GEN 7 GEN 7 Authorisation
GEN 7.1 GEN 7.1 Application
GEN 7.1.1 GEN 7.1.1(1) This chapter applies, subject to (2), to every
Personwho is:(a) an Authorised Firm;(b) an applicant for a Licenceto be an Authorised Firm;(c) an Authorised Individual;(d) an applicant for Authorised Individualstatus; or(e) a Controller of a Person referred to in (a) or (b).(2) This chapter does not apply to a Personintending to:(a) Operate an Exchange;(b) Operate a Clearing House; or(c) Operate a Representative Office.
GEN 7.1.1 Guidance1. This chapter outlines
DFSA'sauthorisation requirements for an Authorised Firmand Authorised Individual.2. The DFSA'srequirements for authorisation of:a. Authorised Market Institutionsare covered by the AMImodule; andb. Representative Officesare covered by the REP module.3. The DFSA'srequirements for registration of DNFBPsare found in the AML module.4. This chapter should be read in conjunction with the RPP Sourcebook which sets out DFSA'sgeneral regulatory policy and processes. Some additional processes may be outlined in other chapters of this module.5. Chapter 2 of the RPP Sourcebook sets out DFSA'sapproach to the authorisation of undertakings and individuals to conduct Financial Servicesor Licensed Functions, as the case may be.
GEN 7.2 GEN 7.2 Application for a Licence
Person, who intends to carry on one or more Financial Servicesin or from the DIFCmust apply to the DFSAfor a Licence, in accordance with the Rulesin this section.
GEN 7.2.2 GEN 7.2.2(1) The
DFSAwill only consider an application for a Licence from a Personwho, subject to (2), (4), (5) and (6), is:(a) a Body Corporate; or(b) a Partnership;and who is not an Authorised Market Institution.(2) If the application is in respect of either or both of the following Financial Services:(a) Effecting Contracts of Insurance;(b) Carrying Out Contracts of Insurance,the applicant must be a Body Corporate.(3) Deleted.(4) If the application is in respect of the Financial Serviceof Managing a Collective Investment Fundor Acting as the Trustee of a Fund, the applicant must be a Body Corporate.(5) If the application is for the Financial Service of:(a) Operating an Employee Money Purchase Scheme, the applicant must be a Body Corporate; and(b) Acting as the Administrator of an Employee Money Purchase Scheme, the applicant must be a Body Corporate incorporated under the DIFC Companies Law.(6) If the application is for Managing a Venture Capital Fund, the applicant must be a Body Corporate incorporated under the DIFC Companies Law.Derived from Notice of Amendments to Legislation April 2011 [VER27/02-11]
[Amended] DFSA RM105/2012 (Made 23rd December 2012). [VER32/12-12]
[Amended] DFSA RM229/2018 (Made 6th June 2018). [VER42/08-18]
[Amended] DFSA RMI260/2019 (Made 18th December 2019). [VER47/01-20]
[Amended] DFSA RM278/2020 (Made 28th October 2020). [VER49/11-20]
Personlicensed by the Emirates Securities and Commodities Authority to trade on an U.A.E.exchange will not be granted a Licenceby the DFSAunless that Personhas the prior approval of the Emirates Securities and Commodities Authority.
GEN 7.2.4 GEN 7.2.4
Personapplying for a Licencemust complete and submit the appropriate form or forms in AFN.
GEN 7.2.4 Guidance
Personsubmitting an application under Rule 7.2.4 is required to:a. pay the appropriate application fee as set out in FER; andb. include information relating to its Controllers, completed by the relevant Controllers themselves, in the appropriate form in AFN.
Consideration and assessment of applications
In order to become authorised to carry on one or more Financial Services, the applicant must demonstrate to the satisfaction of the DFSA that it:(a) has adequate resources, including financial resources;(b) is fit and proper; and(c) has adequate compliance arrangements, including policies and procedures, that will enable it to comply with all the applicable legal requirements, including the Rules.
