Entire Section

RPP 5-1-1

This chapter sets out the DFSA's approach to enforcement and how it commences and conducts investigations, and exercises its powers to address any misconduct or contravention of the Law, Rules or other legislation administered by the DFSA. The DFSA's approach to imposing a penalty can be found in chapter 6 of this sourcebook.

RPP 5-1-2

A reference to:

RPP 5-1-3

The DFSA's enforcement philosophy is guided by the following principles, which govern the DFSA's approach to fulfilling its objectives as set out in Article 8:

RPP 5-2-1

The DFSA will take an enforcement action in line with its objectives and enforcement philosophy and may conduct investigations where there is a suspected contravention of the Law.

RPP 5-2-2

A Person contravenes the Law when that Person:

¹⁴Article 85.

RPP 5-2-3

If a Person is knowingly concerned in a contravention by another Person of the Law then, under Article 86, both Persons may be held liable for committing a contravention.

RPP 5-2-4

A Person is "knowingly concerned" in a contravention¹⁵ if the Person:

¹⁵Article 86(7).

RPP 5-2-5

When taking enforcement action, the DFSA will generally adopt the enforcement process described in this chapter. The DFSA's enforcement process is comprised of the following elements:

See Appendix 1 for a diagram of the enforcement process.

RPP 5-3-2

The DFSA may become aware of suspected misconduct or suspected contraventions of Laws from a variety of sources including:

RPP 5-3-3

The DFSA receives and assesses two types of complaints:

RPP 5-3-4

A Person wishing to lodge a complaint with the DFSA should do so in writing. A complaint can be lodged:

RPP 5-3-5

When a complaint is received, the DFSA will send an acknowledgement letter to the complainant which will include the contact details of the DFSA complaints management function.

RPP 5-3-6

Complaints received by the DFSA from members of the public which relate to:

are classified as regulatory complaints and are assessed through the DFSA's complaints management function.

RPP 5-3-7

If, during the assessment of a regulatory complaint, the DFSA identifies suspected misconduct or a suspected contravention of a Law, it will refer the complaint to the relevant DFSA division for further consideration. Thereafter, the relevant division assumes responsibility for the complaint.

RPP 5-3-8

All complaints lodged with the DFSA are held in confidence in accordance with the Regulatory Law. However, in order to assess a complaint properly, the DFSA may need to speak to third parties including any Person who is the subject of the complaint.

RPP 5-3-9

There are two types of referrals, internal and external. Internal referrals originate from the DFSA's supervisory activities conducted by the Supervision or Markets Division. The DFSA's supervisory framework is designed to detect and mitigate risks to the DIFC and the financial services industry in the DIFC. An internal referral occurs when a DFSA supervisory division refers a matter to the Enforcement Division, when the supervisory division has identified possible contraventions of Laws and Rules.

RPP 5-3-10

When Enforcement receives an internal referral, the referring division may continue to be responsible for the on-going supervision of the Person who is the subject of the referral.

RPP 5-3-11

The DFSA may also receive allegations of misconduct through an external referral from other regulatory authorities and law enforcement agencies. Such allegations are generally received pursuant to the IOSCO or IAIS Multilateral Memoranda of Understanding (MMoU), or bilateral arrangements for the exchange of information between the DFSA and other regulatory and enforcement agencies.

RPP 5-3-12

Complaints about the conduct and activities of the DFSA and its employees are administered and assessed separately by the DFSA's Office of General Counsel.

RPP 5-3-13

Information on how the DFSA's Office of General Counsel assesses complaints against the DFSA and its employees can be found on the DFSA's website (see http://www.dfsa.ae).

RPP 5-4-1

Upon receipt of an internal or external referral, the allegation will be assessed to determine if there is a suspicion of a contravention of the Law. If a suspicion arises and it is appropriate and expedient, then the DFSA may commence an investigation.

RPP 5-4-2

In determining whether to commence an investigation, the DFSA will consider a number of factors including, but not limited to:

RPP 5-4-3

Article 78 empowers the DFSA to conduct such investigations as it considers appropriate and expedient:

RPP 5-4-4

Whether an investigation of a matter is appropriate and expedient is determined by reference to factors such as those set out in paragraph 5-4-2.

RPP 5-4-5

Whether the DFSA has "reason to suspect" a contravention of the Law is a question which the DFSA will determine on the facts and circumstances, available at the time, of the determination.

RPP 5-4-6

While the DFSA is not bound to disclose, to any party, that an investigation has commenced or is on-going or the basis upon which an investigation is commenced, it may notify a Person who is the subject of an investigation that an investigation has commenced, and the nature of the investigation.

