Entire Section

  • RPP 3 RPP 3 Supervision — Being Regulated

    • RPP 3-1 RPP 3-1 DFSA's Approach to Supervision

      • Introduction

        • RPP 3-1-1

          Chapter 3 focuses on the DFSA's risk-based approach to supervision and the ongoing relationship between the DFSA and an Authorised Person, DNFBP or Registered Auditor (collectively referred to as firms in this Chapter unless otherwise stated).

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 5th July 2012). July 2012 Edition
          Amended by Notice of Updates (Made 14th July 2013). July 2013 Edition
          Amended (Made 21st August 2014). August 2014 Edition

        • RPP 3-1-2

          Section 3-1 outlines the DFSA's general approach to risk based supervision; the remaining sections (3-2 to 3-6) provide additional information in relation to the DFSA's approach to the supervision of particular types of firms.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-1-3

          The appropriate use of the DFSA's supervisory powers plays an important part in ensuring that the DFSA achieves its statutory objectives and has regard to its guiding principles which are set out in chapter 1.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

      • Supervision Philosophy

        • RPP 3-1-4

          The DFSA has adopted a risk-based approach to the regulation and supervision of all regulated firms in order to concentrate its resources on the mitigation of risks to its objectives. The DFSA will work with a regulated entity to identify, assess, mitigate and control these risks where appropriate.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-1-5

          The DFSA's supervisory risk-based approach involves:

          (a) the DFSA's continuous risk management cycle, which utilises macro-prudential data, risk assessments and a risk matrix to form risk-based classifications of firms, as set out in paragraphs 3-1-8 to 3-1-24;
          (b) where applicable, developing a strong relationship with a firm and its senior management, as set out in paragraphs 3-1-25 to 3-1-31;
          (c) firms making notifications to the DFSA, including as set out in paragraphs 3-1-32 and 3-1-33;
          (d) using appropriate supervisory tools; and

          where applicable, considering any lead or consolidated supervision which a firm or its Group may be subject to in other jurisdictions, taking into account the DFSA's relationship with other regulators, set out in paragraphs 3-1-34 and 3-1-35;

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 20th December 2012). December 2012 Edition
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-1-6

          The DFSA's risk-based approach to the supervision of a firm may vary depending upon the size, scale, nature and circumstances of each individual firm and the specific risks it poses to the DFSA's objectives.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

        • RPP 3-1-7

          The DFSA is concerned with a firm's behaviour that affects both its overall financial condition and its interaction with individual customers and market counterparties. We do not aim to prevent all failures. A 'zero failure' regime would place an excessive regulatory burden on firms. Instead, we aim to reduce the probability of excessive risk taking or inappropriate conduct through increased intensity of supervision where it is both appropriate and likely to be effective.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

      • Risk management cycle

        • RPP 3-1-8

          The DFSA has adopted a continuous risk management cycle. This comprises the identification, assessment, prioritisation, monitoring and mitigation of risks.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-1-9

          Our risk management cycle starts with a macro-prudential view of the DIFC as a whole. We produce a comprehensive set of quarterly data which highlight demographics of all types of regulated entities. This data set provides an overview of the risk profile of regulated entities, including the aggregate financial position.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-1-10

          Based on the analysis of this data set, we might increase assessment activity with respect to certain entities, or use thematic reviews to target certain products, services or practices across a set of firms.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-1-11

          Our Board of Directors use these data, amongst other factors, to set organisational risk tolerances which are used to prioritise risks.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

      • Risk Matrix — Impact and Probability Ratings

        • RPP 3-1-12

          The impact rating is an assessment of the potential adverse consequences that could follow from the failure of, or significant misconduct by, a firm. The potential adverse consequences include not only the direct financial impact on such firm's customers and stakeholders, but also the potential for damage to the reputation and objectives of the DFSA.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-1-13

          We do not have a single proxy for the impact rating. We consider a variety of factors such as:

          (a) the amount of firm revenue generated by activity in or from the Centre;
          (b) the number of employees in the DIFC;
          (c) the potential scale of damage to the firm's customers based on the firm's level of activity in or from the DIFC;
          (d) whether the firm holds deposits or any other form of client money;
          (e) the potential for an individual firm or entity's failure or misconduct to directly damage other firms or entities; and
          (f) the potential damage of failure or significant misconduct on the reputation and objectives of the DFSA.
          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-1-14

          The probability rating covers four broad risk groups:

          (a) Corporate Governance, Strategy and Business Model Risks;
          (b) Financial and Operational Risks;
          (c) Conduct of Business Risks to Clients and Markets; and
          (d) Anti-Money Laundering, Counter Terrorist Financing and Financial Crime.
          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-1-15

          Within these risk groups are risk elements which the DFSA may review, according to the type of firm, to identify risks that could inhibit the achievement of our objectives.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-1-16

          A risk matrix is then used to identify, assess and further prioritise risks using these impact and probability ratings, resulting in a risk based classification of a firm.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

      • Risk-based classification of firms

        • RPP 3-1-17

          Risk assessments allow the DFSA to allocate its resources in such a way that its supervisory tools are targeted towards those firms and activities which pose a higher risk to the DFSA's objectives.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-1-18

          The DFSA has in place intra-departmental challenges and measures to check that our supervisory activities are proportionate to a firm's risk-based classification.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-1-19

          We will generally only allocate a Relationship Manager to a firm with a higher level of resultant risk from the combined assessment of impact and probability risk ratings. This means that a significant number of firms will not have a dedicated Relationship Manager, but will be supervised by a team — the Thematic Supervision Team (TST).

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-1-20

          Firms supervised by the TST will be subject to onsite and thematic surveillance reviews, however, the review cycle will differ from those firms supervised by dedicated relationship managers. In addition to risk assessments, the TST will use high-level management meetings and self-certifications as considered necessary.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-1-21

          Thematic reviews will cover a sample of all relevant firms. Such reviews may be conducted at any time.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-1-22

          Whilst the DFSA may discuss certain information with a firm, in particular the specific risks that lead it to assign an overall risk classification to the firm and any necessary remedial actions, it will not usually disclose the final risk classification.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

      • Risk mitigation

        • RPP 3-1-23

          Whenever appropriate, the DFSA may inform the firm of the steps it needs to take in relation to specific risks. The DFSA then expects the firm to demonstrate that it has taken appropriate steps to mitigate the risks it poses to the DFSA's objectives.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-1-24

          Where necessary, risk mitigation programmes may be developed with a firm in order to mitigate or remove identified areas of risk.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