GEN 7.2.6 GEN 7.2.6
In assessing whether an applicant has adequate resources, the
DFSAwill consider:(a) how the applicant will comply with the applicable provisions of PIB or PIN;(b) the provision the applicant makes in respect of any liabilities, including contingent and future liabilities;(c) the means by which the applicant and members of its Group manage risk in connection with their business; and(d) the rationale for, and basis of, the applicant's business plan.
Fitness and propriety
GEN 7.2.7 GEN 7.2.7(1) In assessing whether an applicant is fit and proper, the DFSA will consider:(a) the fitness and propriety of the members of its
Governing Body;(b) the suitability of the applicant's Controllers or any other Person;(c) the impact a Controllermight have on the applicant's ability to comply with the applicable requirements;(d) the Financial Servicesconcerned;(e) the activities of the applicant and any associated risks that those activities pose to the DFSA's objectives described under Article 8(3) of the Regulatory Law 2004;(f) whether the applicant's affairs will be conducted and managed in a sound and prudent manner;(g) any matter which may harm or may have harmed the integrity or the reputation of the DFSA or DIFC; and(h) any other relevant matters.(2) The DFSA will, in assessing the matters in (1), consider the cumulative effect of factors which, if taken individually, may be regarded as insufficient to give reasonable cause to doubt the fitness and propriety of an applicant.
In assessing whether an applicant has adequate compliance arrangements, the DFSA will consider whether it has:(a) clear and comprehensive policies and procedures relating to compliance with all applicable legal requirements including the Rules;(b) adequate means to implement those policies and procedures and monitor that they are operating effectively and as intended.
In assessing an application for a
Licence, the DFSA may:(a) make any enquiries which it considers appropriate, including enquiries independent of the applicant;(b) require the applicant to provide additional information;(c) require the applicant to have information on how it intends to ensure compliance with a particular Rule;(d) require any information provided by the applicant to be verified in any way that the DFSA specifies; and(e) take into account any information which it considers relevant.
GEN 7.2.10(1) In assessing an application for a
Licencethe DFSA may, by means of written notice, indicate the legal form that the applicant may adopt to enable authorisation to be granted.(2) Where the DFSA thinks it appropriate it may treat an application made by one legal form or Personas having been made by the new legal form or Person.
In assessing an application for a
Licenceauthorising the applicant to Operate an Alternative Trading System, the DFSA will have regard to, but is not limited to, considering the following matters:(a) whether the establishment of an Alternative Trading Systemis, or is likely to be, in the interests of the Financial Services and Marketsindustry;(b) whether the Alternative Trading Systemwill or is likely to lead to more efficient price discovery of, or deepen liquidity in, an Investment; and(c) whether there is any risk of market fragmentation, loss of liquidity or inefficiency in price discovery as a result of the proposed Alternative Trading Systemoperation.
GEN 7.3 GEN 7.3 Applications for endorsements
Carrying on service with or for a Retail Client
The following requirements must be met by an
Authorised Firmfor the grant of an endorsement to carry on a Financial Servicewith or for a Retail Client:(a) the applicant must have adequate systems and controls for carrying on Financial Serviceswith or for a Retail Client;(b) the applicant must have adequate systems and controls (including policies and procedures) to ensure compliance with the requirements in COBrelevant to Retail Clients;(c) the applicant must have adequate systems and controls to ensure that its Employeesremain competent and capable to perform the functions which are assigned to them, in particular, functions that involve dealing with Retail Clients; and(d) the applicant must have adequate Complainthandling policies and procedures.