RPP 5-4-7

The DFSA will not make a notification referred to in 5-4-6 if to do so is likely to compromise or prejudice the investigation. The DFSA will not advise a Person of the conclusion of an investigation unless the Person has earlier been notified of its commencement.

RPP 5-4-8

The decision to commence an investigation is not a decision that can be referred to the Financial Markets Tribunal for review.

RPP 5-5-1

Once an investigation is commenced, the DFSA may exercise its powers to gather information to advance its objectives.

RPP 5-5-2

The DFSA's information-gathering powers may only be exercised by delegates of the Chief Executive. The delegation need not be limited to DFSA employees. The Chief Executive may delegate DFSA powers to non-DFSA staff who are able to assist a DFSA investigation.

RPP 5-5-3

Similarly, where the DFSA is exercising its powers on behalf of another regulator, it may also delegate powers to a representative of that regulator.¹⁶

¹⁶ Article 40.

RPP 5-5-4

During an investigation, the DFSA may obtain relevant information and documents on a compulsory basis, principally through the exercise of its powers under Article 80(1), and on a voluntary basis.

RPP 5-5-5

The Article 80(1) power to obtain information is a key component of the DFSA's investigative powers. Without the compulsory powers in Article 80(1), the DFSA would not be able to conduct effective and thorough investigations into suspected misconduct or suspected contraventions of the Law, and consequently would not be able to meet its objectives.

RPP 5-5-6

The powers under Article 80(1) are different from the supervisory powers under Article 73(1). The key distinctions are that the Article 80 powers may be used:

RPP 5-5-7

By comparison, the Article 73(1) power permits the DFSA to request information and documents from an Authorised Person, DNFBP, Domestic Fund, Registered Auditor and any director, officer, employees or agent of such Person, which the DFSA considers is necessary or desirable to meet the objectives of the DFSA.

RPP 5-5-8

When the DFSA uses its powers under Article 80(1) (b), (c), (d) or (e), it will provide a written notice to the Person on whom the requirement is being imposed.

RPP 5-5-9

Article 80(1)(a) empowers the DFSA to enter business premises of a Person during the course of an investigation for the purpose of inspecting and copying information or documents. This power will be exercised when the DFSA considers that such Person is or may be able to provide information or documents that are or may be relevant to an investigation.

RPP 5-5-10

The DFSA will generally not provide prior notice of an inspection in circumstances where the provision of prior notice may prejudice the investigation.

RPP 5-5-11

When exercising its power to enter business premises under Article 80(1)(a), the DFSA may:¹⁷

¹⁷ Article 80(2).

RPP 5-5-12

Article 80(1)(b) empowers the DFSA to require a Person to give, or procure the giving of, information. The DFSA considers that the term "information" should be interpreted broadly, in accordance with its ordinary meaning.

RPP 5-5-13

Information may include, for example, the following:

RPP 5-5-14

The DFSA will allow a reasonable period for compliance with the requirement to give information. The reasonableness of the requirement will depend upon the circumstances of each case. The DFSA may, in some circumstances, require the giving of information straightaway where the giving of prior notice may prejudice the investigation.

RPP 5-5-15

Article 80(1)(c) empowers the DFSA to require a Person to produce, or procure the production of, specified documents. The DFSA considers that the term "document" should be interpreted broadly, in accordance with its ordinary meaning. Specified documents may include, for example, any record of information, including:

RPP 5-5-16

This power can only be used when an investigation has commenced and the DFSA considers that the Person to whom the notice is addressed is, or may be, able to produce documents which may be relevant to the investigation.

RPP 5-5-17

Article 80(1)(c) empowers the DFSA to require production of original documents or copies. Whether original or copy documents are required by the DFSA will be determined taking into account the facts and circumstances of the investigation.

RPP 5-5-18

When exercising its Article 80(1)(c) power, the DFSA may retain possession of any original document for so long as is necessary for the investigation to which the notice relates. When a Person is unable to produce documents in compliance with a requirement made by the DFSA, the DFSA may require the Person to state, to the best of that Person's knowledge or belief, where the documents may be found and who last had possession, custody or control of those documents.

RPP 5-5-19

The DFSA will allow a reasonable period of time for compliance with the requirement to produce documents. The reasonableness of the requirement will depend upon the circumstances of each case. The DFSA may, in some circumstances, require the production of documents straightaway, where the giving of prior notice may prejudice the investigation.

