AFN AUT–CORE Authorised Firm—Core information

Past version: effective from 18/06/2006 - 15/01/2007
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Set out here are the preliminary notes relating to the form; click here to download the full form in PDFPDF format.

Purpose of this form

This form must be submitted by any Person wishing to apply for a Licence to carry on one or more Financial Services, as defined in the GEN module of the DFSARulebook, in or from the DIFC.

An Authorised Firm wishing to change the scope of its current Licence need not complete this form but should submit a written request for amendment of its Licence to the relevant contact in the DFSA's Supervision Department.

This form is designed to assist applicants in providing information about the Financial Services for which a Licence is sought and to assist the DFSA in understanding how applicants intend to carry on those activities. Applicants will need to satisfy the DFSA that they have sufficient financial resources, appropriate personnel, and adequate systems and internal controls in relation to the proposed Financial Services to be carried on.

This form AUT–CORE provides only the core information on the applicant and must be accompanied by the additional AUT forms appropriate to the business it proposes to conduct and separate AUT–IND1 forms for all individuals for which Authorised Individual status is being sought.

•  Applicants seeking authorisation to Operate a Collective Investment Fund must, at the same time as the submission of their own applications for authorisation, either:

•  complete Form CIR F1 "Registration of a Public Fund" if they are proposing to Operate a Public Fund; or
•  complete the Operating a Collective Investment Fund section in form AUT–INV (questions 3.23 to 3.46) if they are proposing to Operate a Private Fund
•  An applicant seeking authorisation to Operate a Collective Investment Fund, provided it has ticked the "Fund Administration" box in the Financial Services matrix on page 12 of Form AUT–CORE, is not required to complete Form AUT–FAD.

The DFSA may require additional information or clarification in order to complete the consideration of an application. In this respect the DFSA will correspond with the applicant's contact person, as detailed in section 1 of this form.

Contents

Section Title High level summary of contents
Section 1 General Information This section seeks general high level background information on:
•  The nature of the applicant entity
•  Relevant contact details
•  Trading names and places of business
•  Controllers and Close Links
•  The applicant's personnel and Licensed Functions
•  The proposed Financial Services
Section 2 Financial Resources This section seeks general high level financial information including:
•  Financial projections and details of capital adequacy
•  The financial reporting function
Section 3 Systems and Controls This section seeks information on key systems and controls including:
•  Governance arrangements
•  Internal audit/risk management
Section 4 Compliance This sections requests details of the applicant's compliance arrangements including:
•  Key personnel
•  Relevant policies and procedures
Section 5 Anti Money Laundering This sections requests details of the applicant's anti Money Laundering arrangements including:
•  Key personnel
•  Relevant policies and procedures
Section 6 IT Systems This section requests an overview of the IT systems environment of the applicant and any key systems dependencies.
Section 7 Payment Details of the DFSA account and instructions for paying the application fee
Section 8 Checklist of Attachments This section should be completed by the applicant to ensure it has enclosed all the relevant attachments. The application may be delayed if key documentation is omitted.
Section 9 Declaration This section contains the relevant declarations to be made by the applicant and requires an authorised signature of the applicant to endorse or sign the application.

Notes for completing this form

•  The term "applicant" refers to the entity for which a Licence is being sought to conduct Financial Services in or from the DIFC. In all instances where this application form requests details to be supplied in relation to the applicant, responses should be provided in relation to the applicant entity wanting to establish within the DIFC.
•  Defined terms are identified throughout this application form by the capitalisation of the initial letter of a word or phrase and are defined in the Glossary module (GLO) of the DFSA'sRulebook.
•  All financial information must be given in US dollars, together with a statement of the original currency used (if relevant) and the exchange rate applied for conversion.
•  Questions must be answered fully and the use of abbreviations or acronyms should be avoided or defined.
•  Do not leave any questions blank. If a question is not applicable this should be indicated in the response section. Failure to answer questions or provide full responses may delay the progress of the application.
•  Prior to completion of this form, the applicants are strongly urged to read the AUT module of the DFSARulebook to ensure appropriate information is provided to the DFSA.
•  Various sections of these forms refer to specific modules and Rules within the DFSARulebook and applicants are urged to familiarise themselves with the relevant Rules prior to completing the application forms.
•  Applicants may find it useful to refer to the Frequently Asked Questions (FAQs) Booklets available on the DFSA website www.dfsa.ae.
•  Answers must be typed in electronic format and the form must be signed by a Director/Partner of the applicant or, in the event that, for example, the applicant has yet to be incorporated, the Director who will be authorised in due course to sign on behalf of the applicant. Versions of this form on the DFSA's website are in PDF format. Editable Microsoft Word versions can be obtained from the DFSA.
•  Where the term Client appears in this form, applicant Insurers may construe this as customer.