Acting as a Trade Repository
Endorsement to hold Client Assets or Insurance Monies
Authorised Firmapplying for an endorsement to hold or control Client Assetsmust satisfy the DFSA that it has in place adequate systems and controls to meet the applicable requirements in COB sections 6.11 to 6.14.Derived from DFSA RM166/2016 (Made 10th February 2016). [VER36/04-16]
Insurance Intermediaryor Insurance Managerapplying for an endorsement to hold Insurance Moniesmust satisfy the DFSAthat it has in place adequate systems and controls to meet the applicable requirements in COB section 7.12.Derived from DFSA RM166/2016 (Made 10th February 2016). [VER36/04-16]
Endorsement relating to Long-Term Insurance
Insurance Intermediaryapplying for an endorsement to conduct activities relating to contracts of Long-Term Insurancemust satisfy the DFSA that it has adequate skills and knowledge relating to underlying investments of Long-Term Insurance.Derived from DFSA RM184/2016 (Made 7th December 2016). [VER38/02-17]
Endorsement to use a Fund Platform
Personapplying for an endorsement to use a Fund Platformmust:(a) be authorised to Manage a Collective Investment Fund; and(b) satisfy the DFSA that the Incorporated Cell Companythat is to be the Fund Platform:(i) has adequate systems and controls to establish, manage, operate or wind up the type or specialist classes of Funds proposed to be established as Incorporated Cellsof that Incorporated Cell Company; and(ii) can carry out those activities in accordance with the requirements under the Collective Investment Law 2010and CIR that apply to the relevant type or specialist classes of Funds referred to in (i).Derived from DFSA RMI247/2019 (Made 18th December 2019). [VER45/12-19]
GEN 7.4 GEN 7.4 Licensed Functions and Authorised individuals
GEN 7.4.1(1) Pursuant to Article 43 of the
Regulatory Law2004, the functions specified in Rules 7.4.2 to 7.4.9 are Licensed Functions.(2) A Licensed Functionshall not include a function performed by a registered insolvency practitioner (subject to the restrictions defined within Article 123 of the Insolvency Law 2019) if the practitioner is:(a) acting as a nominee in relation to a company voluntary arrangement within the meaning of Article 7 of the Insolvency Law 2019;(b) appointed as a receiver or administrative receiver within the meaning of Article 42 of the Insolvency Law 2019;(c) appointed as a liquidator in relation to a members' voluntary winding up within the meaning of Article 61 of the Insolvency Law 2019;(d) appointed as a liquidator in relation to a creditors' voluntary winding up within the meaning of Article 68 of the Insolvency Law 2019; or(e) appointed as a liquidator or provisional liquidator in relation to a compulsory winding up within the meanings of Article 90 and 91 of the Insolvency Law 2019.(3) A Licensed Functionshall not include a function performed by an individual appointed to act as:(a) manager of the business of an Authorised Firmor Authorised Market Institutionas directed by the DFSAunder Article 77A of the Regulatory Law; or(b) Temporary Administrator of an Authorised Firm under Article 84Q of the Regulatory Law.Derived from Notice of Amendments to Legislation April 2011 [VER27/02-11]
[Amended] DFSA RM105/2012 (Made 23rd December 2012). [VER32/12-12]
[Amended] DFSA RM131/2014 (Made 21st August 2014). [VER34/06-14]
[Amended] DFSA RMI288/2020 (Made 16th December 2020). [VER50/02-21]
[Amended] DFSA RMI285/2020 (Made 16th December 2020). [VER51/04-21]
Senior Executive Officer
Senior Executive Officerfunction is carried out by an individual who:(a) has, either alone or jointly with other Authorised Individuals, ultimate responsibility for the day-to-day management, supervision and control of one or more (or all) parts of an Authorised Firm's Financial Servicescarried on in or from the DIFC; and(b) is a Director, Partneror Senior Managerof the Authorised Firm.
Licensed Partnerfunction is carried out, in the case of an Authorised Firmwhich is a Partnershipor Limited Liability Partnership, by an individual specified in Rule 7.5.5.
Finance Officerfunction is carried out by an individual who is a Director, Partneror Senior Managerof an Authorised Firmwho has responsibility for the Authorised Firm'scompliance with the applicable Rulesin PINor PIB.
