DIFC and DFSA Latest Development

The Dubai Financial Services Authority (DFSA) has accepted seven new firms into its regulatory sandbox cohort, which will allow them to apply for an Innovation Testing Licence (ITL). The ITL allows FinTech firms who provide a financial service to develop and test concepts within a regulatory testing environment, rather than being constricted to a regulatory framework that may not accommodate the innovative element of their product.
The applications that the DFSA received for its cohort included green financing, the digitisation of bond and sukuk issuances using smart contracts, Small-Medium Enterprise funding platforms, robo-advisors for Islamic finance, and the tokenisation of equities and debt issuances.

The accepted firms can now apply for the ITL and the licences will be granted in March 2019 if accepted.

In May 2017, the DFSA took action against Andrew John Grimes as SEO of Clements (Dubai) Limited after finding regulatory failures in client classification, client agreements and AML customer risk assessments and ultimately insuring risks in the UAE when restricted under DFSA rules from doing so unless the risk is situated in the DIFC. Mr Grimes failed to pay the fine both by the date it was due, as well as after a judgement was passed through the DIFC Courts. Subsequently, the DFSA took legal steps in the United Kingdom and the fine was enforced in the UK and finally paid by Mr Grimes in January 2019.

Following a discussion paper in 2018 regarding the establishment of a Global Financial Innovation Network (GFIN) and seeking consultation globally on its functions, the network has officially launched its next phase in establishment.

Within this phase, FinTech firms are invited to apply to take part in testing innovative financial products, services or business models across more than one jurisdiction. Firms have until 28th February to apply to take part.

CCL is the compliance partner of the FinTech Hive at DIFC and has assisted many FinTech firms in the centre. If firms require assistance in their application to the GFIN, please contact Clare Curtis (CCurtis@cclcompliance.com).


The DFSA has released their ‘DFSA in Action’ publication, which comprises a round up of the DFSA’s main activities in 2018 as well as the ‘DFSA 2019 Outlook’, which the DFSA's plans to focus more on business models, make refinements to its risk-based approach to supervision, have more public outreach and communications as well as dedicate more resource to corporate social responsibility.

In addition to the ‘DFSA 2019 Outlook’, the publication includes the following points, all of which have been covered within previous CCL Regulatory Updates:

  • The DFSA’s appointment of its new Chief Executive, Bryan Stirewalt
  • The DFSA’s restructuring of its supervision division
  • Outreach to the DIFC regulated population
    The three “Dear SEO” letters sent during 2018
  • Trends and issues within Conduct of Business related to its findings from the thematic review on Client Classification and Suitability
  • The DFSA’s preparation for the FATF Financial Mutual Evaluation of the UAE
  • Upgrades to the Electronic Prudential Reporting System (EPRS)
  • Enforcement action including fines, alerts and complaints assessed in 2018
  • FinTech Innovation
  • 2018 DIFC Updates
ADGM and FSRA Latest Developments

The Abu Dhabi Global Market (ADGM) has created and unveiled a Sustainable Finance Agenda during a forum held in Abu Dhabi Sustainability Week.
The agenda comprises of four aims and objectives within the ADGM’s sustainability plan including:

  • The ADGM becoming a hub for sustainable finance activities by building sustainability considerations into its regulatory framework
  • The ADGM creating further dialogues with local and international government bodies to promote green and sustainable investments in the UAE and regionally
  • The ADGM committing to increasing the level of knowledge, awareness and acceptance of sustainable finance across the UAE
  • The ADGM developing a sustainable finance framework within the market and within the products and services it offers

Saudi Arabian General Investment Authority
Saudi Arabia’s foreign investment promotion agency, the Saudi Arabian General Investment Authority (SAGIA) and the ADGM have signed a Memorandum of Understanding (MoU) to promote investment, industry and trade cooperation between Saudi Arabia and the UAE. The objective is to boost cooperation in investment activities and further promote their business relations between the two countries.

Abu Dhabi Airports Free Zone
The ADGM’s Registration Authority has signed an MoU with Abu Dhabi Airports Free Zone to promote Abu Dhabi as a financial centre. The understanding includes initiatives such as providing warehouse commercial licensing, incentives, and the sharing of knowledge between both authorities.

The ADGM has been elected as one of only two Directors in the FinTech Cooperation Committee (FTCC) established by the Asian Financial Cooperation Association (AFCA). The FTCC is an initiative that aims to provide industry support and guidance in fostering growth and development across Asia. Some of the ADGM’s responsibilities include establishing FinTech business opportunities and strengthening FinTech policies and governance standards.

Firms which would like to test innovative financial solutions in a controlled environment, have been invited by the ADGM to take part in the pilot phase of the Global Financial Innovation Network (GFIN), which aims to develop a sandbox for firms to try out FinTech solutions across multiple jurisdictions.
Firms can apply to be part of the ADGM GFIN test phase and have until the 28th February to apply.

Middle East Regulatory Updates

Oman’s financial regulator, the Capital Market Authority (CMA) has launched a whistleblowing window on its website to provide a channel of communication between the CMA and regulated institutions within the capital market and insurance sectors. The window can be used to report any violations, irregularities, unethical acts and suspicious acts that may be detrimental to these financial sectors. The channel will also help the whistleblowing procedures become more efficient and ensure identity protection of the whistle blower.

Iranian authorities have approved an anti-money laundering bill which aims to bring Iranian rules and regulations in line with anti-money laundering international standards. The bill comes in line with Iran’s aim to set standards set by the Financial Action Task Force (FATF) in order to be removed off the FATF blacklist and be brought in line with other global territories. Foreign businesses have already voiced their support of Iran’s compliance in order to increase international investment with the country.

International Regulatory Developments

Transparency International has released its 2018 Corruption Perception Index, an index which ranks 180 countries by their perceived levels of public sector corruption according to experts and business people.

The United States dropped four points compared to 2017’s ranking, which is its lowest score on the index in the last seven years. Despite several changes such as new governments and anti-corruption reforms, India, Malaysia, the Maldives and Pakistan have yet to implement solid action and the rankings have not changed drastically. Armenia is expected to begin enforcing anti-corruption reforms in 2019 and its ranking of 35 is expected to improve in the coming year. The United Arab Emirates received the highest ranking in the Middle East and North Africa. The lowest scoring countries remain in Sub-Saharan Africa, and the highest in Western Europe and the European Union.

The UK’s Financial Conduct Authority (FCA) has released CP19/3:Guidance on Cryptoassets, a consultation to provide regulatory clarity for market participants carrying out crypto-activities within the FCA regulated environment. The consultation paper covers the cryptoasset market, the underlying Distribution Ledger Technology (DLT) and will help market participants understand whether the cryptoassets they use are within the regulatory perimeters currently set by the regulator.

Enforcement Action

Kenyan bank, Family Bank, has been fined 40 million shillings ($400,000USD) after pleading guilty to money laundering and failing to report suspicious transactions in relation to a 1.6billion shillings scam.
The firm repeatedly failed to report transactions deemed suspicious and it was only after an investigation by the regulator that the discoveries were made.

The French data protection authority, Commission nationale de l'informatique et des libertés (CNIL) has fined Google $57 million for failures under the General Data Protection Regulation (GDPR). The watchdog stated that the search engine company failed to provide transparent and easily accessible information on its data consent policies. The CNIL found that while Google had made changes following the implementation of the GDPR, the “spirit of the rules” were still being failed by the firm.

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