The Dubai Financial Services Authority (DFSA) has suspended the licence of Morgan Gatsby Limited (MGL) for 12 months following regulatory concerns.
MGL, who covered Investment Banking, Wealth Management and Corporate Advisory services while holding a category 3A licence, was found by the DFSA to be in breach of the law and rules of the regulator, and no longer fit and proper to carry on financial services.
The failures were:
- Inadequate management, systems and controls regarding its financial resources, and its consequential inability to continue to conduct a viable financial services business.
- Lack of adequate and competent human resources to sustain its financial services business.
- Inappropriate Client Classification of a Client and anti-money laundering concerns. Furthermore, breaching certain restrictions applied by the DFSA.
- Failure to comply with relevant rules in the marketing of a foreign fund.
- The DFSA was also concerned that MGL may be carrying out activities which require registration as a Designated Non-Financial Business or Profession (DNFBP).
The failures were deemed serious enough by the DFSA for the licence to be suspended.
Firms are encouraged to read the relevant Decision Notice on the DFSA’s website in order to understand the breaches in more detail and hopefully avoid such breaches themselves.
Following the proposed changes to Consultation Papers No. 122- Miscellaneous Changes and No.123- Fund Protocol Rules the DFSA has made changes to the FPR, GEN, CIR, GLO, FER, COB and MKT Rulebooks.
The changes implemented by the DFSA surround the proposed changes to the Domestic Funds Regimes, introducing the Fund Protocol Rules to the DFSA rulebook, and changes regarding:
- Registration changes to how domestic funds are registered
- Amendments to the types of custodians which can be chosen for funds opted into the regime
- Standardised text for prospectus of funds.
- Changes to how firms must notify the DFSA of its domestic fund.
Firms who deal with domestic funds are encouraged to familiarise themselves with the new Fund Protocol Rulebook, which covers passported fund procedures, management and operation, as well as the updated modules regarding the new passported funds.
The Abu Dhabi Global Market’s (ADGM) Financial Services Regulatory Authority (FSRA) has released Consultation Paper No.1 of 2019 “Proposed Revisions to the Anti-Money Laundering Regime in the ADGM”.
The proposed amendments include:
- Clarification of the status of the FSRA as the “Supervisory Authority” for the ADGM for the purposes of administering the Federal AML Legislation
- Clarification and revision of Beneficial Ownership to bring the definition in line with the Financial Action Task Force (FATF) recommendations
- Using the term “Designated Non-Financial Business and Professions (DNFBPs)” explicitly to include providers, where they are not financial institutions of certain services
- Giving the FSRA the power to register and supervise DNFBPs and suspect or withdraw their commercial licenses, with the option of delegating its authority to the Registration Authority to undertake those actions
- Incorporating a specific requirement for Relevant Persons to undertake business risk assessments when a new business line is launched, or a new technology adopted and mitigate any identified risks
- Changing consideration of the risk factors to be assessed from guidance to requirement in rules for customer risk assessments.
- Differentiating the criteria for financial institutions and DNFBPs that trigger the requirement to undertake Customer Due Diligence (CDD)
- Allow Simplified CDD only for Low-Risk Customers, rather than certain customer categories
- Remove the existing requirement under standard CDD obligations to identify customers’ source of funds and of wealth, in order to bring CDD requirements in line with FATF Recommendations
- Require Relevant Persons to submit the annual AML Return to the FSRA on an Annual Basis
- Include Non-Profit Organisations within the definition of Relevant Persons and establish proportionate requirements for them to maintain appropriate controls to protect their activities from being used for terrorist financing.
The FSRA is inviting comments on the proposed Consultation Paper until 12th March 2019.
The ADGM’s Registration Authority and the Australian regulator, the Australian Securities and Investments Commission (ASIC) have signed an agreement to increase collaboration between the two authorities.
Collaboration includes aligning legislation and procedural information across both jurisdictions.
The ADGM Courts has launched an entirely digital Notary Public Office. The new digital service will allow firms to request all notarisation through the e-Courts platform, creating a faster and more efficient method for firms in the ADGM.
The Bahrain Central Bank has released draft rules for cryptocurrency regulation. The Central Bank will allow cryptocurrency companies to work in the country for a trial period, with twenty-eight firms receiving approval to operate in the country.
The European Union (EU) has rejected the proposed addition of Saudi Arabia to the blacklisting of countries suspected of being too lax on terrorist financing and money laundering.
Originally the European Commission had published a provisional blacklist with twenty-three jurisdictions including Saudi Arabia, however twenty-eight member states of the EU all backed the decision not to have Saudi Arabia added to the list.
EU envoys are set to agree on the new list which will then be formally adopted by EU finance ministers in a meeting on March 12.
The FATF has extended Iran’s deadline to strengthen its anti-money laundering legislation. Originally the country was given until February 2019 to strengthen its AML legislation, but as there were still items not completed following their requests, they have extended this deadline to June 2019.
Following the European Securities and Markets Authority’s (ESMA) prohibition on binary options, and restricting contract for difference products (CFDs) sold to retail clients, the Financial Conduct Authority (FCA) has worked with the UK Government to make these measures part of UK domestic law following the proposed UK withdrawal from the EU.
The FCA plans to release final rules regarding this decision in March 2019 for binary options and April 2019 for CFDs and CFD-like options.
The Dutch Central Bank, De Nederlandsche Bank, has fined Rabobank over 1 million euros for not having its customer files in order and for failing to make adequate checks on money flows. The customer files failings such as lack of ownership structure of clients consequently led to a lack of beneficial owner information, thus exposing the firm to serious money laundering and terrorist financing risk.
The fine was issued in September 2018 and considers violation made by the firm up to and including 2016.