Compliance Officerfunction is carried out by an individual who is a Director, Partneror Senior Managerof an Authorised Firmwho has responsibility for compliance matters in relation to the Authorised Firm's Financial Services.
GEN 7.4.7 GEN 7.4.7
Senior Managerfunction is carried out by an individual who is responsible either alone or jointly with other individuals for the management, supervision or control of one or more parts of an Authorised Firm's Financial Serviceswho is:(a) an Employeeof the Authorised Firm; and(b) not a Directoror Partnerof the Authorised Firm.
GEN 7.4.7 Guidance
In respect of a
Fund, the DFSAwould expect the Fund Managerto appoint at least one individual other than the Senior Executive Officerto carry out Senior Managerfunctions in relation to the Fundsuch as managing operational risk and other internal controls.
Money Laundering Reporting Officer
Money Laundering Reporting Officerfunction is carried out by an individual who is a Director, Partneror Senior Managerof an Authorised Firmand who has responsibility for the implementation of an Authorised Firm'santi money laundering policies, procedures, systems and controls and day to day oversight of its compliance with the Rulesin AMLand any relevant anti money laundering legislation applicable in the DIFC.
GEN 7.4.9 GEN 7.4.9
Responsible Officerfunction is carried out by an individual who:(a) has significant responsibility for the management of one or more aspects of an Authorised Firm'saffairs;(b) exercises a significant influence on the firm as a result of (a); and(c) is not an Employeeof the Authorised Firm.
GEN 7.4.9 Guidance1. The
Licensed Functionof Responsible Officerapplies to an individual employed by a Controlleror other Groupcompany who is not an Employeeof the Authorised Firm, but who has significant responsibility for, or for exercising a significant influence on, the management of one or more aspects of the Authorised Firm'sbusiness.2. Examples of a Responsible Officermight include an individual responsible for the overall strategic direction of an Authorised Firmor a regional manager to whom a Senior Executive Officerreports and from whom he takes direction.
GEN 7.4.10 GEN 7.4.10
Authorised Individualmay perform one or more Licensed Functionsfor one or more Authorised Firms.
GEN 7.4.10 Guidance1. In considering whether to grant an individual
Authorised Individualstatus with respect to more than one Authorised Firm, the DFSAwill consider each Licensed Functionto be carried out and the allocation of responsibility for that individual among the Authorised Firms.2. In the above situation the DFSAwill need to be satisfied that the individual will be able to carry out his role effectively, is fit and proper to do so, and that there are no conflicts of interest or that any actual or potential conflicts of interest are appropriately managed.
GEN 7.5 GEN 7.5 Mandatory appointments
GEN 7.5.1 GEN 7.5.1(1) An
Authorised Firmmust, subject to (2) and (3), make the following appointments and ensure that they are held by one or more Authorised Individualsat all times:(a) Senior Executive Officer;(b) Finance Officer;(c) Compliance Officer; and(d) Money Laundering Reporting Officer.(2) An Authorised Firmwhich is a Credit Rating Agency:(a) need not make the appointment referred to in (1)(b) and (d); and(b) must ensure that the appointments referred to in 1(a) and (c) are held by separate Authorised Individualsat all times.(3) An Authorised Firm need not make the appointment referred to in (1)(b) if the only Financial Service it carries on is Managing a Venture Capital Fund.