      • DFSA's Relationship with Firms

        • RPP 3-1-25

          In order to meet its objectives, the DFSA requires an open, transparent and co-operative relationship between itself and each firm. The DFSA expects to establish and maintain an on-going dialogue with the firm's senior management in order to develop and sustain a thorough understanding of the firm's business, systems and controls and, through this relationship, to be aware of all areas of risk to the DFSA's objectives.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-1-26

          The DFSA seeks to maintain an up-to-date knowledge of a firm's business. However, a firm is also required to keep the DFSA informed of significant events, or anything related to the firm of which the DFSA would reasonably expect to be notified, including as set out in paragraphs 3-1-32 and 3-1-33.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-1-27

          The nature and intensity of the DFSA's relationship with a firm will depend first on the extent of risk a firm poses, but after that will also depend on a number of factors. The DFSA's level of supervision will be proportionate to the risks which the firm poses to the DFSA's objectives and will emphasise the responsibilities of the firm's senior management in identifying, assessing, mitigating and controlling its risks. The greater the impact and probability of the firm's perceived risks, the more intensive the supervisory relationship may be.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-1-28

          For those Firms who have a dedicated Relationship Manager, their Relationship Managers will be the Firms' main point of contact with the DFSA. This includes any notifications, changes or queries.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-1-29

          For those Firms without a dedicated Relationship Manager, who will be supervised by the TST, a "Supervised Firm Contact Form" (Contact Form), is available only to Firms on the DFSA website and provides a mechanism to securely and efficiently communicate with us.

          http://www.dfsa.ae/Pages/ContactUs/SupervisedFirmContactForm.aspx

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-1-30

          This Contact Form can be used for any questions or queries you have of us and for the lodgement of any required forms (except EPRS returns). The Contact Form also allows for the attachment of any related supporting documents. Once received, all enquiries will be acknowledged and an appropriate DFSA staff member will be allocated to each enquiry. The DFSA has put in place service standards to ensure that all enquiries are responded to in a timely manner.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-1-31

          In addition, we have also published, on our website, a set of Frequently Asked Questions (FAQs). These FAQs include the most commonly asked questions from our regulated entities ranging from general "Where can I find … ?" queries to more specific supervisory processes or reporting requirement queries. We will update the FAQs on a regular basis and we encourage all regulated entities to visit and revisit this resource frequently.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

      • Notifications to the DFSA

        • RPP 3-1-32

          Section 11.10 of the GEN module sets out Rules on specified events, changes or circumstances that require notification to the DFSA by an Authorised Person (other than a Representative Office). The list of notifications outlined in section 11.10 is not exhaustive and other areas of the Rulebook may also specify additional notification requirements.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-1-33

          An Authorised Firm and Authorised Market Institution are required to comply with the high level principles in GEN Rule 4.2.10 and AMI Rule 9.2.1 respectively. These Rules require an Authorised Person to deal with the DFSA in an open and co-operative manner and keep the DFSA promptly informed of significant events or anything else relating to such person of which the DFSA would reasonably expect to be notified.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

      • Co-Operation with Other Regulators

        • RPP 3-1-34

          The DFSA views co-operation with other regulators as an important component of its supervisory activities. Effective co-operation arrangements with other regulators will provide for prompt exchange of information in relation to supervision, investigation and enforcement matters. Usually, co-operation arrangements will be in the form of memoranda of understanding or other arrangements. The information exchange may enhance, for example, the DFSA's understanding of the operations of an Authorised Firm's Group and the effect on the firm.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-1-35

          The DFSA may exercise its powers for the purposes of assisting other regulators or agencies (see Article 39 of the Regulatory Law). The DFSA may also delegate functions and powers to representatives of other regulators or agencies (see Article 40 of the Regulatory Law).

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended (Made 21st August 2014). August 2014 Edition
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

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        • RPP 3-1-12 [Deleted]

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        • RPP 3-1-13 [Deleted]

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        • RPP 3-1-27 [Deleted]

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        • RPP 3-1-35 [Deleted]

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    • RPP 3-2 RPP 3-2 Supervision of Authorised Firms

      • Introduction

        • RPP 3-2-1

          Section 3.2 provides additional information in relation to DFSA's approach to the supervision of an Authorised Firm. Where relevant, some of these requirements may apply to a Representative Office.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

        • RPP 3-2-2

          In supervising an Authorised Firm, the DFSA expects an Authorised Firm to comply with a number of high level principles in relation to its activities.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

        • RPP 3-2-3

          An Authorised Firm, other than a Representative Office, must comply with the twelve principles set out in section 4.2 of the GEN module. In brief, these are:

          (a) Principle 1 — Integrity;
          (b) Principle 2 — Due skill, care and diligence;
          (c) Principle 3 — Management, systems and controls;
          (d) Principle 4 — Resources;
          (e) Principle 5 — Market Conduct;
          (f) Principle 6 — Information and Interests;
          (g) Principle 7 — Conflicts of Interest;
          (h) Principle 8 — Suitability;
          (i) Principle 9 — Customer assets and money;
          (j) Principle 10 — Relations with regulators;
          (k) Principle 11 — Compliance with high standards of corporate governance; and
          (l) Principle 12 — Remuneration practices.
          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 5th July 2012). July 2012 Edition

        • RPP 3-2-4

          A Representative Office must comply with the four principles set out in section 3.2 of the REP module. In brief, these are:

          (a) Principle 1 — Integrity;
          (b) Principle 2 — Due skill, care and diligence;
          (c) Principle 3 — Resources; and
          (d) Principle 4 — Relations with regulators
          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

      • Group Supervision

        • RPP 3-2-5

          When the DFSA licenses an Authorised Firm, it takes into consideration the relationship with any wider Group to which the firm may belong or with other Persons closely linked to it. The DFSA may also take into account lead or consolidated supervision to which an Authorised Firm or its Group may be subject in another jurisdiction.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

        • RPP 3-2-6

          An Authorised Firm is expected to provide information as required or reasonably requested under legislation applicable in the DIFC relating to the Authorised Firm and, where applicable, its consolidated or lead regulatory arrangements. This information may include prudential information, reports on systems and controls relating to an Authorised Firm's Group, internal and external audit reports, details of disciplinary proceedings or any matters which may have financial consequences, reputational impact or pose any significant risk to the DIFC or to the Authorised Firm and the group-wide corporate governance practices and policies and the remuneration structure and strategies adopted. This information may initially be taken into account as part of DFSA's fit and proper test as set out in section 2.2 and may subsequently be utilised in the supervision of the Authorised Firm. Further Rules and Guidance with regard to obtaining information from an Authorised Firm's lead regulator are set out in GEN Rule 11.1.5.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 5th July 2012). July 2012 Edition