RPP 5-5-20

Article 80(1)(d) empowers the DFSA to require a Person (the interviewee) to attend before an officer, employee or agent of the DFSA (the interviewer) for a compulsory interview to provide oral evidence relevant to an investigation it is conducting.

RPP 5-5-21

During the course of an investigation, not all interviews will be conducted under compulsion. The DFSA may, where appropriate, conduct voluntary interviews. The decision as to whether a compulsory or voluntary interview will be conducted will depend upon the circumstances of the particular case.

RPP 5-5-22

A Person attending a compulsory interview must first be served with a written notice requiring his attendance. An interviewee is not entitled to refuse or fail to answer a question on the basis that his answers may incriminate him or make him liable for a penalty.¹⁸

¹⁸ Article 82.

RPP 5-5-23

A compulsory interview will be conducted in private and the interviewer may give directions¹⁹ to the interviewee regarding:

¹⁹ Article 80(3).

RPP 5-5-24

An interviewee is entitled to legal representation during the course of a compulsory or voluntary interview. At the conclusion of the interview, the lawyer will be permitted to address any issues with the interviewer or interviewee relevant to the investigation. However, the lawyer is not permitted to answer questions on behalf of the interviewee or obstruct the investigation.

RPP 5-5-25

All compulsory interviews will be recorded. The DFSA will, upon a written request from the interviewee at the conclusion of the interview, provide the interviewee or his lawyer with a copy of the recording or a transcript of the interview. The provision of a recording or transcript may be subject to any reasonable conditions imposed by the DFSA.

RPP 5-5-26

Article 80(1)(e) empowers the DFSA to require a Person to give it any assistance in relation to an investigation which the Person is able to give.

RPP 5-5-27

The DFSA considers that providing assistance may include requiring a Person to do a physical act or provide information to advance an investigation. For example, this may include the situation where the DFSA requires a Person to provide assistance by commenting on the accuracy of a document or compiling information that had been stored in a different manner.

RPP 5-5-28

The power under Article 80(1)(e) can be used independently, or in conjunction with, the exercise of other Article 80(1) powers. For example, the DFSA can exercise its powers under Article 80(1)(d), to require a Person to attend a compulsory interview and under Article 80(1)(e), to require the interviewee to provide reasonable assistance during the interview. For example, the interviewee may be required, during the interview, to draw a diagram, or locate and produce a document referred to in an answer to a question.

RPP 5-5-29

When carrying out its regulatory functions, the DFSA must maintain confidentiality of information, unless disclosure is expressly sanctioned by Article 38. The DFSA's Policy Statement with respect to Confidential Regulatory Information outlines its policy in respect of the treatment of information and documents.

RPP 5-5-30

The DFSA may also impose obligations of confidentiality in respect of information and documents provided during the exercise of its powers under Article 80(1).

RPP 5-5-31

The DFSA can make directions²⁰ to protect the confidentiality of information and documents which are part of a compulsory interview.

²⁰ Article 80(3)(b).

RPP 5-5-32

The DFSA can direct the recipient of an Article 80(1) (b), (c), (d) or (e) notice not to disclose the receipt of the notice, or any information relating to compliance with it, to any other Person, other than his legal representative, if it considers that such disclosure may hinder an investigation²¹.

²¹ Article 80A(6).

RPP 5-5-33

Confidentiality directions are made to ensure that an investigation is not prejudiced by the disclosure of the nature of the information sought or the questions asked during an investigation. In each case, the DFSA needs to consider whether or not such directions are appropriate in the circumstances of that matter.

RPP 5-5-34

Parties who are required to comply with a requirement made by the DFSA during the course of an investigation, and Persons who are the subject of an investigation, benefit from certain protections in the Regulatory Law, including:

RPP 5-5-35

A claim by a Person that information is a Privileged Communication is not of itself an excuse for failing to comply with a requirement made by the DFSA during the course of an investigation.²²

²² Article 82.

RPP 5-5-36

A lawyer may refuse to comply with a requirement to provide information where to comply would require the lawyer to disclose a Privileged Communication made by, to, or on behalf of, the lawyer in his capacity as a lawyer in relation to a client.

RPP 5-5-37

Should a lawyer refuse to disclose a Privileged Communication, the lawyer must disclose sufficient information to identify the Person entitled to claim the privilege and the document which contains the privileged information. In such a case, the DFSA considers it appropriate for a lawyer to secure those documents, pending the resolution of any claim for privilege.

RPP 5-5-38

The DFSA will enforce compliance with its requirements, under Articles 73, 74 or 80, whenever there is less than full compliance by seeking orders in the DIFC Court.²³

²³ Article 84(1).