GEN 7.5.1 Guidance1. This
Guidanceaddresses a range of circumstances:a. one individual performing more than one function in a single firm, as contemplated in Rule 7.5.1;b. more than one individual performing one function in a single firm, not addressed by that Rule;c. one individual performing a single function in more than one firm, also not addressed by that Rule.2. The DFSAwill only authorise an individual to perform more than one Licensed Functionor combine Licensed Functionswith other functions where it is satisfied that the individual is fit and proper to perform each Licensed Functionor combination of Licensed Functions.3. In the above situation the DFSAwill need to be satisfied that the individual will be able to carry out his role effectively, is fit and proper to do so, and that there are no conflicts of interest or that any actual or potential conflicts of interest are appropriately managed.4. Notwithstanding this Rule, an Authorised Firmwould generally be expected to separate the roles of Compliance Officerand Senior Executive Officer. In addition, the roles of Compliance Officer, Finance Officerand Money Laundering Reporting Officerwould not be expected to be combined with any other functions unless appropriate monitoring and control arrangements independent of the individual concerned will be implemented by the Authorised Firm. This may be possible in the case of a Branch, where monitoring and controlling of the individual (carrying out more than one role in the Branch) is conducted from the firm's home state by an appropriate individual for each of the relevant Licenced Functions. However, it is recognised that, on a case by case basis, there may be exceptional circumstances in which this may not always be practical or possible.5. In what it considers to be exceptional circumstances, the DFSAmay register more than one individual to perform the Licensed Functionof Compliance Officerin respect of different internal business divisions within a large Authorised Firm. In this regard the DFSAmay consider, amongst other things, the nature, scale and complexity of the activities of the firm, the clarity of demarcation between areas of responsibility, the potential for gaps in responsibility, and processes of communication with the DFSA.6. The DFSAmay also register an individual as the Compliance Officerfor more than one Authorised Firm. The DFSAwill only do this where it is satisfied that the individual is able to carry out his functions effectively in each firm taking into consideration factors such as the amount and nature of business conducted by the firms. Each Authorised Firmhas a duty under GEN 5 to monitor its compliance arrangements to ensure, as far as reasonably practicable, that it complies with all legislation applicable in the DIFC.
GEN 7.5.2 GEN 7.5.2
Authorised Individualsreferred to in Rule 7.5.1(1)(a), (c) and (d) must be resident in the U.A.E.
GEN 7.5.2 Guidance1. In appropriate circumstances, the
DFSAmay waive the requirement for a Compliance Officeror MLROto be resident in the UAE. In determining whether to grant a waiver, the DFSAwill consider a range of factors on a case by case basis focused on whether the firm can demonstrate that it has appropriate compliance arrangements (see GEN section 5.3). These factors may include, but are not limited to: the nature, scale and complexity of the activities of the firm; the ability of a remote officer to carry out his functions in differing time zones and a differing working week; the size, resourcing and capabilities of a remote compliance function; the ability of a remote officer to liaise and communicate readily with the DFSA; and the competency and capability of a remote officer and whether the remote officer is able effectively to undertake or supervise regular compliance monitoring and keep up to date with applicable Rules.2. The DFSAwill also take into account factors such as the relevant regulatory experience of the proposed Authorised Individualand whether the applicant firm has previously been subject to financial services regulation.
In the case of a
Trust Service Provider, the Authorised Individualsreferred to in Rule 7.5.1 (c) and (d) must not act also as trustees on behalf of the Trust Service Provider.
Authorised Firmwhich is a Body Corporate(other than a Limited Liability Partnership) whose head office and registered office are located in the DIFC, must register with the DFSAall of its Directorsas Licensed Directors.
GEN 7.5.5 GEN 7.5.5(1) In the case of an
Authorised Firmwhich is a partnership established under either the DIFC General Partnership Law or Limited Liability Partnership Law, the Licensed Partnerfunction must be carried out by:(a) each individual Partner who must be registered as a Licensed Partner; and(b) in the case of a Partnerwhich is a Body Corporate, by an individual nominated by that Body Corporateand registered as a Licensed Partnerto act on its behalf.(2) In the case of an Authorised Firmwhich is a partnership established under the DIFC Limited Partnership Law, the Licensed Partnerfunction must be carried out by:(a) each individual General Partner who must be registered as a Licensed Partner; and(b) in the case of a General Partner which is a Body Corporate, by an individual nominated by that Body Corporateand registered as a Licensed Partnerto act on its behalf.
