DFSA Latest Developments


  • DFSA Sign MoU with ADGM FRSA

The Dubai Financial Services Authority (DFSA) signed a Memorandum of Understanding (MoU) with the Abu Dhabi Global Market’s (ADGM) Financial Services Regulatory Authority (FSRA). This is the 97th MoU that the DFSA has signed with fellow regulators and was entered into particularly fervently given that the FRSA is also a common-law-based financial supervisor in the UAE. As per the agreement, both parties endeavour to cooperate to ensure that the high standard of their regimes are perpetuated and a development of the local financial markets is realised.


Middle East Regulatory Updates


  • Saudi CMA REITF Instructions Proposal
  • Saudi CMA Book Building and IPO Instructions Approved
  • Saudi CMA to Adopt Updated FAQ’s Forms
  • Qatar Central Bank Issue Government Bonds
  • CBB Issues Directive on SMS Notifications
Saudi CMA REITF Instructions Proposal

The Saudi Arabia Capital Market Authority (CMA) has issued a public consultation announcement regarding its instructions for Real Estate Investment Traded Funds (REITFs). The CMA proposals include that:

  • The fund manager must appoint a property management company to oversee the properties that are being held for investment. The experience and specialism of the property management company should equip them to carry out a full manner of property management services including property maintenance, leasing services and rent collection;
  • The fund manager must appoint a custodian. The rules also stipulate which persons are excluded from taking up this designation and what the role entails;
  • The fund manager is limited to investing no more than 25% of the fund’s assets’ value outside of Saudi Arabia;
  • The nominal unit value will be SAR 10 and the minimum initial offer must be at least SAR 10,000,000;
  • The fund must be close-ended;
  • 75% of the fund’s assets must be invested in real estate;
  • The fund must have at least 200 public unit holders; and
  • At least 50% of the funds units should be held by public unit holders.

The instructions also provide details of the information memorandum that should be drafted for the REITF and communicates disclosure requirements.

Saudi CMA Book Building and IPO Instructions Approved

The Saudi Arabia Capital Market Authority (CMA) has further developed its legal framework, this time by approving the new Instructions of Book Building Process and Allocation Method in Initial Public Offerings (IPOs), which comes into effect in January 2017. Details therein include:

  • Foreign institutional investors are permitted to buy shares directly in IPOs (no longer on a case-by-case basis only);
  • The price extent/range must not exceed 20% of the minimum price;
  • Participating institutions may submit requests at prices outside of the price range but by no more than 20% of either limit;
  • Financial advisors may only change the price extent once;
  • Shares are to be allocated sequentially and at the price as per the applicable application form;
  • Individuals are encouraged to invest via a public fund;
  • The book building process is to be completed in 14 days; and
  • Investors may not bid for more than 5% of the total issued shares
Saudi CMA to Adopt Updated FAQ’s Forms

The Saudi Arabia Capital Market Authority (CMA) has developed FAQs which include answers on the frequently asked questions that were received during a recent consultation period regarding the amended Rules for Qualified Foreign Financial Institutions Investment in Listed Securities.

The FAQs and the forms can be viewed on CMA’s website here.

Qatar Central Bank Issue Government Bonds

Qatar's central bank has sold 4.6 billion QAR ($1.26 billion) of conventional and Islamic government bonds in its first domestic government bond offer this year. It is understood that most local banks participated.
The sale indicates that there is a good level of liquidity in the system and is reassuring following the recent downturn in the economies of GCC countries who were affected by the widespread drop in oil prices, upon which most of these governments are heavily reliant.

CBB Issues Directive on SMS Notifications

The Central Bank of Bahrain (CBB) has issued a new directive to the Bahraini banking sector, both conventional and Sharia-compliant, requiring that retail banks provide their customers with fee-free notifications via SMS text messaging service when making any transaction, withdrawal or change to the customer's account or credit card or pre-paid cards. This will take effect from 1st September 2016.