        • RPP 3-2-7

          The DFSA has an interest in the relationship of an Authorised Firm with other regulators, particularly in order to determine the level of reliance the DFSA may place on a regulator in another jurisdiction concerning any lead supervision arrangements. Depending on the legal structure of an Authorised Firm and the relationship of the DFSA with the regulator in question, the DFSA may place appropriate reliance on the supervision undertaken by this regulator.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

      • Domestic Firm's Group With DIFC Head Office

        • RPP 3-2-8

          The DFSA will usually be the lead and consolidated regulator of any Group headed by a Domestic Firm. Members of the Group, that is any of the Authorised Firm's Subsidiaries or branches, will be either subject to DFSA's exclusive supervision or, where members of the Group are located in a jurisdiction outside the DIFC, generally subject to lead or consolidated supervision by the DFSA in co-operation with another regulator.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

      • Subsidiary of a Non-DIFC Firm

        • RPP 3-2-9

          The DFSA will routinely be the lead regulator for the purpose of prudential supervision of an Authorised Firm which is a DIFC incorporated Subsidiary of a non-DIFC firm.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

        • RPP 3-2-10

          Where the Authorised Firm is a Subsidiary of a regulated non-DIFC parent company, the DFSA may have regard to any consolidated prudential supervision arrangements to which the Subsidiary is subject and will liaise with other regulators as necessary to ensure that these are adequately carried out, taking into account the Subsidiary's activities. The DFSA may place appropriate reliance on the Subsidiary's consolidated regulator in another jurisdiction if it is satisfied that it meets appropriate regulatory criteria and standards.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

        • RPP 3-2-11

          An Authorised Firm carrying on Financial Services as a Subsidiary of an unregulated non-DIFC parent company may be subject to the DFSA's consolidated prudential supervision, taking into account the parent's activities.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

      • Branch of a Non-DIFC Firm

        • RPP 3-2-12

          An Authorised Firm carrying on Financial Services through a branch will be subject to supervision by both the DFSA and the regulator in its head office jurisdiction.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-13

          The DFSA will have regard to any lead or consolidated prudential supervision arrangements to which a branch is subject. The DFSA may place appropriate reliance on a Branch's lead regulator in another jurisdiction and, where appropriate, its consolidated prudential regulator if it is satisfied that it meets appropriate regulatory criteria and standards. Where an Authorised Firm is subject to lead regulation arrangements with a foreign regulator, the DFSA will usually not seek to impose consolidated prudential supervision on the Authorised Firm's Group.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-14

          During the authorisation process the DFSA will take into account the nature and scope of the regulation and supervision to which the applicant is subject in its head office jurisdiction. Notwithstanding that an Authorised Firm may be subject to lead or consolidated regulatory arrangements, the DFSA requires it to remain fit and proper in respect of its Group and Controllers. Certain changes or events will require notification to, or prior approval from, the DFSA.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

        • RPP 3-2-15

          The DFSA will determine the level of regulatory and supervisory oversight which is subsequently required for a specific Branch. As part of DFSA's risk assessment process, during the authorisation process the DFSA undertakes a two-tier approach to the risks to its objectives posed by the Branch, thereby taking into account the characteristics of the applicant and its head office. The first part of this assessment includes a judgement on the degree of home country supervision and considers the strength of support, both financial and managerial, which the head office is capable of providing to the Branch, taking into account the Branch's activities and the adequacy of, among other things, the corporate governance framework and practices and remuneration structure and strategies adopted at the head office. The second part of the assessment considers the risk and control mechanisms within the Branch itself.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 5th July 2012). July 2012 Edition

        • RPP 3-2-16

          As a result of the assessment, the DFSA may consider granting a waiver or modification notice in respect of specific prudential or other regulatory requirements relating to a Branch.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

      • Periodic Returns for Authorised Firms

        • RPP 3-2-17

          An Authorised Firm is required to submit periodic returns. In addition, an Authorised Firm may be required to submit copies of its Group's annual interim and audited accounts. The DFSA may also require an Authorised Firm to provide copies of Group returns which are sent to any other regulator.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-18

          Collecting this data in a timely and accurate manner is imperative to our risk management cycle, which is the primary reason we have automatic fees for late financial reports.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

      • On-going Risk Analysis

        • RPP 3-2-19

          The DFSA conducts an ongoing analysis of risks relating to each Authorised Firm, although the information required may vary from firm to firm. Authorised Firms with a higher risk classification may be subject to closer regulatory attention and would typically be subject to supervisory reviews specifically designed to address particular causes of risk.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-20

          All Authorised Firms will be subject to an individual on-site risk assessment, except where more than one Authorised Firm belongs to the same Group, in which case the DFSA may decide to carry out a Group risk assessment.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-21

          The risk assessment process is ongoing. The DFSA will, on a continuous basis, review notifications and reporting of information, maintain an ongoing dialogue with senior management and make appropriate visits to the Authorised Firm, so that the DFSA has current information on key risk areas of the Authorised Firm.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-22

          There are also a number of trigger events which may affect the frequency of a risk assessment and the Authorised Firm's overall risk classification. Examples include:

          (a) a notification from a non-DIFC regulator or other authority of an issue concerning the Authorised Firm or its Group;
          (b) a material change in an Authorised Firm's business and new business activities;
          (c) a change in the Authorised Firm's Controllers;
          (d) an Authorised Firm's development of high risk products or business lines;
          (e) an Authorised Firm's development of business areas with characteristics such as unusual profitability;
          (f) an Authorised Firm's appointment of new personnel in key business areas;
          (g) an Authorised Firm's acquisition of new or revised information systems or new technology;
          (h) a rapid growth in specific areas of activity of an Authorised Firm which is not matched by appropriate systems and controls to manage such growth;
          (i) an Authorised Firm's corporate restructuring, merger or acquisitions;
          (j) an Authorised Firm's expansion or acquisition of non-DIFC operations including the impact of changes in related economic and regulatory environments; or
          (k) the DFSA's response to industry-wide concerns or themes.
          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

      • Review of Risk Management Systems

        • RPP 3-2-23

          Under GEN Rule 5.3.4, an Authorised Firm must ensure that its risk management systems provide the Authorised Firm with the means to identify, assess, mitigate and control its risks. In addition to undertaking its own assessment of the Authorised Firm, the DFSA may review the results of the Authorised Firm's internal risk assessment and determine the extent to which each of the Authorised Firm's risks impacts on DFSA's objectives, the likelihood of the risk occurring and then will consider the controls and mitigation programmes the firm has in place.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended (Made 21st August 2014). August 2014 Edition
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

      • Desk Based Reviews

        • RPP 3-2-24

          The DFSA may undertake desk based reviews in order to review compliance with legislation applicable in the DIFC. They assist the DFSA's understanding of an Authorised Firm's operations. For example, monitoring its financial position and detecting emerging problems or concerns to be explored in greater detail through prudential meetings, examinations, or otherwise. A desk based review may involve analysing information provided by the firm through periodic returns, internal management information, published financial information or specially requested information.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-24 [Deleted]

