AFN AUT-NOTES Part 4: Exempt Fund form notes

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Exempt Fund form notes

This section contains information to assist you to complete the Exempt Fund form. Each note relates to a question in the Exempt Fund form. e.g. EF5 below provides information to assist you to complete the question at EF5 of the Exempt Fund form.

The following boxes marked 'X' indicate which sections of this form need to be completed by you:

  Type of Exempt Fund Application
Applicable Section Authorisation as a Domestic Fund Manager Variation of License as a Domestic Fund Manager Applying as an External Fund Manager Existing Domestic / External Fund Manager giving Notification of additional Exempt Fund
Section 1:
General Information
X X X  
Section 2:
Contact Details
X X X  
Section 3:
Information about the Domestic Fund Manager
X X    
Section 4:
Documentation for a Domestic Fund Manager
X X    
Section 5:
Documentation for an External Fund Manager
    X  
Section 6:
Compulsory supporting documents for a Fund Manager
X X X  
Section 7:
Fees for a Domestic Fund Manager Application / Domestic Fund (Initial Annual Fee)
X X X X
Section 8:
Prudential Regulatory Reporting for a Domestic Fund Manager
X X    
Section 9:
Fit & Proper Questionnaire & Declaration
X X X  
Section 10:
Information about the Fund
X X X X
Section 11:
Disclosure & Declaration
X X X X
Section 12:
Additional Declaration for External Fund Manager
    X  

Section 1 General information

PF1. -
PF2. -
PF3. We are seeking information about the legal nature of your Firm. Please refer to GEN Rule 7.2.2.
PF4. There are generally two types of firms applying to be Authorised Firms: DIFC entities and non-DIFC entities (or Branches).

DIFC entities are firms that have been created under DIFC legislation, such as DIFC Company Law or DIFC General Partnership Law.

Non-DIFC entities are firms that have been created outside of the DIFC under the laws of another jurisdiction, but who want to establish a place of business in the DIFC. Such firms are commonly referred to as Branch offices. Note that legally, the Branch is not a separate legal person to the firm.
PF5. Start-up entities are either new Financial Services businesses or existing Financial Services businesses which have not been subject to Financial Services regulation in the past. Please refer section 2-5 of the RPP Sourcebook module.
PF6. Give the name of the supervisory contact person from the relevant regulator including postal address, telephone number, fax number and e-mail address.
PF7. Please refer to GLO for the definition of Islamic Financial Business.
PF8. If the company is going to be formed in the DIFC, please answer 'in formation'.
PF9. Your financial year-end will be used to determine the regulatory reporting requirements.
PF10. You will need to give details of any trading name(s) which you propose to use for the purpose of, or in connection with, any business carried out in or from the DIFC, if these are different from your legal name.

Section 2 - Contact details

PF11. The contact person named should be the person who is responsible for the application during this process and who will liaise with the DFSA. This person must be a representative of the company. It may be helpful to provide a second contact name as back up.
PF12. If you do not have an adviser assisting you with this application, please go to question EF14.
PF13. You may have a professional adviser assisting you with this application. Please tick yes if the DFSA should copy correspondence in relation to this application to the adviser.
PF14. You need to give the full address of the registered and current / proposed place of business in the DIFC or Dubai. It is expected that prior to submitting an application for authorisation, you will have already approached the Dubai International Financial Centre Authority (DIFCA) in relation to securing premises.
PF15. Whether you are a DIFC entity or non-DIFC entity, please provide your head office address.
PF16. -
PF17. State the name of your auditor, their address, the relevant contact person, telephone number and fax number. Note that for Domestic Firms, the auditor must be an auditor registered with the DFSA in accordance with GEN chapter 8.
PF18. -

Section 3: Information about the Domestic Fund Manager

PF19. You should confirm whether or not the Fund Manager's procedures and controls will ensure that it meets the management and operation requirements of CIR Chapter 8.
PF20. Please provide details regarding who is the Eligible Custodian and whether it meets the requirements in CIR section 8.2 of CIR. Please also see CIR section 8.12 and CIR Appendix 1 for delegation requirements.
PF21. Please provide details regarding who will carry out the investment management activities of the Fund and that it meets the requirements. Please see CIR section 8.12 and CIR Appendix 1 for delegation requirements.
PF22. Please provide details regarding who will carry out the Fund Administration and confirm that it meets the requirements in GEN and also in CIR section 8.12 and CIR Appendix 1 for delegation requirements.
PF23. Please see CIR section 9.3 regarding auditors.
PF24. Please advise which of the following accounting standards permitted by CIR 8.2 will be followed by the Fund: IFRS Supplemented by IMA SORP; US GAAP; AAOIFI (for an Islamic Fund). Please see CIR Rule 9.2.1.
PF25. Please see CIR Chapter 9.
PF26. If you wish to have any of the DFSA Rules waived or modified you must submit the Form SUP 2.