Further information
If you would like to discuss these updates in more detail, please contact:
Christopher Hobbs (CHobbs@cclcompliance.com)

International Developments


FCA Issue New Financial Crime Reporting Requirements
3.2 FinCEN Updates
3.3 2016 Basel AML Index Published
3.4 AUSTRAC Updates
3.5 New Zealand Develop Anti-Money Laundering Legislation
3.6 MAS AML Departments Launched
3.7 Concerns over IOLTAs in the US
3.8 Extreme Counter-Terrorism Financing Measures Considered in France
3.9 Study of Link Between AML and Data Protection in EU vs US
3.10 GIABA Hold Forum Focusing on Counter Terrorism Financing in West Africa

FCA Issue New Financial Crime Reporting Requirements

The UK Financial Conduct Authority (FCA) has introduced new financial crime reporting requirements – which come in to force from 31st December 2016 – for Prudential Regulatory Authority (PRA) and FCA authorised firms, with revenue of GBP 5,000,000 or above that are subject to UK money laundering regulations. Applicable firms (including advisors, life insurers and investment firms but excluding credit unions, peer-to-peer lending platform operators, authorised professional firms and limited permission consumer credit firms) will have to submit, annually (and within 60 days of their financial year end, with the first reports due March 2017), details on:

The location of their customers;
The number of suspicious activity reports filed with authorities;
High-risk jurisdictions that the firms itself has business in;
Resources allocated to combat financial crime; and
Sanctions/freezing of assets.
This better regimented approach to financial supervision will enable the FCA to build a more risk-based and efficient framework. However, the estimated 1400 firms that will be obliged to file these reports are expected to incur implementation costs of up to GBP 85,000 (or more for group wide implementation).

3.2 FinCEN Updates

1) The Financial Crimes Enforcement Network (FinCEN) has introduced Geographical Targeting Orders (GTOs) to 6 new areas of the USA which will be effective until February 2017. The GTOs require insurance companies to identify the beneficial owners or corporates that make cash purchases of ‘high-end’ real estate in:

New York;
Los Angeles;
San Francisco;
San Diego; and
San Antonio.
The intention of increasing the number of locations that GTOs are applied to, is to reveal and take action against individuals committing money laundering. With the tool having already proven its effectiveness in Manhattan and Miami-Dade, it was a logical move by the regulator to cast a wider net.

2) FinCEN released a Joint Fact Sheet on Foreign Correspondent Banking last month, developed with the Federal Reserve Board, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency. It outlines supervisory and enforcement processes with respect to anti-money laundering (AML) and sanctions in the area of correspondent banking. The Fact Sheet, available here, describes the expectations of U.S. regulators, the supervisory examination process, and the use of enforcement actions.

3) On 25th August 2016, FinCEN proposed new regulations that would extend AML requirements to banks not currently subject to federal regulatory oversight. Under FinCEN regulations, private banks, non-federally insured credit unions and certain trust companies are defined as “banks” for this purpose.

Under the current span of AML regulations in the U.S, principally stemming from the Bank Secrecy Act (BSA), non-functionally regulated banks – meaning those not overseen by a federal banking agency – are exempt from comprehensive federal AML compliance programme requirements. FinCEN is now proposing regulations that would do away with this exemption, requiring the non-functionally regulated to implement a written AML compliance programme, including implementation of a Customer Identification Programme (CIP), to the same degree as those functionally regulated. Additionally, they would need to comply with the beneficial ownership requirements only recently imposed on all federally regulated banks and financial institutions.

If finalised in its current form, the new rule would expand AML programme coverage by removing the exemption that currently excuses banks and other entities that are not subject to regulation by a ‘Federal functional regulator’ from compliance with the regulations. The proposed rule lays out the following minimum required components of a compliance programme:

An assessment of the customer-related information that is relevant to a determination of the bank’s money laundering and terrorist financing risks concerning the business’ products, customers, distribution channels and geographic locations;
A written AML programme approved by the entity’s board of directors or equivalent, including policies, procedures and internal controls reasonably designed to ensure BSA compliance;
Independent testing to monitor and maintain an adequate programme, which may be conducted internally, as long as the person or persons conducting the testing are independent of those responsible for implementing the AML programme. Additionally, those conducting the testing should be empowered to develop and enforce appropriate policies and procedures;
Designation of a person or persons knowledgeable about BSA requirements, money laundering issues/risks and who holds responsibility for coordinating and monitoring day-to-day compliance with the entity’s AML programme;
Ongoing employee training regarding BSA compliance, organisation-specific money laundering risks (including so-called “red flag” indicators of potential money laundering or terrorist financing activity) and internal policies and procedures;
Procedures to verify, to the extent reasonable and practicable, the identity of any person seeking to open an account, ensure the maintenance of related records and screen potential customers against lists of suspected terrorists or terrorist organisations maintained by any government agencies; and
Specific procedures for conducting ongoing consumer due diligence, including “understanding the nature and purpose of customer relationships for the purpose of developing a customer risk profile; conducting ongoing monitoring to identify and report suspicious transactions; and, on a risk basis, to maintain and update customer information.”

2016 Basel AML Index Published

The 2016 Basel AML Index was published at the end of July by the Basel Institute on Governance. The group took into account the new Financial Action Task Force evaluation methodology and findings from the Panama Papers

Following an annual research-based assessment of 149 countries, it was revealed that:

  • 79 countries improved on their score from last year. The biggest climbers being Kuwait, Ecuador, the Seychelles and Albania. The countries with the lowest (and therefore the safest countries anti-money laundering-wise) score were Finland, Lithuania and Estonia;
  • 59 countries dropped from their previous positions, with the greatest falls coming from Vanuatu, Chile, Sri Lanka, Slovenia, China, Estonia, Serbia and Turkey. The countries identified as most at risk from money laundering were Afghanistan, Iran, Tajikistan, Guinea-Bissau, Mali, Cambodia, Mozambique, Uganda, Sudan and Myanmar.

The assessment also showed that although the majority of countries have in place sufficient anti-money laundering (AML) and counter-terrorism financing laws, these jurisdictions are not necessarily effectively implementing or enforcing them. Furthermore, it appears that the countries with large financial centres (i.e. the UK, Japan, Switzerland, the U.S, Italy, Germany and France) are merely toeing the line and no moves are being made by them to improve their position/AML frameworks.

The ranking (from lowest to highest risk) in the MENA region is:

  • Malta;
  • Tunisia;
  • Egypt;
  • Jordan;
  • Qatar;
  • Saudi Arabia;
  • Kuwait;
  • Bahrain;
  • Morocco;
  • the UAE;
  • Algeria;
  • Yemen;
  • Lebanon; and
  • Iran

Kuwait’s new scoring showcases that the GCC country is perceived as having addressed a number of the deficiencies that were identified by the MENA FATF evaluation. By the next Basel AML Index assessment, there should be sufficient information for the institute to consider the effectiveness of Kuwait’s new systems and how this will affect the country’s standing.


1) A new team has been launched by the Australian Transaction Reports and Analysis Centre (AUSTRAC) to tackle the cyber threats from terrorism financing, financial fraud and money laundering. The unit will work with other key agencies (such as iDcare and the Australian Cybercrime Online Reporting Network Joint Management Group) to investigate online payment platforms, monitor trends and uncover online scams.
2) A Memorandum of Understanding (MoU) has been signed between AUSTRAC and Cambodia’s Financial Intelligence Unit (FIU) to promote the exchange of financial information in order to improve counter-terrorism financing efforts. Provisions for confidentiality and how/when the information can be used is also included in the MoU, which comes after the conclusions of the recent Southeast Asia Regional Counter-Terrorism Financing summit.

New Zealand Develop Anti-Money Laundering Legislation

The second phase of the development of New Zealand’s Anti-Money Laundering and Countering Financing of Terrorism Act 2009 went into action this month (the first phase was in 2013). The government intends to extend the list of businesses and professionals to whom the act is applicable and a consultation paper has thusly been released with a deadline of 16th September 2016 for comments. The government plans to have the new bill passed by July 2017.

The additional vocations (as identified in the 2010 regional risk assessment) to whom the act is expected to apply to – in relation to activities which pose a money laundering/terrorist financing threat – are:

  • Lawyers;
  • Accountants;
  • Real estate agents;
  • Conveyancers;
  • Selected high-value goods dealers; and
  • Additional gambling service providers.