A statement about Branches

Applicants wishing to apply to the DFSA to be an Authorised Firm will generally fall into two high level categories: DIFC entities and non-DIFC entities (or Branches).

DIFC entities are entities that have been created under DIFC legislation governing their creation (such as DIFC Company Law or DIFC General Partnership Law).

In the case of non-DIFC entities, by definition, these will be entities that have been created outside of the DIFC under the laws of another jurisdiction, but who wish to establish a place of business in the DIFC. Accordingly, such entities are commonly referred to as Branch offices, although legally, the Branch is not a separate legal person to the entity itself.

For an applicant to apply to the DFSA to establish a Branch office in the DIFC for the purposes of carrying on Financial Services, the DFSA would generally expect:

•  that the entity is subject to regulatory standards in its home jurisdiction that are broadly equivalent to those of the DFSA; and
•  that the DFSA is satisfied, in its sole discretion, that the applicant's home Regulator has adopted supervisory criteria closely based on those recommended by leading international organisations such as the Basel Committee on Banking Supervision, the International Association of Insurance Supervisors or the International Organisation of Securities Commissions.

For prospective applicants wishing to understand more about the above criteria that the DFSA will take into account (including criteria in relation to the prevention of Money laundering) these can be viewed through the following web-sites:

Basel Core Principles: www.bis.org
Insurance Core Principles www.iaisweb.org
IOSCO Principles of Securities Regulation www.iosco.org
Financial Action Task Force recommendations www.fatf-gafi.org

Whether to permit an applicant to establish a Branch office in the DIFC will be at the sole discretion of the DFSA. Prospective applicants should discuss with the DFSA at the earliest possible stage if they are contemplating such an application.

In addition to the above, all Authorised Firms (be they DIFC or non-DIFC entities) are automatically subject to the DFSA's capital adequacy Rules. In the majority of cases, DFSA would expect a Branch office applicant to apply for a waiver of the DFSA's capital adequacy Rules in favour of those of the applicant's home supervisor, provided these can be shown to be broadly equivalent (or superequivalent) to the DFSA's. It will be at the DFSA's sole discretion as to whether the applicant has demonstrated this. In this respect, applicants may need to obtain copies of relevant legislation, Regulations or Rules in English as part of any waiver submission, particularly where the relevant legislation and Rules are not readily available from public sources.

If the capital adequacy standards or the regulatory standards referred to earlier appear to significantly and negatively diverge from those of the DFSA's, applicants should discuss this with the DFSA at an early stage and may wish to consider establishing a subsidiary entity in the DIFC as an alternative to a Branch office. In very limited circumstances in certain industry sectors, "whole firm" supervision of non-DIFC entities may be possible, subject to prior consultation with the DFSA. However, this is only likely to be acceptable in a small number of exceptional cases.

Applications for waivers or modifications of the applicable prudential Rules may be made using form SUP2 which is contained in the Prescribed Forms and Notices module of the DFSA'sRulebook, with electronic versions available directly from the DFSA. Previous waivers granted to existing Authorised Firms are published on the DFSA's website. Potential applicants may wish to review the DFSA's web-site (www.dfsa.ae and search for "waivers") to check if any relevant precedents have already been set.

Please note that only waivers of specific sections of the prudential Rules may need to be applied for, rather than the whole PIB or PIN Module. This is because not all of the Rules in each Module will apply in all circumstances, particularly if the firm is conducting a narrower range of Financial Services than the Module covers in its entirety. Conditions may also be attached to the granting of such waivers depending on the particular circumstances in each case; these can also generally be viewed on the DFSA's website.

Financial reporting to the DFSA by successful applicants will be at the "whole firm" level for DIFC entities or, in the case of Branches with prudential waivers, be at the Branch office level (with any exceptions as noted above). The ongoing financial reporting is summarised in Appendix 7 of the PIB Module (for Banks and Investment firms), or section 6 of the PIN Module (for Insurers).

In submitting financial forecasts, projected balance sheets, profit and loss statements and forecasted regulatory returns, should be based on whole firm reports for DIFC entities, or Branch returns, which are similar in format to a balance sheet.

Your auditors should then complete their sign-off on the basis of the forecasted figures and statements submitted.

Note for start up entities

Start up entities are either:

•  new Financial Services businesses; or
•  existing Financial Services businesses which have never been subject to Financial Services regulation, for whatever reason.

Start up entity applicants should read DFSA'sPolicy on Start Up Entities, available on the DFSA website www.dfsa.ae, prior to completing and submitting an application.