          Deleted by Notice of Updates (Made 11th February 2015). February 2015 Edition

      • On-Site Visits

        • RPP 3-2-25

          On-site visits provide the DFSA with an overview of the Authorised Firm's operations and enable it to form a first-hand view of the personnel, systems and controls and compliance culture within the Authorised Firm as well as identifying and evaluating the risks to the DFSA's objectives, taking into account any mitigation by the Authorised Firm. They enable the DFSA to test the soundness of the Authorised Firm's systems and controls and the extent to which the DFSA can continue to rely on them and the Authorised Firm's senior management to prevent or mitigate risks to the DFSA's objectives. On-site visits will also assist the DFSA to assess the extent of supervision and the use of other supervisory tools required to address certain key risk areas.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

        • RPP 3-2-26

          There are various types of on-site visits by the DFSA to an Authorised Firm which differ in their objective and frequency:

          (a) Periodic visits are undertaken at frequencies determined by the DFSA and focus on the main risk areas within an Authorised Firm as well as providing the DFSA with a thorough understanding of the Authorised Firm, its business and any major changes that have taken place within the Authorised Firm since a previous visit or risk assessment and their probable effects;
          (b) Theme visits are designed to address a current or topical risk or issue either within a particular type of Authorised Firm or the market place in general. They tend to be short in duration and are focused in their approach. Examples of theme visits are anti-money laundering, client assets and conflict management;
          (c) Follow-up visits are often required to assess the implementation of any action that may have been agreed as part of a risk mitigation programme or to satisfy the DFSA that the Authorised Firm has taken appropriate action arising from a previous visit or communication;
          (d) Special visits are unique to a particular Authorised Firm and are generally scheduled following a particular event or notification from an Authorised Firm. They are generally short, focused visits usually targeted to a particular area of an Authorised Firm. These visits allow the DFSA to review certain high risk areas of an Authorised Firm's business in isolation. Occasionally, special visits may be unannounced. These assist in keeping firms to the need to maintain a continuously high quality of compliance; and
          (e) The DFSA may, from time to time, hold high level meetings with an Authorised Firm's senior management. Such meetings enable the DFSA to assess issues including any prudential concerns arising from desk based reviews or elsewhere.
          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

      • Periodic Communications

        • RPP 3-2-27

          The DFSA is committed to open and transparent communication with Authorised Firms. From time to time, the DFSA may issue letters to Senior Executive Officers or equivalent persons across the DIFC (commonly referred to as 'Dear SEO Letters'). Frequently, these letters will be issued as a means of communicating findings arising from completed thematic visits. However, they may also be issued in response to other major events or changes. For example, such a letter may include an update from relevant United Nations Security Council Sanctions or Resolutions or the Financial Action Task Force, in relation to the prevention of money laundering and combating the financing of terrorism.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

        • RPP 3-2-28

          In addition to the Senior Executive Officer letters, the DFSA may issue s and warnings in response to particular matters of concern. An example of this could be in relation to matters concerning fraudulent activity that the DFSA has become aware of.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

        • RPP 3-2-29

          The DFSA holds outreach sessions from time to time, to interact with firms operating in the DIFC. These sessions are held to discuss regulatory matters in an open manner.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

        • RPP 3-2-30

          From time to time, the DFSA may consider a particular item of communication to an Authorised Firm to be of key regulatory importance. For this reason, the DFSA may consider it necessary to issue such communications directly to a senior member of staff at the Board level of the DIFC entity copied (where appropriate) to the group's home state regulator. For entities established as a Branch in the DIFC, these communications will likely be delivered to the Chairman of the Board at the DIFC Branch entity's head or Parent office. For DIFC incorporated entities, communications will likely be delivered directly to the Chairman of the firm's Board or head office. These communications may include, for example, the results of DFSA's risk assessment visits where a risk mitigation plan has been sent that contains significant matters of concern to DFSA's objectives.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

      • External Auditor Reports, Statements and Tripartite Meetings

        • RPP 3-2-31

          The DFSA requires an Authorised Firm's registered external auditor to co-operate with the DFSA in a number of ways, including the submission of specific audit reports and statements. As part of an audit, the DFSA would expect an auditor to review any relevant correspondence between the DFSA and the Authorised Firm. Further, tripartite meetings between the Authorised Firm's senior management, the auditor, and the DFSA may be requested at the DFSA's initiative. Finally, an auditor is required to disclose to the DFSA those matters outlined in Article 104(3) of the Regulatory Law.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended (Made 21st August 2014). August 2014 Edition

      • Requiring Information and Documents

        • RPP 3-2-32

          Apart from reports such as regular prudential returns, the DFSA may from time to time also request from an Authorised Firm additional supplementary information and documents, including non-financial information such as an Authorised Firm's internal policies on particular areas of risk and compliance.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

      • Requirements relating to a Change in Control

        • RPP 3-2-33

          Article 64 of the Regulatory Law and section 11.8 of the GEN Module set out the DFSA's requirements governing Controllers of Authorised Firms.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 20th December 2012). December 2012 Edition
          Amended (Made 21st August 2014). August 2014 Edition

        • RPP 3-2-34 [Deleted]

          Deleted by Notice of Updates (Made 20th December 2012). December 2012 Edition

        • RPP 3-2-35 [Deleted]

          Deleted by Notice of Updates (Made 20th December 2012). December 2012 Edition

        • RPP 3-2-36 [Deleted]

          Deleted by Notice of Updates (Made 20th December 2012). December 2012 Edition

      • DFSA approval

        • RPP 3-2-34

          A Person who proposes to become a Controller of a Domestic Firm or an existing Controller who proposes to increase the level of control which that Person has in a Domestic Firm beyond the threshold of 30% or 50% is required to obtain the DFSA's prior approval before doing so. The DFSA's assessment of a proposed acquisition or increase in control of a Domestic Firm is a review of such a firm's continued fitness and propriety and ability to conduct business soundly and prudently. Accordingly, the DFSA takes into account the considerations specified in paragraph 2-2-13 relating to Controllers when making such an assessment.

          Added by Notice of Updates (Made 20th December 2012). December 2012 Edition
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-35

          Under GEN Rule 11.8.5(1), a Person who proposes either to acquire or increase the level of control in a Domestic Firm must lodge with the DFSA an application for approval in the appropriate form in AFN. The DFSA may approve of, object to or impose conditions relating to the proposed acquisition or the proposed increase in the level of control of the Authorised Firm. If the information in the application form lodged with the DFSA is incomplete or unclear, the DFSA may in writing request further clarification or information. The DFSA may do so at any time during the processing of such an application. The period of 90 days within which the DFSA will make a decision will not commence until such clarification or additional information is provided to the satisfaction of the DFSA. The DFSA may, in its absolute discretion, agree to a shorter period for processing an application where an applicant requests for such a period, provided all the information required is available to the DFSA.

