DFSA Latest Developments


  • DFSA Notice of Updates
DFSA Notice of Updates

The Dubai Financial Services Authority (DFSA) has made amendments to the Regulatory Policy and Process (RPP) Module of the DFSA Sourcebook. The following changes come into effect on 28th February 2016:

  • Changes have been made to the breakdown of the DFSA’s regulatory structure – namely the Policy and Legal divisions have been split into two separate divisions.
  • Changes have been made to the definition of a ‘head office’ – this now focuses more on the primary place of business rather than the primary location of directors etc.
  • DFSA considerations when accepting enforceable undertakings have been broadened.

    Additionally, the following DFSA forms have been updated:
  • AUT – PFS Public Fund supplement
  • AUT – EFF Exempt Fund Form
  • AUT – IND1 Application for authorisation Authorised Individual status
  • AUT – CRA Applying for Authorisation as a Credit Rating Agency
  • AUD 7 Annual Information Return

Further information

If you would like to discuss these latest developments in more detail, please contact:
Clare Curtis (CCurtis@cclcompliance.com)

Middle East Regulatory Updates


  • UAE Central Bank Efforts
  • Foreign Bank Lending in the UAE
  • Saudi CMA Evaluator Requirements
  • UAE SCA Regulatory Amendments
UAE Central Bank Efforts

The UAE Central Bank has told banks in their jurisdiction that they need to seek approval before announcing the size of dividend pay-outs, in a bid to stop businesses from defaulting. As the price of oil continues to affect the economy and we see liquidity fall, the importance of preventing capital ratios from dropping and maintaining capital buffers has never been greater for the country. The difficulty comes in ensuring that the size of pay-outs retains investor interest. Another factor in the diminishing of liquidity has been the decline in resident deposits into the banking sector. A surge in foreign deposits has been evident as UAE services look for alternative sources of funding for loans etc.

Elsewhere in the GCC, the government of Bahrain is planning to make changes to fees for gas, electricity, water and petrol in order to stabilise the fiscal environment following the regional drop in oil prices.

Foreign Bank Lending in the UAE

The UAE Central Bank has failed to renew the waivers of some local branches of foreign banks for 2016 which related to government lending. The waivers had previously permitted UAE branches of foreign banks to rely on their group’s capital reserve when calculating lending perimeters for the Government and companies linked to the State. The result now however, is that the local branches of foreign banks who are used to book loans to UAE government entities (as opposed to foreign banks who register the loan with a centre outside of the UAE) can expose the Government and government-related organisations to 30% of their local capital only. This will severely inhibit their lending power as local units are generally minimally funded.

Subsidiaries who beforehand were exempt from these rules must now adhere to the stipulations or consider alternative set ups, such as registering the lending services in another country or setting up in a regional financial free-zone.

Saudi CMA Evaluator Requirements

Saudi Arabia’s Capital Markets Authority (CMA) has issued a new resolution which impacts their Real Estate Investment Funds Regulations. The CMA now requires that the evaluators chosen by fund managers to appraise a fund’s assets must be members of the Saudi Authority for Accredited Valuers (aka. Taqeem).

The CMA’s rationale for the decision is that, by applying international best practice in receiving fund assets reports from accredited evaluators only, and increasing transparency, they will create a more attractive investment setting.

Furthermore, the CMA has approved rules for listing the funds (or Real Estate Investment Trusts/REITs) on the Tadawul (Saudi Arabian stock exchange). It is expected that this will bolster some much needed foreign funding into the country’s building sector.

UAE SCA Regulatory Amendments

The UAE’s Securities and Commodities Authority (SCA) has published proposed amendments to two pieces of regulation which are available for comment by industry stakeholders.

The first proposed amendments are to Resolution No. (37) of 2012 which relates to the rules of investment funds. It appears that the new draft regulations do not cover the marketing of foreign funds in much detail. However, it is expected that once finalised, the new regulations will fully cover the marketing of foreign funds and lighten the scope and/or burden of regulation to DIFC firms when marketing foreign funds within the UAE.