RPP 5-5-39

Articles 84(1) and (2) empower the DFSA to apply to the Court for an injunction or the issue of a search warrant in order to enforce compliance with its requirements under Articles 73, 74 or 80. An application to the Court for a search warrant will be made in circumstances where:

RPP 5-5-40

Should the Court exercise its discretion to issue a search warrant, it may be addressed to a named Dubai Police Officer together with any other individual, including a DFSA officer or third party, named in the warrant.

RPP 5-5-41

The DFSA may exercise its right to apply for a search warrant, rather than seeking compliance with its requirement through some other process (such as an injunction), only where it is satisfied that:

RPP 5-5-42

Any material seized by officers of the DFSA pursuant to a search warrant issued under Article 84 may be dealt with by the DFSA as if the material had been produced to it under a notice to produce documents.

RPP 5-5-43

A Person must not, without reasonable excuse, engage in conduct that is intended to obstruct the DFSA in the exercise of its investigative powers by any means including, but not limited to, the following:

²⁴ Article 83.

RPP 5-5-44

Any breach of Article 83 will be regarded seriously by the DFSA and appropriate action will be taken.

RPP 5-5-45

Where the DFSA²⁵ has obtained originals of information or documents during the course of an investigation, the DFSA will usually return such information or documents to the Person, from whom the information and documents were received, as soon as practicable after the conclusion of the investigation or related proceedings.

²⁵Article 80A(3).

RPP 5-5-46

Where information or documents have been produced to the DFSA in the course of an investigation to assist another regulator or agency, the DFSA may²⁶ release the information or documents to that other regulator or agency. The information and documents will usually be returned to the Person, from whom the information and documents were received, as soon as practicable after receiving them back from the other regulator or agency.

²⁶Article 38.

RPP 5-15-9

The process for reaching a settled outcome is different to the process for the DFSA to exercise formally a discretionary power. For example, most of the DFSA’s formal decision making policy in chapter 7 of RPP and many of the requirements in Schedule 3 to the Regulatory Law do not apply.

RPP 5-15-10

The decision about whether to accept a settlement offer will be taken by a senior member of DFSA staff who has not been directly involved in establishing the evidence on which the decision to take the action is based. That person is referred to as a Settlement Decision Maker.

RPP 5-15-11

Settlement Decision Makers will generally come from the same pool of staff as persons who may be on a Decision Making Committee (DMC) (see section 7-7). The DMC is the DFSA’s decision maker for enforcement decisions in cases that have not been resolved through settlement. If a Settlement Decision Maker has been involved in considering a matter which ultimately does not result in agreement, then that person will generally not be a member of the DMC for that matter.

RPP 5-15-12

The case team will conduct the settlement negotiations with the Person(s) concerned. If agreement is reached, the case team will recommend to the Settlement Decision Maker that the settlement be approved. It will be for the Settlement Decision Maker to decide, on behalf of the DFSA, whether to accept the settlement on the agreed terms. If approved, the agreed terms will then be included in the appropriate form of settlement as set out in the following paragraphs.

RPP 5-15-13

The DFSA will generally only settle an enforcement matter on the basis of either:

In appropriate cases, the DFSA may settle a matter on the basis of both a notice of decision and an EU. Any settlement entered into by the DFSA, which results in a notice of decision, will be documented in the form of a legally enforceable agreement executed by all parties.

RPP 5-15-14

When the DFSA agrees to settle an enforcement matter, the outcome of the settlement may result in an agreed notice of decision. The issue of such a notice promotes consistency of regulatory outcomes and transparency of approach to enforcement decision making.

RPP 5-15-15

An EU is a written promise, made under Article 89, to do or refrain from doing a specified act or acts. It is an alternative mechanism for addressing the DFSA's concerns, including regulating contraventions of the Law. It may, amongst other things, include remedial actions that are not otherwise available under a notice of decision.

RPP 5-15-16

An EU may be given by a Person and accepted by the DFSA at any time, either before, during or after an investigation, the making of a decision or the commencement of litigation or proceedings in the Court. The DFSA does not have the power to require a Person to enter into an EU nor can a Person compel the DFSA to accept an EU. This does not mean, however, that the DFSA cannot propose an EU to a Person, during the course of settlement negotiations, or provide a Person with a draft EU to provide guidance as to the terms of an EU that the DFSA would be willing to accept.