          Added by Notice of Updates (Made 20th December 2012). December 2012 Edition
          Amended (Made 21st August 2014). August 2014 Edition

        • RPP 3-2-36

          Where the DFSA proposes to object to or impose conditions relating to a proposed acquisition of or increase in the level of control in a Domestic Firm, the DFSA will first notify the applicant in writing of its proposal to do so and its reasons. The DFSA will take into account any representations made by an applicant before making its final decision.

          Added by Notice of Updates (Made 20th December 2012). December 2012 Edition

        • RPP 3-2-37

          The DFSA may consider whether a Person has become an unacceptable Controller as a result of any notification given by an Authorised Firm under Rule 11.8.11(2) or as a result of its own supervisory work. The considerations which the DFSA will take into account in assessing whether a Person is an acceptable Controller are those set out in paragraph 3-2-34 above.

          Added by Notice of Updates (Made 20th December 2012). December 2012 Edition
          Amended (Made 21st August 2014). August 2014 Edition

      • Application for a Change of Scope of Licence

        • RPP 3-2-38

          Where an Authorised Firm applies to change the scope of its Licence, it should provide the following information:

          (a) a revised business plan as appropriate, describing the basis of, and rationale for, the proposed change;
          (b) details of the extent to which existing documentation, procedures, systems and controls will be amended to take into account any additional activities, and how the Authorised Firm will be able to comply with any additional regulatory requirements; and
          (c) descriptions of the Authorised Firm's senior management responsibilities (GEN chapter 5) where these have changed from those previously disclosed, including any up-dated staff organisation charts and internal and external reporting lines.
          (d) details of any transitional arrangements where the Authorised Firm is reducing its activities and where it has existing customers who may be affected by the cessation of a Financial Service;
          (e) the appropriate financial reporting statement where the variation may result in a change to the Authorised Firm's prudential category or the application of additional or different financial rules. If a capital increase is required in order to demonstrate compliance with additional financial rules but such capital is not paid up or available at the time of application, proposed or forecast figures may be used;
          (f) details of the effect of the proposed variation on the Authorised Individuals including, where applicable, submitting any application forms for individuals to perform additional or new Licensed Functions, or to remove existing Licensed Functions; and
          (g) revised pro forma financial statements.
          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 20th December 2012). December 2012 Edition
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-39

          An Insurer which wishes to vary its Licence to remove the Financial Service of Effecting Contracts of Insurance or to reduce the classes of insurance should refer to the run-off provisions in PIN chapter 9.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 20th December 2012). December 2012 Edition

        • RPP 3-2-40

          In considering whether an Authorised Firm is fit and proper with respect to a change in the scope of its Licence, the DFSA may take into account those matters in Chapter 2 of the RPP Sourcebook, which provides Guidance on fitness and propriety for Authorised Firms.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 20th December 2012). December 2012 Edition

        • RPP 3-2-41

          When considering a change to the scope of a Licence, the DFSA may also consider one or more of the matters outlined in paragraphs 3-2-51 to 3-2-56 below relating to the withdrawal of a Licence.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 20th December 2012). December 2012 Edition
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

      • Notification to the DFSA relating to a Major Acquisition

        • RPP 3-2-42

          GEN Rule 11.10.8 provides that an Authorised Firm which makes or proposes to make a Major Acquisition as defined must comply with either GEN Rule 11.10.9 or 11.10.10, depending on whether it is a Domestic Firm.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-43

          An Authorised Firm should provide to the DFSA information that would enable the DFSA to consider factors noted in GEN Rule 11.10.9(3). Although the DFSA does not prescribe the form in which such information is to be provided to the DFSA, Authorised Firms should consider any relevant industry and international practices when providing information to the DFSA for similar purposes.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-44

          The 45 day notice period referred to in GEN Rule 11.10.9(1) commences to run from the first business day after the date on which the DFSA receives the notification. However, if any critical information that the DFSA requires in order to assess the notification has not been provided to the DFSA at the time of the notification, the relevant notice period for considering that notification will only commence to run after the Authorised Firm has provided to the DFSA that information upon a request made by the DFSA under its powers in GEN Rule 11.10.11(1).

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-45

          Upon the request of an Authorised Firm, the DFSA may, at its sole discretion, agree to consider a notification within a shorter period than the 45 days referred to above. The onus is on an Authorised Firm which wishes to obtain a DFSA decision under this Rule within a shorter period to make a request to that effect to the DFSA and provide all the information that the DFSA requires to enable the DFSA to process the notification within a shorter timeframe.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-46

          The DFSA may exercise its powers under this provision to object to a proposed Major Acquisition or impose any conditions relating to a Major Acquisition. In these cases a Person affected by such a decision may refer the decision to the Financial Markets Tribunal for review. Provisions on the referral to the Financial Markets Tribunal are in GEN Rule 11.10.12.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-47

          Where the DFSA receives a notification under GEN Rule 11.10.10(1)(b), it will to the extent necessary, liaise with the home regulator in taking any appropriate action relating to the proposed Major Acquisition.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

      • Outsourcing

        • RPP 3-2-48

          An Authorised Person must comply with those requirements in GEN Rules 5.3.21 and 5.3.22 when outsourcing functions or activities. In relation to Funds, there are additional outsourcing and delegation requirements applicable for Fund Managers and Trustees in section 8.12 of the CIR module.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-49

          The DFSA requires an Authorised Person to notify it of any material outsourcing arrangements. In the case of an Authorised Market Institution, any material outsourcing arrangements require the DFSA's prior approval under AMI Rule 5.5.3(1). An outsourcing arrangement would be considered to be material if it is a service of such importance that weakness or failure of the service would cast serious doubt on the Authorised Firm's continuing ability to remain fit and proper or comply with applicable Laws and Rules.

          Derived from Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-50

          The outsourcing of functions or activities does not absolve management or Governing Body of responsibility and accountability for ensuring proper administration and execution of these functions or activities.