The regulations are significant to the funds industry in the UAE because they govern the promotion of funds within the UAE.

SCA has provided no additional commentary since releasing the new draft. CCL will continue to keep their eye on matters as they develop.

The second proposed amendment will develop Federal Law No. (4) of 2000, focusing on legislation governing the securities industry. The proposed changes would afford the SCA greater supervisory powers and independence as a financial body, which will serve them well as they endeavour to meet their new goals of aligning the financial market with international best practice and acknowledging local developments. The draft amendments will also promote investor rights. The regulators hope the new legislation will have a positive impact on investment volume and quality.

The proposed amendments can be found on the SCA website.

Further information

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

International Developments


  • BVI AML Legislation
  • Nigerian AML Bill
  • Moneyval Reports
BVI AML Legislation

Changes to British Virgin Islands’ (BVI) anti-money laundering (AML) laws took effect this month, aiming to meet international standards of prevention and transparency. Registered agents are now required to hold certain up-to-date beneficial ownership information for new companies registered in the BVI, impacting those who usually rely on third party introducers to retain these details. New BVI companies also need to register their directors’ details with the Registry of Corporate Affairs. Existing companies have a 12-month transitional window to provide this information to agents and register director details.

Nigerian AML Bill

The Money Laundering Prevention and Prohibition Bill has been sent to the Nigerian national assembly for adoption this month. The Bill aims to develop the governance of anti-money laundering (AML) agencies and establish an appropriate penalty for the crime. It also seeks to create provisions to protect whistle-blowers as well as enhancing customer due-diligence requirements. The Bill would also see legal bodies reaching out for international assistance in relevant cases with a new framework to facilitate this endeavour.

Moneyval Reports

The European Council body, Moneyval, has published their assessment of Guernsey in relation to the country’s money laundering and terrorist financing prevention measures. The glowing report shows that Guernsey has made major progress since their 2010 assessment by the International Monetary Fund.

Moneyval stated that Guernsey’s extended legal framework was comprehensive, complying with international standards and that the legislative provisions they have in place adequately cover all relevant areas of the financial industry. Additionally, Guernsey authorities were found to be competent and knowledgeable, commended for their local and international cooperation. Moneyval’s only recommendations related to the country’s disciplinary activities. The organisation evaluated that financial penalties were not proportionate to the size and nature of the country’s finance sector and did therefore not work as an effective deterrent. It was also noted that the increase in volumes of money laundering prosecutions was still low in comparison to the size of Guernsey’s financial industry and that failures in the reporting of suspicious transactions were not met with any kind of sanctions.

The European Council body also reported on the capabilities of Armenia to combat money laundering. They found that the country had made noticeable progress in establishing a legal framework to govern the fiscal crime and that the finance sector was effective in its application of the preventative measures. However, Armenia has been urged to introduce policy to guide law enforcement operatives in regards to their utilisation of collected financial intelligence. Moneyval identified significant weaknesses in how money laundering crimes were investigated and prosecuted in the country. Armenia is expected to report back to the European Council body in April 2018 with a proposed action plan and execution strategy.

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

Financial Crime Update


  • Transparency International Index 2015 Results
  • Global CTF Meeting and ECTC
Transparency International Index 2015 Results

Transparency International (TI) has released their 2015 Corruption Perceptions Index. Although two-thirds of the 168 countries assessed scored below 50 (on a scale of 0 – highly corrupt – to 100 – very clean), overall more countries saw their score improve from last year than declined.

Top of the list was Denmark (for the second year in a row) with North Korea and Somalia coming in jointly at the opposite end of the spectrum. In fact, out of the 10 countries who found themselves at the bottom of the index, 3 of them came from the MENA region (the Middle East and North Africa) – namely Iraq, Libya and Sudan. It is evident that a diminishment of civil liberties in many MENA countries, resulting from civil conflicts and the war on terror, has enabled institutional corruption to go unchallenged. Conversely, countries such as Kuwait, Jordan and Saudi Arabia all experienced an improvement in the index scores (for Saudi Arabia this was for a third consecutive year) which has been attributed to strengthened austerity measures, in light of falling oil prices, and an increase in transparency level, in a bid to attract foreign investment and funding. Kuwait and Jordan (along with Austria and the Czech Republic) were the biggest improvers of the year. The UAE maintained their score of 70 from 2014 which sees them sitting at 23rd.
Brazil had the greatest fall in TI’s 2015 index, a lot of which is the effect of the Petrobas scandal. Guatemala was the second biggest decliner, although TI has commended activist groups in the country who publically protested against grand corruption. The organisation feel that collective action seen in this country and others like Sri Lanka and Ghana, send the strongest and most effective message.

