DFSA Regulatory Entity
DFSA, the Dubai Financial Services Authority, is an independent financial regulatory agency of DIFC. Dubai International Financial Centre is a purpose-built free economic zone in Dubai, United Arab Emirates.
The DFSA’s regulatory entity includes credit and banking services, custody and trust services, asset management, collective investment funds, commodities future trading, securities, insurance, international commodities derivatives exchange, Islamic finance, and international equities exchange.
DFSA has also registered a delegation of powers from the DIFC ROC, Registrar of Companies. DFSA investigates the activities of companies and partners of DIFC. And when it suspects that the DIFC Companies Law is breached, DFSA pursues remedies available at the registrar by enforcement.
Besides the regulatory ancillary and financial services, DFSA enforces and supervises the Counter-Terrorist Financing (CTF) and anti-money laundering (AML) requirements significant in DIFC.
Table of contents
The DFSA regulatory agency came into existence in 2004 as a part of the Dubai International Financial Centre. The journey of DFSA in achieving objectives to set DIFC at the international standard is as follows:
- On 31st January 2019, DFSA participated in the launch of the Global Financial Innovative Network.
- On 2nd October 2019, DFSA authorised its 500th financial firm.
- On 22nd July 2019, DFSA joined networks for greening the financial system.
- On 30th June 2019, DFSA signed an MoU with Smart Dubai on an organisation wide-smart final.
- On 14th November 2019, DFSA extended the MoU with the Chinese regulatory body CBIRC.
- On 16th January 2016, DFSA published findings of a trade finance review in DIFC.
- On 24th January 2017, DFSA extended its relations with Hong Kong and Asia.
- On 22nd February 2017, DFSA signed an MoU with European market authorities and securities.
- On 27th September 2018, DFSA signed a FinTech agreement with the financial service agency of Japan.
- On 16th May 2018, DFSA expanded the FinTech innovation testing program.
- Between 2015 and 2016, DFSA celebrated the tenth anniversary of the TRL program.
- On 20th April 2020, DFSA launched a financial service awareness initiative for the UAE national community.
- Mr Abdullah Salih was appointed DFSA’s chairman on 17th June 2007.
- DFSA signed two crucial MoU with AML and UAE central bank regarding the exchange of information and cooperation.
DFSA, a purpose-built regulatory entity, sets DIFC at higher international standards. The main objective is to create clear and concise legislation suitable for a modern financial centre.
It registers and regulates individuals and institutions that wish to manage financial services either in or from the DIFC. DFSA enforces the legislation that it authorises and supervises registered participants and administrates their compliance with the rules, regulations, and laws set.
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DFSA core functions
As an independent financial services regulator of DIFC. DFSA regulatory entity performs several functions that include:
- International cooperation
- Policy and rulemaking
To fulfil the objectives, DFSA promotes and maintains its relations with other regulatory authorities in DIFC, with international agencies, organisations, and regulators. Further to facilitate DFSA principles and purposes, it diligently pursues the creation of a Memorandum of Understanding with national, international, and local regulators and organisations. These Memoranda are responsible for providing assistance and cooperating with the international and local regulators. In addition, these facilitate the ways for the regulators to assist each other to achieve their objectives through enforcement powers and information exchange.
Policy and Rulemaking
The Regulatory Law 2004 gives the power of making rules regarding all affairs to the DFSA Board of Directors. DFSA creates rules that are applicable to foster its objective, functions, and powers. The rulemaking procedure includes a period of public consultation in which interested individuals gain an opportunity to give their opinion about the proposed rule. Individual’s opinion is valuable input for us. DFSA also provides an efficient and quick response to all the affairs, events, and trends affecting DIFC.
The DFSA is an integrated regulator entity that mandates the risk-based approach in regulating regulatory authorities in or from the DIFC. It supervises the registered authorities, financial institutions, credit rating agencies, and registered auditors. DFSA risk-based approach to supervise the companies varies depending upon the size, nature, complexity, circumstances, and scale of each regulator and its risk towards the DFSA’s rules.
To regulate financial services in or from the DIFC, firms and individuals require authorisation from Dubai Financial Services Authority (DFSA). The authorisation is given to the firm in the form of a license electronically issued by the DFSA. Through authorisation, DFSA specifies which type of financial services firms can conduct.
Article 41(1) of Regulatory Law 2004 does not allow a person or firm to conduct financial services in or from the DIFC unless they are authorised by DFSA. It does not consider a firm and institute a Recognised body or member before it meets the requirement to be recognised by DFSA. Institutes should have fulfilled the activities according to the rules in the Recognition module for conducting financial services.
The Enforcement functions of DFSA foster the achievement of its objectives set out in Article 8(3) of Regulatory Law 2004. DFSA prevents, restrain and detect the regulators that cause damage to the financial service industry of DIFC. It ensures the protection of direct and indirect prospective users in or from the DIFC.DFSA’s enforcement main objective is to achieve “credible deterrence.” It ensures that the person or institute that commits the misconduct in DIFC’s rules and regulations will be detected.
Overall, DFSA promotes the welfare of society and sustainable development through its ethical behaviour. Its decisions and policies impact society and the environment, so it sets such objectives and rules that foster the community’s growth. Moreover, DFSA has adapted such activities and strategies that provide society with innovative programs and initiatives for information exchange.
So DFSA, as an internationally sound financial service regulator, develops and enforces current financial services through its strict and clear rules and regulations. DFSA shows independence, professionalism, and efficiency in its responsibilities. It expects ethical conduct and high standards from its people. Moreover, DFSA ensures accessibility, accountability, and fairness in its functions.
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