Section 4: Documentation for a Domestic Fund Manager

PF27. Organogram of group structure

This should identify all Controllers, other shareholders and Close Links including a breakdown of shareholding, jurisdiction in which the entity/individual is based, and identification of any other regulated entities. Where shares are held by a trust, provide details of all trustees, settlers and beneficiaries.
Also provide narrative regarding intra-group transactions and business relationships e.g. guarantees, cash flows and their rationale.
PF28. Staff organogram including reporting lines

This should identify the senior management / head functions with significant influence and any reporting lines to the Governing Body. Please ensure the CO and MLRO also have access to both the Senior Executive Officer and the board.
PF29. -
PF30. -
PF31. AUT-IND1 forms

You must fill in an AUT-IND1 form for each individual who will be performing a Licensed Function. An Authorised Individual is a person who is approved by the DFSA to perform a Licensed Function for an Authorised Firm. Licensed Functions are defined in GEN section 7.4. A person may perform more than one Licensed Function. However we do not expect to see the same individual carrying out both business and control responsibilities, for example, Senior Executive Officer and Compliance Officer roles.
PF32. Financial projections

Please attach the following financial projections and assumptions commencing at the time of authorisation and, on a quarterly basis, for each of the first three financial years after licensing:
•   Balance sheet (if applicable)*
•   Profit and loss account, split into income streams; and
•   Cash flow statement (if applicable)*
•   forecast of your Capital Resources versus your Capital Requirement
*These items may not be applicable in the case of a Branch.

Please provide the figures in the DFSA reporting return format. A list of the key assumptions supporting these financial projections must also be submitted. Please confirm whether you have stress tested your forecasts and provide details.
PF33. Evidence of source of funds for start-up
For start-ups, supporting evidence of the original source of funds which will be used to provide initial capital resources. We usually require details of how the money sourced for the start-up entity has been generated. Please provide a bank reference. You may be asked for a declaration that the funds are not from the proceeds of crime.
PF34. -
PF35. -

Section 5: Documentation for an External Fund Manager

PF36. If you are unable to attach a letter of good standing from your regulator regarding your application, you must arrange for it tobe sent directly to the DFSA by your regulator prior to submission of this application. Otherwise DFSA will not be able to accept submission of your application.
PF37. -
PF38. Please see CIR 6.1.3 regarding the appointment of a Fund Administrator or Trustee as agent of an External Fund Manager. Please note the agreement must contain the information regarding the type of powers being granted to the agent to facilitate the External Fund Manager in relation to its dealings with the DFSA and Unitholders and prospective Unitholders such as:
•   If it is an open-ended Fund, the issue, resale and redemption of the Units of the Fund and the publication of the price at which such issue, resale or redemption will occur as provided under the Law and the Rules;
•   The sending to Unitholders of the Fund all the reports required under the Law and the Rules;
•   Access to the Constitution and most recent Prospectus of the Fund to Unitholders and Prospective Unitholders;
•   Access to the Unitholder register; and
•   Access to the books and records relating to the Fund as required by the DFSA and any person providing the oversight functions of the Fund,
in or from a place in the DIFC.
PF39. Please refer to the notes in EF38.