As well as the above, further amendments have been proposed to the following sections of the statute which would apply to all current and future entities:

  • Reporting to Financial Intelligence Units;
  • Information sharing; and
  • Reliance on third parties
MAS AML Departments Launched

The two new anti-money laundering (AML) and counter-terrorism financing (CTF) departments of the Monetary Authority of Singapore (MAS) were launched last month, this is further to the reports of our June edition of the Middle East Regulatory Update. Each with their own mandate (one will focus on policy and supervision, the other on enforcement action), the dedicated teams are expected to improve the regulator’s supervisory efforts by streamlining, centralising and focusing resources. The establishment of the departments was partly born from the global attention received by MAS following the 1MDB scandal.

Concerns over IOLTAs in the US

Questions are being raised about the protocols and procedures in place in the US for funds that are held in Interest on Lawyer Trust Accounts (IOLTAs). This comes after evidence was uncovered which traced USD 586,000,000 of the laundered 1MDB funds to the law firm trust fund accounts of Shearman & Sterling and DLA Piper.

Neither law firm has been accused of misconduct and both have assured investigators that internal anti-money laundering policies were adhered to, in relation to the monies that were allegedly held for 13 days (DLA Piper) or held over a one-year period as a result of multiple wire transfers (Shearman and Sterling). This having been said, the establishment of IOLTAs and the treatment they are afforded by authorities was based on the understanding that they are utilised for small sums only.

Extreme Counter-Terrorism Financing Measures Considered in France

In an extreme attempt to prevent a repeat of any of the major terrorist attacks that were perpetrated in France over the last 18 months, the French government has proposed to prohibit all foreign funding to mosques in the country.

Not only has there been outcry from local Muslims who say this is mistakenly suggesting that Islamic holy houses are where terrorists become radicalised, but it poses an expansion problem too. As per legislation passed in 1905 as a means to ensure the autonomy of both state and church, mosques – and likewise the places of worship of other major religious denominations like churches and synagogues – are not permitted to receive state funding, this means that the creation of new mosques is often reliant on the charitable donations of foreign persons.

The French government has therefore announced its plans to establish the Foundation for Islamic Works which aims to deliver an acceptable and transparent method of foreign funding to mosques, as well as supervising the training of foreign-born Imams. However, this too has caused controversy as the government intends for this institution to be run by a non-Muslim.

Study of Link Between AML and Data Protection in EU vs US

The SWIFT Institute has released a new report on the challenges and risks posed by the conflicting approaches that jurisdictions in the EU take when handling customers’ personal data, in comparison to their US counterparts, when meeting anti-money laundering (AML) and counter-terrorism financing (CTF) obligations.

In both regions, law exists which provides that multi-national financial institutions (MNFIs) must cooperate with national authorities. However, the US’ view of personal data is that it belongs to the entity that possesses it (e.g. a bank) which puts EU firms with operations across the pond in a difficult scenario when they receive requests for information by local authorities – given that EU privacy laws consider the information belongs to the individual as a human right – and causes issues in their adherence to AML and CTF legislation.

The report advised MNFIs to be mindful of this when locating their servers, to endeavour to develop integrated compliance and privacy teams and to encourage internationally-focused training for employees.

GIABA Hold Forum Focusing on Counter-Terrorism Financing in West Africa

The Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) held a conference in Senegal last month entitled The Regional Stakeholders Forum on Emerging Global AML/CTF Issues and Implications for GIABA Member States. It was frequently reiterated at the meeting that peace in the region was of paramount importance if member states were to see any financial security or development. Other focus areas that were expressed at the forum as a means to counter the growing terrorist financing levels included the need for appropriate resourcing of Financial Intelligence Units, swifter building and hearing of cases and for greater stakeholder engagement in terrorist financing issues.