          Derived Notice of Updates (Made 11th February 2015). February 2015 Edition

      • Application for a Withdrawal of Licence

        • RPP 3-2-51

          In considering requests under GEN Rule 11.4.1, an Authorised Firm will need to satisfy the DFSA that it has made appropriate arrangements with respect to its existing customers, including the receipt of any customers' consent where required and, in particular:

          (a) whether there may be a long period in which the business will be run-off or transferred;
          (b) whether deposits must be returned to customers;
          (c) whether money and other assets belonging to customers must be returned to them; and
          (d) whether there is any other matter which the DFSA would reasonably expect to be resolved before granting a request for the withdrawal of a Licence.
          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 20th December 2012). December 2012 Edition
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-52

          In determining a request for the withdrawal of a Licence, the DFSA may require additional procedures or information as appropriate including evidence that the Authorised Firm has ceased to carry on Financial Services.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 20th December 2012). December 2012 Edition
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-53

          An Authorised Firm should submit detailed plans where there may be an extensive period of wind-down. It may not be appropriate for an Authorised Firm to immediately request a withdrawal of its Licence in all circumstances, although it may wish to consider reducing the scope of its Licence during this period. Authorised Firms should discuss these arrangements with the DFSA.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 20th December 2012). December 2012 Edition
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-54

          The DFSA may refuse a request for the withdrawal of a Licence where it appears that customers may be exposed to adverse effect.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 20th December 2012). December 2012 Edition
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-55

          The DFSA may also refuse a request for the withdrawal of a Licence where:

          (a) the Authorised Firm has failed to settle its debts to the DFSA; or
          (b) it is in the interests of a current or pending investigation by the DFSA, or by another regulatory body or Financial Services Regulator.
          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 20th December 2012). December 2012 Edition
          Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-47

          Some other matters which an Authorised Firm should be mindful of in relation to the withdrawal of its Licence include:

          (a) Under Article 63 of the Regulatory Law where the DFSA grants a request for the withdrawal of a Licence, the DFSA may continue to exercise any power under the Regulatory Law or Rules in relation to an Authorised Firm, Authorised Individual or any other officer, employee or agent of the Authorised Firm for three years from the date on which the DFSA becomes aware of the act or omission that gives rise to the right to exercise that power;
          (b) Article 43(4) of the Regulatory Law states that Licensed Functions of an Authorised Firm shall be carried out by its Authorised Individuals. Accordingly, where an Authorised Firm's Licence is withdrawn, the authorised status of its Authorised Individuals will also be withdrawn from the same date. However, this does not remove the obligation on an Authorised Firm to provide a statement under GEN Rule 11.7.3 where an Authorised Individual has been dismissed or requested to resign; and
          (c) Where a Fund Manager or the Trustee makes a request under GEN Rule 11.4.1, the Fund Manager or the Trustee will need to satisfy the DFSA that it has made appropriate arrangements in accordance with the requirements under the Collective Investment Law 2010 and the CIR module with respect to the continuing management of the Fund for which it is the Fund Manager or the Trustee, as the case may be.
          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 20th December 2012). December 2012 Edition
          Amended (Made 21st August 2014). August 2014 Edition

      • [Deleted]

        • RPP 3-2-48 [Deleted]

          Deleted by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-49 [Deleted]

          Deleted by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-50 [Deleted]

          Deleted by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-51 [Deleted]

          Deleted by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-52 [Deleted]

          Deleted by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-53 [Deleted]

          Deleted by Notice of Updates (Made 11th February 2015). February 2015 Edition

      • [Deleted]

        • RPP 3-2-54 [Deleted]

          Deleted by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-55 [Deleted]

          Deleted by Notice of Updates (Made 11th February 2015). February 2015 Edition

        • RPP 3-2-56 [Deleted]

          Deleted by Notice of Updates (Made 11th February 2015). February 2015 Edition

    • RPP 3-3 RPP 3-3 Supervision of Representative Offices

      • RPP 3-3-1

        The DFSA expects to undertake periodic visits to Representative Offices as part of its risk based approach to supervising firms. The DFSA may also include Representative Offices in thematic visits.

        Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

      • RPP 3-3-2

        Onsite visits to Representative Offices are likely to focus on issues including:

        (a) confirming that activities undertaken by the Representative Office are allowed under its licence;
        (b) reviewing the adequacy of its systems and controls to comply with its AML responsibilities;
        (c) reviewing the material distributed by the Representative Office to ensure it is clear, fair and not misleading;
        (d) any solvency concerns with the head office or Group; and
        (e) the firm's disclosure of its regulated status.
        Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
        Amended by Notice of Updates (Made 11th February 2015). February 2015 Edition

      • RPP 3-3-3

        The onsite visit is likely to include interviews with the Principal Representative and a review of relevant records.

        Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

    • RPP 3-4 RPP 3-4 Supervision of DNFBPs

      • RPP 3-4-1

        The DFSA expects to undertake periodic visits to the place of business of a DNFBP as part of its risk based approach to supervising firms. The DFSA may also include DNFBPs in thematic visits.

        Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
        Amended by Notice of Updates (Made 14th July 2013). July 2013 Edition

      • RPP 3-4-2

        Onsite visits to DNFBPs will generally focus on their compliance with relevant AML/CTF Laws and the Rulescontained in the AML module. This may include the DFSA testing the firm's systems and controls for conducting a money laundering risk assessment, customer due diligence and complying with relevant United Nations Security Council Sanctions and Resolutions.

        Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
        Amended by Notice of Updates (Made 14th July 2013). July 2013 Edition

      • RPP 3-4-3

        The onsite visit is likely to include interviews with senior management and a review of relevant records. Depending on the outcome of the visit, the DFSA may provide a letter to the firm to discuss its findings.

        Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

      • RPP 3-4-4

        The DFSA will also receive an Annual AML Return from a DNFBP (see AML Rule 14.5.1) which will assist the DFSA in its supervision of DNFBPs.

        Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
        Amended by Notice of Updates (Made 14th July 2013). July 2013 Edition

    • RPP 3-5 RPP 3-5 Supervision of Registered Auditors

      • RPP 3-5-1

        The DFSA undertakes periodic visits of Registered Auditors as part of its risk based approach to supervising firms. The DFSA may include Registered Auditors in some thematic visits.

        Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
        Amended by Notice of Updates (Made 5th July 2012). July 2012 Edition
        Amended (Made 21st August 2014). August 2014 Edition

      • RPP 3-5-2

        A Registered Auditor must complete an annual information return form for each calendar year and submit the form to the DFSA by 31 January of the following year.

        Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
        Amended by Notice of Updates (Made 5th July 2012). July 2012 Edition
        Amended (Made 21st August 2014). August 2014 Edition

      • RPP 3-5-3

        The DFSA is likely to undertake a desk based review of the content of the annual information return form it receives from a Registered Auditor. Prior to scheduling an onsite visit, the DFSA may make a request for further information from the Registered Auditor.

        Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
        Amended by Notice of Updates (Made 5th July 2012). July 2012 Edition
        Amended (Made 21st August 2014). August 2014 Edition

      • RPP 3-5-4

        The onsite visit is likely to include interviews with senior management and a review of files/documentation.

        Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

    • RPP 3-6 RPP 3-6 Supervision of Authorised Market Institutions

      • Introduction

        • RPP 3-6-1

          The Regulatory Law establishes a principles-based framework for the licensing and supervision of Authorised Market Institutions and for taking regulatory action against those licensed institutions. This framework is supplemented by supervisory powers and other requirements in the Markets Law 2012.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 5th July 2012). July 2012 Edition
          Amended (Made 21st August 2014). August 2014 Edition

        • RPP 3-6-2

          The Markets Law 2012 establishes a framework in relation to how an Authorised Market Institution may administer and operate an Official List of Securities and stipulates some specific Rule requirements in respect of this.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 5th July 2012). July 2012 Edition

      • Official List of Securities

        • RPP 3-6-3

          Where an Exchange administers and operates an Official List of Securities, the risk-based approach to supervision also applies to the carrying on of this activity.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

      • Group Supervision

        • RPP 3-6-4

          When the DFSA licenses an Authorised Market Institution, it takes into consideration the relationship with any wider Group to which the Authorised Market Institution may belong or with other Persons closely linked to it. The DFSA will also take into account lead or consolidated supervision to which an Authorised Market Institution or its Group may be subject in another jurisdiction. This may lead to the DFSA placing some reliance on the supervisory arrangements in another jurisdiction or creating and participating in special arrangements for the supervision of the Authorised Market Institution and its Group. The Authorised Market Institution is expected to provide information required or reasonably requested in relation to these consolidated or lead supervisory arrangements before final supervisory arrangements are established.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

        • RPP 3-6-5

          Each relationship will be considered on a case by case basis and according to the risks posed by the Authorised Market Institution's activities identified during supervisory arrangements. Such supervisory arrangements may include a process to be agreed by the DFSA, the Authorised Market Institution itself and other relevant regulators.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

        • RPP 3-6-6

          Effective co-operation with regulators will provide for prompt exchange of information and co-operation in relation to supervision and enforcement between jurisdictions. This may include exchanges of information and co-operation in respect of activity conducted by an Authorised Market Institution. Usually co-operation arrangements will be in the form of memoranda of understanding. The information exchange will enhance the DFSA's understanding of the operations of the Group and the effect on the Authorised Market Institution.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 5th July 2012). July 2012 Edition

      • Application for a Change in Control

        • RPP 3-6-7

          Chapter 8 of the AMI module sets out the requirements relating to a change in control. These requirements are similar to those for an Authorised Firm which are set out at paragraphs 3-2-33 to 3-2-37.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 5th July 2012). July 2012 Edition
          Amended by Notice of Updates (Made 20th December 2012). December 2012 Edition
          Amended by Notice of Updates (Made 14th July 2013). July 2013 Edition

      • Directions Power

        • RPP 3-6-8

          Article 26 of the Markets Law 2012 empowers the DFSA to give an Authorised Market Institution certain directions in relation to the Authorised Market Institution's duties under DFSA-administered laws. It also gives the DFSA a power to direct an Authorised Market Institution to do specified things including closing the market, suspending transactions and prohibiting trading in Investments. Article 26 also empowers the DFSA to exercise the powers contained in the Authorised Market Institution's Rules for participants as though it was the Authorised Market Institution where it considers that the Authorised Market Institution has not exercised the powers under those Rules.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 5th July 2012). July 2012 Edition

        • RPP 3-6-9

          In considering whether to exercise such powers, the DFSA may take into account factors including:

          (a) what steps the Authorised Market Institution has taken or is taking in respect of the issue being addressed in the planned direction;
          (b) the impact on the DFSA's objectives if a direction were not issued; or
          (c) whether it is in the interests of the DIFC.
          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]

        • RPP 3-6-10

          The written notice given by the DFSA will specify what an Authorised Market Institution is required to do under the exercise of such powers. Though the DFSA is not required to do so under the Markets Law 2012, in most cases the DFSA will contact the Authorised Market Institution prior to issuing such a direction.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 5th July 2012). July 2012 Edition

        • RPP 3-6-11

          Article 35 of the Markets Law 2012 allows the DFSA to direct an Authorised Market Institution to suspend or delist Securities from its Official List of Securities. Such directions may take effect immediately or from a date and time as may be specified in the direction. Chapter 9 of the MKT contains details in this regard.

          Derived from DFSA GM8/2011 (Made 28th April 2011). [VER 1/02-11]
          Amended by Notice of Updates (Made 5th July 2012). July 2012 Edition

    • RPP 3-7 RPP 3-7 Business Transfer Schemes

      • General background

        • RPP 3-7-1

          This section sets out information relating to a financial services business transfer scheme, i.e., a scheme by an Authorised Firm to transfer all or a part of a financial service business to another body. A reference in this section to "the Law" is to the Regulatory Law, to an "Article" is to an Article of the Law and to a "transfer scheme" is to a financial services business transfer scheme.

          Derived from Notice of Updates (Made 23rd January 2017). February 2017 Edition

        • RPP 3-7-2

          Part 9 of the Law sets out requirements applying to financial services business transfer schemes. In particular, Article 106 provides that no transfer scheme is to have effect unless a Court order has been made in relation to the scheme.

          Derived from Notice of Updates (Made 23rd January 2017). February 2017 Edition

        • RPP 3-7-3

          Article 107 defines a "transfer scheme" as a scheme where:

          (a) the whole or part of the business carried on through an establishment in the DIFC by an Authorised Firm ("the firm concerned") is to be transferred to another body ("the transferee") and the business to be transferred consists in whole or in part of financial services business; or
          (b) the Fund Property of a Fund, or of a sub-fund of an Umbrella Fund ("the Fund concerned"), is to be transferred to another Fund.
          Derived from Notice of Updates (Made 23rd January 2017). February 2017 Edition

        • RPP 3-7-4

          The need for a Court order sanctioning a transfer scheme arises because a transfer of business may interfere with agreements between an Authorised Firm and its clients (without the consent of each client), and may also affect the rights of other persons, such as creditors. The Court is best placed to hear and consider representations from persons who may be adversely affected by the scheme. It is then able, if appropriate, to make various orders binding all persons concerned that are necessary to give legal effect to the transfer.

          Derived from Notice of Updates (Made 23rd January 2017). February 2017 Edition

      • Applying to the Court

        • RPP 3-7-5

          Under Article 108 the Authorised Firm concerned, the transferee or both may apply to the Court for an order sanctioning a transfer scheme.

          Derived from Notice of Updates (Made 23rd January 2017). February 2017 Edition

        • RPP 3-7-6

          If an Authorised Firm or transferee is considering a transfer scheme, it should discuss the scheme with the DFSA as soon as practicable, to enable the DFSA to consider whether any particular issues are likely to arise, and to establish a practical timetable for the scheme.