Section 6: Compulsory Supporting Documents for a Fund Manager

The documents required in this section can be self-certified by all firms. Be aware that you may still be asked to supply all or any of the documents as part of the application.
PF40. Compliance manual This is a critical document which will impact the decision whether the firm should be authorised. The DFSA prefers it if the compliance procedures are incorporated in one manual. Once you receive authorisation, our Supervision team will visit and ask to see the manual. The manual should include the following details:
•    The structural oversight and reporting arrangements that will enable you to continually meet your compliance obligations under applicable legislation in the DIFC;
•    How compliance reports are prepared, authorised, disseminated and followed up;
•    How compliance breaches are detected, recorded, categorised and rectified;
•    How the DFSA and other Financial Services Regulators, if applicable, will be kept appraised of all relevant breaches;
•    How you will keep your firm updated of any changes to applicable legislation in the DIFC and DFSA Rules;
•    The arrangements for handling, resolving and recording complaints received from clients, with particular reference to the requirements of GEN chapter 9 (Internal Dispute Resolution and Complaints Handling);
•    How you will embed a positive mind-set towards compliance issues from all your employees, not just your compliance team;
•    How you will ensure compliance by any Person under a material outsourcing or delegation arrangement with relevant Regulations and procedures;
•    How you will determine and maintain records of Client verification;
•    How you will ensure training and competence are embedded into your firm's culture;
•    Who will be responsible for reviewing the compliance plan, and how often the plan will be reviewed and what process will be followed;
•    How you will ensure compliance with financial reporting and regulatory capital requirements;
•    How senior management and the board will identify and manage conflicts of interest between different clients, and between the firm and its clients.
PF41. Anti-money laundering procedures Your anti-money laundering procedures should include, amongst other things, arrangements to:
•    Ensure compliance with UAE Law No 4 and any other relevant UAE federal laws. The only exception is if another jurisdiction's laws or regulations prevent or inhibit you from complying with UAE Law No 4 or the DFSA Rules; in which case you should tell us. Also note that should such an event arise in the future, Authorised Firms are obliged to promptly notify us in writing;
•    Ensure compliance with relevant resolutions or sanctions issued by the United Nations Security Council. Please refer to GEN Rule 5.3.30.
•    Monitor for, detect and report suspicious customers and transactions. You should ensure your procedures comply with the requirement for Suspicious Transaction Reports (STRs), to be made in the required format to the Anti-Money Laundering Suspicious Cases Unit (AMLSCU), with a copy provided to the DFSA. Details of the required format of the report and details for submission can be found on the DFSA website;
•    Establish and verify the identity of the customer and any other person on whose behalf the customer is acting, including that of the beneficial owner. Details will need to be provided if you intend to delegate any aspect of the customer identification process to a qualified professional or the Unitholder verification process to a Fund Administrator;
•    Establish and verify your business partners' identities, including correspondent Banks;
•    Provide an audit trail of transactions;
•    Determine the duties and obligations of your Money Laundering Officer (MLRO);
•    Review the effectiveness of your Anti-Money Laundering policies, procedures, systems and controls at minimum on an annual basis;
•    Respond to any request for information made by UAE authorities or the DFSA. You will need to state where customer or Unitholder identification records will be kept outside of the UAE, whether there is any secrecy or data protection legislation that would restrict access by the applicant, the DFSA or the law enforcement agencies of the UAE. If this is the case, you will need to provide details of the arrangements that it will be put in place to ensure copies of these records are kept in a jurisdiction which allows access;
•    Maintain AML relevant documents and records;
•    Ensure that you obtain and make use of findings in relation to names of persons, groups, organisations or entities, or any other body where suspicion of money laundering or terrorist financing exists;
•    Assess your risks in relation to money laundering and perform enhanced due diligence investigations for higher risk products, services and customers;
•    Determine whether a customer is a Politically Exposed Person (PEP) and address the associated risks accordingly;
•    Establish and maintain an anti-money laundering training programmes and awareness sessions. This should include a description of the arrangements in place to ensure you obtain use any government, regulatory and international findings;
•    Ensure compliance with any other obligation in the DFSA'sAML module. You must have arrangements in place to provide appropriate Anti-Money Laundering training (including the internal reporting duties and Client identification duties) to your employees. Please provide full details of what training you will provide for all your relevant employees and whether the MLRO will be in charge of this training. If the MLRO will not be in charge, then give the full name and job title of the person who will be;
•    If you will be Providing Fund Administration, ensure such procedures are also relevant with respect to Unitholders of a Fund;
•    You will need to provide the details of the Deputy Money Laundering Officer, including Surname/Family name and Given name.
•    You will need to state whether your Anti-Money Laundering function will be subject to oversight, review or audit by either your Parent'sAnti-Money Laundering function, internal audit or another internal function or external organisation. If so, you will need to specify the arrangements including the nature of the oversight, review or audit and the scope and frequency with which it will be undertaken.
•    AML Rule 3.4.1 requires a firm to take reasonable steps to verify the identity of its customers. Please detail the policies, procedures, systems and controls that you will put in place to ensure that sufficient evidence of the identity of all your Clients (or a Fund'sUnitholders, if relevant) will be obtained.
•    Detail the procedures or systems that you will put in place to ensure that "Know Your Customer" (KYC) or Unitholder information is made available to your relevant employees. In addition, are there any systems that will be set up to obtain further information;
•    Detail the proposed disciplinary steps that you will put in place for any employee who fails to report promptly to the MLRO any suspicion or beliefs that money laundering is occurring as required in AML chapter 3.5;
•    Describe the record keeping arrangements you will put in place for records, as specified in the AML module of the DFSA Rulebook.
PF42. Compliance monitoring programme
•    Your programme should document how compliance is monitored within the business units.
PF43. Risk management policies
Your policy document should describe the risk management arrangements you will establish and maintain to identify, assess, mitigate, control and monitor the risks arising from the Financial Services activities carried out in or from the DIFC. Such arrangements should also take into account the Funds for which you are acting as the Fund Manager.