GEN 7.6 GEN 7.6 Application for Authorised Individual status
In submitting applications for
Authorised Individualstatus, both the individual and Authorised Firmmust complete and submit the appropriate form in AFN.
When an individual and an
Authorised Firmapply to the DFSAfor that individual to be an Authorised Individual, the individual must satisfy the DFSAthat he is a fit and proper person to carry out the role.
Consideration and assessment of applications
GEN 7.6.3 GEN 7.6.3
An individual will only be authorised to carry on one or more
Licensed Functionsif the DFSAis satisfied that the individual is fit and proper to be an Authorised Individual. In making this assessment, the DFSAwill consider:(a) the individual's integrity;(b) the individual's competence and capability;(c) the individual's financial soundness;(d) the individual's proposed role within the Authorised Firm; and(e) any other relevant matters.
GEN 7.6.3 Guidance
Section 2.3 of the RPP Sourcebook sets out matters which the
DFSAtakes into consideration when making an assessment of the kind under Rule 7.6.3.
In Rule 7.6.3, an individual may not be considered as fit and proper where:(a) he is bankrupt;(b) he has been convicted of a serious criminal offence; or(c) he is incapable, through mental or physical incapacity, of managing his affairs.
In assessing an application for
Authorised Individualstatus, the DFSAmay:(a) make any enquiries which it considers appropriate, including enquiries independent of the applicant;(b) require the individual or Authorised Firmto provide additional information;(c) require any information provided by the individual or Authorised Firmto be verified in any way specified by the DFSA; and(d) take into account any information which it considers appropriate.
Authorised Firmmust not permit an individual to perform a Licensed Functionon its behalf, except as permitted by section 11.6, unless that individual is an Authorised Individualwho has been assessed by the Authorised Firmas competent to perform that Licensed Functionin accordance with Rule 7.6.7.
In assessing the competence of an individual, an
Authorised Firmmust:(a) obtain details of the knowledge and skills of the individual in relation to the knowledge and skills required for the role;(b) take reasonable steps to verify the relevance, accuracy and authenticity of any information acquired;(c) determine whether the individual holds any relevant qualifications with respect to the Licensed Functionor Licensed Functionsperformed, or proposed to be to performed, within the Authorised Firm;(d) determine the individual's relevant experience; and(e) determine the individual's knowledge of the Authorised Firm'srelevant systems and procedures with respect to the type of business that is to be, or is being, conducted by the individual on behalf of the Authorised Firm.
Authorised Firmmust be satisfied that an Authorised Individual:(a) continues to be competent in his proposed role;(b) has kept abreast of relevant market, product, technology, legislative and regulatory developments; and(c) is able to apply his knowledge.
GEN 7.6.9 GEN 7.6.9
Authorised Firmis responsible for the conduct of its Authorised Individualsand for ensuring that they remain fit and proper to carry out their role.
Before lodging an application with the
DFSA, an Authorised Firmmust make reasonable enquiries as to an individual's fitness and propriety to carry out a Licensed Function.
Authorised Firmmust not lodge an application if it has reasonable grounds to believe that the individual is not fit and proper to carry out the Licensed Function.
Systems and controls
Authorised Firmmust have appropriate arrangements in place to ensure that an individual assessed as being competent under Rule 7.6.6 maintains his competence.
GEN 7.6.13 GEN 7.6.13
Authorised Firmmust ensure, in the case of individuals seeking to perform the Licensed Functionsof Senior Executive Officer, Money Laundering Reporting Officeror Compliance Officer, that such individuals are able to demonstrate sufficient knowledge of relevant anti money laundering requirements.
GEN 7.6.13 Guidance
In considering whether individuals have sufficient knowledge of relevant anti money laundering requirements, the
DFSAmay be satisfied where the individual can demonstrate receipt of appropriate training specifically relevant to such requirements.
GEN 7.6.15(1) An
Authorised Firmmust keep records of the assessment process undertaken for each individual under this chapter.(2) These records must be kept for a minimum of six years from the date of the assessment.