Further information
If you would like to discuss these updates in more detail, please contact:
Nigel Pasea (NPasea@cclcompliance.com)

Financial Crime


  • Southeast Asia Hold Counter-Terrorism Financing Summit
Southeast Asia Hold Counter-Terrorism Financing Summit

The findings of the Southeast Asia regional risk assessment – with contributors from Indonesia, Malaysia, Singapore, Thailand, the Philippines and Australia – were communicated at the summit in Bali last month, with the following observations made:

  • There has been a rise in the use of charitable organisations as avenues for funding terrorism. This is in keeping with a general increase in terrorism financing being routed through the region;
  • The Indonesian Financial Transaction Reports and Analysis Centre has estimated that between 2014-2015, terrorism financing contributions totalled USD 763,000;
  • The most common method adopted for this illicit activity is the cross-border movement of cash facilitated by weak land borders and the close proximity of maritime boundaries.

The resolutions put forth in the regional report beseeched states to develop and improve their counter-terrorism financing frameworks and to increase intelligence sharing activity.

Further information
If you would like a more detailed discussion on these or other enforcement actions, please contact:
Carwyn Evans (CEvans@cclcompliance.com)

Enforcement Action


  • Deutsche Bank Fined by FINRA
  • Multiple Penalties Issued by South African Reserve Bank
  • Enforcement Action Against AS PrivatBank Subsidiary
  • Enforcement Action Taken Against Falcon Private Bank
  • Kuwaiti Apprehended for Terrorist Financing
  • Case Continues for Bahraini Holy Man
  • Ex-Presidential Family Member Arrested for Money Laundering
Deutsche Bank Fined by FINRA

Deutsche Bank has found itself on the receiving end of a monetary penalty from the US Financial Industry Regulatory Authority (FINRA) for USD 12,500,000.

The regulator found that the bank had ignored the red flags raised by numerous parties – such as internal audit and compliance – in relation to its governance and use of ‘squawk boxes’. It was highlighted that confidential and material, non-public information could be relayed over the internal forums but the bank failed to implement policies or procedures as to how the systems should be used, who should have access to it and how these individuals should be supervised. FINRA perceived the years’ worth of ignorance by the bank in this regard as evidence of a poor framework of supervision.

Multiple Penalties Issued by South African Reserve Bank

The South African Reserve Bank has fined 5 financial institutions in which anti-money laundering and counter-terrorism financing weaknesses were identified during routine inspections. Namely:

  • GBS Mutual Bank – ZAR 500,000
  • Habib Overseas Bank Limited – ZAR 1,000,000
  • Investec Bank Limited – ZAR 20,000,000
  • The South African Bank of Athens Limited – ZAR 3,000,000
  • Standard Chartered Bank, Johannesburg branch – ZAR 10,000,000

All banks have been given a directive to take remedial action.

Enforcement Action Against AS PrivatBank Subsidiary

The Italian subsidiary of AS PrivatBank has been found in serious breach of anti-money laundering legislation, following an investigation that took place in March-April of this year, and has been ordered to close down by the Central Bank of Italy.

Enforcement Action Taken Against Falcon Private Bank

Falcon Private Bank has been stopped from taking on new business in Singapore. This order comes from the Monetary Authority of Singapore in response to the 1MDB scandal.

Kuwaiti Apprehended for Terrorist Financing

International cooperation has led to the successful apprehension and arrest of Kuwaiti national, Abdullah Hadi Abdul Rehman Al-Enezi, by the local authorities on terrorist financing charges. This is following information that was received from India’s National Investigation Agency which relayed how Mr. Rehman Al-Enezi provided four Indian men with the funds to return to Syria, in order to continue their activity with ISIS.

Case Continues for Bahraini Holy Man

The case against a Bahraini spiritual leader, Isa Qassim, continued this month. The Shia ayatollah has had his citizenship revoked and is accused of illegally collecting a Muslim tax known as ‘khums’ which contributed to the USD 10,000,000 found in his account. It is also alleged that the laundered proceeds financed anti-Bahrain organisations in Iraq and Iran that Qassim purchased USD 1,000,000 worth of properties in his name in an effort to ‘legitimise’ some of the funds.

Ex-Presidential Family Member Arrested for Money Laundering

The son of former Sri Lankan president Mahinda Rajapaksa was arrested last month in connection with money laundering offences and the funds that he seemingly invested in two companies. It is the second time he has been arrested for criminal financial activity since the new Sirisena regime began.


Further information
If you would like a more detailed discussion on these or other enforcement actions, please contact:
Carwyn Evans (CEvans@cclcompliance.com)

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