          Derived from Notice of Updates (Made 23rd January 2017). February 2017 Edition

        • RPP 3-7-7

          It is important for an applicant to plan a timetable as there are various steps it must take under Article 111 (some of which involve the DFSA) before the Court may determine an application. For example, an applicant to the Court must:

          (a) arrange for a report on the terms of the transfer scheme (a "scheme report") to be prepared by a person nominated or approved by the DFSA who appears to have the skills necessary to enable him to make a proper report (an "independent expert");
          (b) give written notice of the transfer scheme to all interested parties (as determined by the DFSA); and
          (c) publish a notice in a newspaper best suited to bringing the transfer scheme to the attention of any persons who may be affected by it. Depending on where the Authorised Firm's business and clients are located, notice may be necessary in more than one newspaper.
          Derived from Notice of Updates (Made 23rd January 2017). February 2017 Edition

        • RPP 3-7-8

          The scheme report is a key document in the process that will assist and be relied upon by the Court in deciding whether or not to approve the proposed scheme and will also inform and be relied upon by the DFSA and persons potentially affected by the scheme. The DFSA will, therefore, only nominate or approve a person to make the report if the person has appropriate expertise and is independent of both the proposed transferor and transferee. That is, the person should be neutral and not have any potential conflicts of interest, so that the report is objective. The scheme report, as well as being objective, must set out clearly and in sufficient detail, the independent expert's opinion as to the likely effects and impact of the scheme on clients and third parties and each opinion must be supported by appropriate analysis and rationale.

          Derived from Notice of Updates (Made 23rd January 2017). February 2017 Edition

        • RPP 3-7-9

          In limited circumstances the DFSA may direct that a scheme report or notice is not required. However, the DFSA may only do so if it appears to the DFSA that, by reason of urgency, it is in the interests of the DIFC that the scheme report or notice is not provided (see Article 111).

          Derived from Notice of Updates (Made 23rd January 2017). February 2017 Edition

        • RPP 3-7-10

          Article 109 provides that when an application is made to the Court, the following persons may be heard by the Court:

          (a) any person who alleges that he would be adversely affected by the carrying out of the scheme; and
          (b) the DFSA.
          Derived from Notice of Updates (Made 23rd January 2017). February 2017 Edition

        • RPP 3-7-11

          Under Article 108 the Court may grant an order sanctioning the transfer scheme if it considers that, in all the circumstances of the case, it is appropriate to do so. Under Article 112 the Court must also be satisfied that:

          (a) before the transfer takes effect, the transferee will have any authorisation necessary to enable the business to be carried on in the place in which it is to be transferred; and
          (b) the transferee will possess adequate financial resources to carry on that business in accordance with the legislation applicable in that place.
          Derived from Notice of Updates (Made 23rd January 2017). February 2017 Edition

        • RPP 3-7-12

          Article 110 sets out the various types of orders that the Court can make relating to a transfer scheme.

          Derived from Notice of Updates (Made 23rd January 2017). February 2017 Edition

      • Alternative Arrangements

        • RPP 3-7-14

          The effect of GEN Chapter 12 is that a business transfer scheme is not required to be sanctioned by a Court order to be effective if certain other alternative arrangements have been made. These alternative arrangements apply only to transfer schemes that do not involve a transfer of:

          (a) Banking Business;
          (b) Insurance business; or
          (c) Fund Property
          Derived from Notice of Updates (Made 23rd January 2017). February 2017 Edition

        • RPP 3-7-15

          The first type of arrangement is if the Authorised Firm or transferee has been able to obtain the consent of each client who will be affected by the scheme. This option recognises that sometimes, if there are only a small number of clients, it may be practicable to obtain the agreement of all clients whose interests may be affected. Any communication sent to the client should set out clearly what the client is being asked to consent to. Also, it should then be clear that the client has provided its consent.

          Derived from Notice of Updates (Made 23rd January 2017). February 2017 Edition

        • RPP 3-7-16

          The second type of arrangement is if the transfer of business is expressly permitted under agreements between clients and the Authorised Firm or transferee concerned and the procedures in those agreements have been complied with. For example, in some cases agreements expressly provide for the transfer of accounts or novation of contracts to another person in accordance with a specified procedure.

          Derived from Notice of Updates (Made 23rd January 2017). February 2017 Edition

        • RPP 3-7-17

          Finally, in limited cases, a person may apply to the DFSA for its written consent to the transfer scheme. The DFSA does not expect Authorised Firms to regard this as their first option. The DFSA expects to receive applications seeking its consent to a transfer scheme only in very limited circumstances if the scheme is not complex or contentious. Under GEN 12.1.5, the DFSA may give its consent only if it is reasonably satisfied of a number of matters including that:

          (a) it is more appropriate and proportionate, and in the overall interests of clients, for the DFSA's consent to be sought rather than an application being made to the Court;
          (b) the applicant has taken all reasonable steps to pursue other options for giving effect to the scheme (e.g. seeking the consent of clients or using procedures in existing agreements);
          (c) the scheme is not likely to result in any material prejudice to the interests of clients of the Authorised Firm; and
          (d) implementation of the scheme will not result in the Authorised Firm or transferee contravening a law or Rule.
          Derived from Notice of Updates (Made 23rd January 2017). February 2017 Edition

        • RPP 3-7-18

          The onus is on the Authorised Firm and the transferee to ensure that a transfer of business under an alternative arrangement is legally effective. For example, obtaining the consent of the DFSA may mean that it is not necessary to apply for a Court order, but it does not of itself give legal effect to the transfer.

          Derived from Notice of Updates (Made 23rd January 2017). February 2017 Edition

        • RPP 3-7-19

          Further, just because an alternative mechanism in GEN 12 may be available does not prevent the Authorised Firm or transferee from applying for a Court order sanctioning a transfer scheme under Part 9 of the Law if they consider it appropriate to do so. For example, an application for a Court order is likely to be more appropriate if the scheme is complex (e.g. there are complex property interests involved), is likely to be contentious, is likely to affect a large number of persons or if additional legal certainty is sought.

          Derived from Notice of Updates (Made 23rd January 2017). February 2017 Edition

        • RPP 3-7-20

          The following flowchart sets out in simplified form some of the options available to an Authorised Firm or transferee. The flowchart and the information in this Chapter is only intended to be a summary of the procedures for a transfer of business. For full information a person reading this Chapter should also read Part 9 of the Law, Chapter 12 of GEN and Chapter 16 of CIR.

          BUSINESS TRANSFER SCHEMES

          Derived from Notice of Updates (Made 23rd January 2017). February 2017 Edition