and the maintenance of financial stability.
Supervisory scope includes all commercial banks (both conventional and Islamic), foreign bank branches, finance companies, exchange houses, insurance firms, and payment service providers operating in Qatar. The QCB issues banking licences, sets capital adequacy requirements, conducts on-site and off-site supervision, and has authority to impose sanctions for regulatory non-compliance.
Monetary policy is anchored by the fixed exchange rate peg of the Qatari riyal to the US dollar at QAR 3.64 per USD, maintained since 2001. This peg provides exchange rate stability but constrains independent monetary policy, tying Qatar’s interest rate environment closely to the decisions of the US Federal Reserve.
Qatar Financial Markets Authority
The Qatar Financial Markets Authority (QFMA) was established under Law No. 8 of 2012 as the independent regulator of the securities and capital markets. The QFMA supervises the Qatar Stock Exchange (QSE), licensed brokerage firms, investment fund managers, and listed company disclosure obligations.
Key functions include the regulation of initial public offerings, secondary market trading, corporate governance standards for listed companies, and the licensing and supervision of market intermediaries. The QFMA has progressively enhanced its disclosure and governance standards to align with international best practices, contributing to Qatar’s inclusion in the MSCI Emerging Markets Index and the FTSE Russell Emerging Markets Index.
Islamic Banking and Finance
Qatar has a significant Islamic banking sector, with Islamic banks accounting for a substantial share of total banking assets. The regulatory framework for Islamic finance is integrated within the QCB’s supervisory structure, with specific provisions governing Sharia-compliant products and services.
Regulatory provisions for Islamic banking include:
- Mandatory Sharia Supervisory Boards for all Islamic financial institutions, comprising qualified scholars who review product structures for compliance with Islamic law.
- QCB circulars and instructions specific to Islamic banking products, including murabaha, ijara, sukuk, and takaful.
- Separate liquidity management frameworks that accommodate the structural differences between conventional and Islamic banking balance sheets.
- Distinct reporting requirements that capture the unique risk profiles of Islamic finance instruments.
The QCB does not permit conventional banks to offer Islamic banking products through dedicated Islamic windows, a policy that was introduced in 2011 to clarify the separation between conventional and Islamic banking operations.
Basel III Implementation
Qatar has adopted the Basel III framework as the basis for its capital adequacy, liquidity, and leverage requirements. The QCB’s implementation includes:
- Capital adequacy. Minimum Common Equity Tier 1 (CET1) ratio of 6 percent, with additional buffers. Domestic systemically important banks (D-SIBs) are subject to higher requirements.
- Liquidity Coverage Ratio (LCR). Banks are required to maintain high-quality liquid assets sufficient to cover net cash outflows over a 30-day stress scenario.
- Net Stable Funding Ratio (NSFR). Banks must maintain a stable funding profile in relation to the composition of their assets and off-balance sheet activities.
- Leverage ratio. A non-risk-based leverage ratio serves as a backstop to the risk-weighted capital framework.
Qatar’s banking sector consistently reports capital adequacy ratios well above minimum requirements, reflecting conservative regulatory expectations and the strong capitalisation of major Qatari banks.
Anti-Money Laundering and Counter-Terrorism Financing
Qatar’s AML/CTF framework is governed by Law No. 20 of 2019 on Combating Money Laundering and Terrorism Financing, which replaced earlier legislation and brought Qatar’s regime into closer alignment with the Financial Action Task Force (FATF) Recommendations.
Key elements include:
- Customer due diligence (CDD) and enhanced due diligence (EDD) requirements for financial institutions and designated non-financial businesses.
- Suspicious transaction reporting obligations to the Qatar Financial Information Unit (QFIU).
- Sanctions screening requirements, including compliance with UN Security Council sanctions and domestic designation lists.
- Beneficial ownership transparency requirements for legal persons and arrangements.
- Cross-border declaration requirements for currency and bearer negotiable instruments.
Qatar underwent a FATF Mutual Evaluation in 2020, which identified areas for improvement in the effectiveness of the AML/CTF regime. The country has since implemented a number of reforms to address the evaluation findings, including enhanced supervision of designated non-financial businesses and improved inter-agency coordination.
Financial Sector Stability
Qatar’s banking sector is characterised by high capitalisation, strong profitability, and significant state-linked deposits. The sector is dominated by a small number of large banks — including Qatar National Bank (QNB), Qatar Islamic Bank (QIB), and The Commercial Bank — with substantial regional and international operations. The QCB conducts regular stress testing exercises and publishes financial stability reviews to monitor systemic risk.