1. DFSA Reminder- Being Regulated and Group entities
In March 2022, the Dubai Financial Services Authority (“DFSA”) reminds all firms authorised by the DFSA (“Authorised Firms”) of their obligation to use the phrase "Regulated by the Dubai Financial Services Authority” or “Regulated by the DFSA". Authorised Firms were reminded to include this phrase across all their key documents including websites, promotional material, client agreements, text messages, and so on, as required in the General Module (“GEN”) Rule 6.4 of the DFSA Rulebook.
Firms were also reminded about the scope of the licence granted. The DFSA licence applies only to the firm that receives it and, if the licensed firm is operating as part of a corporate group, not to any other entity in that group.
All firms that are regulated by the DFSA are subject to financial services rules and regulations. Adherence to these rules ensures integrity in the financial centre.
2. FATF Adds UAE to Increased Monitoring List, March 2022
Further to the decision by The Financial Action Task Force (“FATF’”) to add the United Arab Emirates (“UAE”) to the increased monitoring list, the UAE made a high-level political commitment to work with the FATF and MENAFATF to strengthen the effectiveness of its Anti-money Laundering and Counter Terrorist financing (“AML/CFT”) regime.
Since the adoption of its Mutual Evaluation Report (“MER”) in February 2020, the UAE has made significant progress in implementing its MER’s recommended actions to improve its system by finalising a Terrorism Financing (“TF”) Risk Assessment, creating an AML/CFT coordination committee, establishing an effective system to implement targeted financial sanctions without delay, and significantly improving its ability to confiscate criminal proceeds and engage in international cooperation. Additionally, the UAE has addressed or largely addressed more than half of the key recommended actions from the MER.
The UAE will work to implement its FATF action plan by:
- demonstrating a sustained increase in outbound Mutual Legal Assistance (“MLA”) requests through case studies and statistics to aid in the investigation of Terrorist Financing (“TF”), Money Laundering (“ML”), and high-risk predicates
- identifying and maintaining a shared understanding of ML/TF risks among the various Designated Non-Financial Business and Professions (“DNFBP”) sectors and institutions
- showing an increase in the number of Suspicious Transaction Reports (STRs) filed by Financial Institutions (“FIs”) and DNFBPs
- achieving a more granular understanding of the risk of abuse of legal persons and, where applicable, legal arrangements, for ML/TF
- providing additional resources to the Financial Intelligence Unit (“FIU”) to strengthen its analysis function and improve the use of financial intelligence in pursuing high-risk ML threats, such as proceeds of foreign predicate offenses, trade-based ML, and third-party laundering
- demonstrating a sustained increase in effective investigations and prosecutions of different types of ML cases consistent with UAE’s risk profile
- proactively identifying and combating sanctions evasion by using detailed Targeted Financial Sanctions (“TFS”) guidance in sustained awareness-raising with the private sector, as well as demonstrating a better understanding of sanctions evasion among the private sector.
3. DIFC introduces ‘Whistleblowing’ regime- April 2022
The DFSA introduced a new Whistleblowing regime, which came into force on 7 April 2022 and will apply to all DFSA Regulated Entities. This regime builds on existing requirements, and aims to help:
- provide better legal protection for persons who report concerns;
- improve the Whistleblowing culture in Entities and increase transparency around how Entities will handle regulatory concerns;
- encourage more disclosures of concerns; and
- deter wrongdoing, promote better compliance and an ethical culture, by increasing awareness that there is a higher likelihood that wrongdoing will be reported.
Changes will be made to the Regulatory Law to enshrine legal protection for whistleblowers.
4. DFSA Consults on Crypto-Assets
The DFSA released its consultation relating to the regulation of crypto tokens with consumer protection, market integrity, custody, and financial resources for service providers in mind.
The proposed scope of the proposed regime is as follows:
|
In Scope |
Investment Token |
Security Token Derivative Token |
|
Accepted Crypto Token |
Defined based on an eligibility criterion and application process |
|
|
Excluded Token |
· Non-Fungible Token (NFT) · Central Bank Digital Currency · Utility Token |
|
|
Prohibited Token |
· Privacy Token · Algorithmic Token |
|
|
Financial Services that can be conducted with Accepted Crypto Tokens |
· Authorised Market Institutions · MTF · Dealing as Principal · Dealing as Agent · Asset Manager · Fund Manager · Providing Custody · Arranging Custody · Arranging Deals · Advising |
|