Further conclusions that can be drawn from the report are the similarities in the characteristics of countries with similarly assessed levels of corruption. Those perceived as clean tend to have

  • high levels of press freedom
  • access to budget information
  • independent judiciaries

Contrastingly, those perceived as corrupt tend to have

  • a lack of independence in the media
  • weak public institutions and governance
  • conflict and war
Global CTF Meeting and ECTC

For the first time, countries with key roles in counter-terrorist financing (CTF) efforts converged this month in a joint meeting between the Global Counter Terrorism Forum and the Global Coalition to Counter ISIL. Representatives from Europol, Interpol, the European Union and the United Nations were all in attendance.

To facilitate the co-implementation of more than 60 measures that delegates from 50 countries agreed upon at the meeting, the European Counter-Terrorism Centre (ECTC) has been launched. Based in Amsterdam, comprising of national police forces and incorporated into Europol’s organisational structure, the ECTC looks to improve information sharing and the monitoring of terrorist financing, key measures that have been identified by the numerous assemblies held since the attacks in Paris.


Enforcement Action


  • Noteworthy US Court Ruling
  • FinCEN Take Action Against Precious Metals Dealer
  • UAE Central Bank Target Exchange Organisation
UAE Central Bank Target Exchange Organisation

Further to their earlier suspension action, the Central Bank of the UAE has now revoked the licence of Al Zarooni Exchange whose anti-money laundering breaches gave the Altaf Khanani Money Laundering Organisation (Khanani MLO) access to financial services. Khanani MLO launder illicit funds for organised crime groups, drug trafficking organisations, and designated terrorist groups throughout the world.

Chief Compliance Officer Fined

The former Chief Compliance Officer of MoneyGram has been held personally accountable and fined USD 1,000,000 by the Financial Crimes Enforcement Network in relation to the company’s wire fraud and money laundering violations.

US District Court judge, David Doty, has upheld the decision and ruled that the Bank Secrecy Act clearly allows for civil penalties to be imposed with regards to anti-money laundering programme failures and has set a precedent that these disciplinary powers can be extended to partners and employees (including compliance officers and other executives).

FinCEN Take Action Against Precious Metals Dealer

The Financial Crimes Enforcement Network (FinCEN) has taken, for the first time, action against a dealer of precious metals, stones and jewels for breaching anti-money laundering (AML) laws. The violations included failing to
adequately assess business risks

  • conduct customer due diligence
  • establish detection systems to identify, report and inquire about red flags and suspicious activity

The business, B.A.K. Precious Metals Inc. (BAK), has been fined USD 200,000 and has agreed to a number of undertakings including:

  • contracting an external auditor
  • annually reporting to FinCEN with updates on their AML training
  • providing FinCEN with an annual report which details their progress in implementing their new AML programme

A number of findings arose when the company was assessed for compliance with the Bank Secrecy Act. In 2011 it was reported that there was no AML programme in place for the first 5 years that BAK was in operation and in 2013 it was revealed that the AML programme that had been established 2 years previously was both insubstantial and often not adhered to. It was also identified that though BAK claimed the transactions they dealt with were less than USD 5,000 which made them low risk, reports show that some deals were in excess of USD 20,000,000.

FinCEN’s action delivers the strong message that similar businesses will be expected to have adequate AML programmes in place, just like any other financial institution.

Further information

If you would like a more detailed discussion on these or other enforcement actions, please contact:
Clare Curtis (CCurtis@cclcompliance.com)

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