Include the following: The nature, scope and organisational structure of your risk management functions. The reporting lines and nature, scope and frequency of risk reporting, including the composition and terms of reference of any risk committees and any appropriate links to Group risk reporting.
PF44. Delegation Agreement
Your agreement should describe the delegation arrangements in place for the particular function whether it be custody, investment management or fund administration. Please see GEN and sections CIR 8.2 and CIR 8.12 as well as CIR Appendix 1 for delegation requirements.

Section 7: Fees for a Domestic Fund Manager Application / Domestic Fund (Initial Annual Fee)

Details of fees can be found in the Fees module of the DFSA Rulebook.

Section 8: Prudential Regulatory Reporting for a Domestic Fund Manager

PF45. Please refer to GEN section 8.2 to determine the accounting standards to be used in preparing your financial accounts and statements.
PF46. -

Section 9: Fit and Proper Questionnaire

EF47-52. These questions are self-explanatory and are focused on the fitness and propriety of the firm. Please supply all relevant information - openness and honesty are essential. Should we need to examine your application more closely because of any disclosures you make, this will not necessarily count against you. However, deliberately withholding information or providing false or misleading information, will adversely impact the success of your application. If in doubt, disclose.

Section 10: Information about the Fund

General information

EF53 Please see CIR Rule 7.1.4.
EF54 Please refer to Article 16(4) of the Collective Investment Law for the Domestic Fund criteria.
EF55 Please see Article 26 of the Collective Investment Law for the permitted form of a Domestic Fund.
EF56 Please see CIR Chapter 3 or IFR Chapter 6.
EF57 Please see the applicable parts of CIR Chapter 3.
EF58 -
EF59 -
EF60 -

Additional information about an External Fund

EF61 The Fund Manager of an External Fund must:
(a) have systems and controls which are adequate to ensure compliance with the requirements that apply to the External Fund in the jurisdiction in which it is established or domiciled; and
(b) inform the DFSA of the jurisdiction in which the Fund is or is to be established or domiciled and the nature of regulatory requirements applicable applicable to the Fund in the host jurisdiction.
A Fund Manager of an External Fund is generally not subject to the requirements that otherwise apply to other Domestic Funds (see Article 14(2) of the Law). However, some limited requirements apply to External Funds. See for example the disclosure required under Rules CIR 14.2.4CIR 14.2.7. Should such a requirement conflict with any requirements that apply to an External Fund in the jurisdiction in which the Fund is domiciled, the Fund Manager may apply to the DFSA for appropriate waivers or modifications of the DFSA requirements.

The DFSA may upon receipt of the information referred to in CIR Rule 6.2.2(b), assess the desirability of establishing an External Fund in that particular jurisdiction chosen by the Fund Manager. Relevant considerations include:
(a) The Fund Manager's need to establish the Fund in the particular jurisdiction for reasons such as the physical location of the Fund assets or investor preference;
(b) Any regulatory risks arising from establishing the External Fund in the relevant jurisdiction, particularly if the Fund is to be open to retail investors; and
(c) Whether the relevant jurisdiction complies with the FATF or other relevant international standards or requirements.
EF62 Give the name of the supervisory contact person from the relevant regulator including postal address, telephone number, fax number and e-mail address.
EF63 -
EF64 Please see CIR Rule 6.2.2
EF65 If you wish any of the DFSA Rules waived or modified you must submit the Form SUP 2.

Compulsory Supporting Documents for a Fund

EF66 The Constitution of the Fund must be in compliance with CIR Chapter 7 and CIR APP5.
EF67 The Prospectus of the Fund must be in compliance with CIR Chapter 14 and CIR Rule 12.2.

Section 11: Disclosure & Declarations

This section should be completed by all applicants.

Section 12: Additional Declaration for an External Fund Manager

This section should be completed by an External Fund Manager only.
[Amended][VER23/04-11]
[Amended][VER6/08-14]