RPP 5-15-17

The DFSA may accept an EU that it considers necessary or desirable in pursuit of its objectives. Article 89 does not prescribe a particular structure or format to an EU or the circumstances in which an EU would be acceptable to the DFSA. The DFSA will consider all the relevant circumstances of a matter when deciding whether to accept an EU including whether other regulatory tools, for example a notice of decision, might achieve a more appropriate outcome in the particular matter. However, in the context of an enforcement matter, the DFSA will generally only accept an EU that:

RPP 5-15-18

A Person offering an EU to the DFSA may also undertake in the EU to pay a pecuniary penalty and/or the DFSA's costs, including any costs associated with compliance with the EU.

RPP 5-15-19

An EU will not take effect until it is formally accepted by the Chief Executive of the DFSA or his delegate.

RPP 5-15-20

Once accepted by the DFSA, an EU can only be withdrawn or varied with the consent of the DFSA in writing. The DFSA will only consider a request to vary an undertaking if:

RPP 5-15-21

If the DFSA considers that a Person has not complied with a term of the EU or a decision, the DFSA may apply to the Court for appropriate orders. The DFSA may publish the fact of the application to the Court and any subsequent orders of the Court. The DFSA will also seek the costs of the application.

RPP 5-16-3

Under Article 47(1) of the Court Law, the Court shall not require the DFSA to give an undertaking as to damages as a condition for granting an injunction or any order made under DIFC Law. In making any order the Court shall not take into account, in determining the merits of an application for the injunction, that the DFSA has not given an undertaking as to damages.

RPP 5-16-4

The DFSA will do all things necessary and, where appropriate, commence relevant actions to ensure full compliance with any orders of the FMT or of the Court which arise out of an investigation.

RPP 5-16-5

In particular, Article 90(10) provides that the DFSA may apply to the Court for recovery, as a debt due, of so much of a fine as is not paid by a party together with costs. Further, in appropriate circumstances, the DFSA may apply to the Court for the winding up of a body corporate.

RPP 5-17-2

The DFSA will generally publish, in such form and manner as it regards appropriate, information and statements relating to enforcement actions, including censures and any other matters which the DFSA considers relevant to the conduct. The publication of enforcement outcomes is consistent with the DFSA's commitment to open and transparent processes and its objectives.

RPP 5-17-3

In all cases the DFSA retains the discretion to take a different course of action, where it furthers the DFSA's achievement of its objectives or is otherwise in the public interest to do so. For example, the DFSA may decide to publish at an earlier stage than suggested by the general policy, where circumstances justify this.

RPP 5-17-4

The DFSA generally will not publish information about the commencement, conduct or conclusion of the investigative phase of its enforcement actions.

RPP 5-17-5

Where the DFSA has published the fact that it is conducting an investigation and no enforcement action results, the DFSA may issue a press release confirming the conclusion of the investigation and that no action is to be taken.

RPP 5-17-6

The DFSA expects not to publish information about referrals to the DMC.

The Decision Making Committee (DMC)

FMT or a court

DMC

FMT or a court decision

RPP 5-17-15

The DFSA expects to disclose publicly the outcome of any settlement of an enforcement action, including the notice of decision or EU, to ensure all stakeholders and the general public are clearly informed as to the outcome. Settlement agreements which result in a notice of decision or EU will result in the publication of the relevant notice of decision or EU on the DFSA website as well as an associated press release.

RPP 5-17-16

The DFSA may be ordered, or required by law, not to publish information regarding a settlement. For example, disclosure may not occur if a third party has commenced proceedings in the courts in respect of the same conduct and the publication of the undertaking or settlement may prejudice that party's case in the courts. However, simply because a third party has commenced proceedings does not preclude the DFSA from publishing its settlements, including the notice of decision or EU.

RPP 5-17-17

The DFSA will not generally publish information about temporary suspensions imposed under Article 58(5) or Article 98A(5),⁴² when an investigation is ongoing. However, the DFSA retains discretion to publicise such a suspension if it is considered appropriate.

⁴² That is, suspensions of Authorised Individuals, Key Individuals, Registered Auditors or Audit Principals pending completion of an investigation.

RPP 5-17-18

The DFSA will generally make appropriate disclosures when publishing notices of decision, EUs proceedings before, and decisions of the FMT or a court.

RPP 5-17-19

The DFSA will take into consideration any privileged or sensitive information when considering the content of its publications. In doing so, it will also consider the possibility that any publication may also potentially affect the rights of a third party and, if so, will endeavour to give that third party an opportunity to make representations on the publication.

RPP 5-17-20

Publication may take any one or more forms including, for example, a media release, a statement on the DFSA website, and any other suitable forums as determined by the DFSA.