Dubai Financial Services Authority

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Dubai Financial Services Authority

Dubai Financial Services Authority

Dubai is the most populous city and the capital of the Emirate of Dubai. A special economic zone is located in the city known as the Dubai International Financial Centre (DIFC) was established in 2004. It is worth noting that it has its own independent, internationally regulated regulator and judicial system, common law framework, global financial exchange as well as a tax-friendly regime. Interestingly, DIFC is one of Dubai’s free independent trade-zones. As mentioned above, the DIFC has its own regulator, Dubai Financial Services Authority (DFSA).

People should take into account that, Dubai Financial Services Authority, is distinct from the United Arab Emirates (UAE) Federal Securities and Commodities Authority. Notably, the jurisdiction of DFSA covers only the territory of the Dubai International Financial Centre.

Interestingly, it is up to the Dubai Financial Services Authority, to authorize and register institutions who would like to conduct financial services in or from the DIFC. Moreover, it is their responsibility to supervise and regulate participants as well as to monitor compliance with the laws, regulations, and rules. Also, DFSA has the authority to enforce the legislation, the agency administers.

The agency strives to maintain an environment that fosters the DIFC guiding principles of integrity, transparency, and efficiency. Importantly, DFSA maintains high standards. Moreover, the agency has a statutory obligation to pursue the following objectives. Let’s have a look at the objectives.

For example, fairness, transparency, as well as efficiency in the financial services industry in the DIFC. Also, the agency is working hard to maintain confidence in the financial services industry in the Dubai International Financial Centre. People should take into account that, one of the main goals of the agency is to prevent, detect, restrain activities that may cause or already caused damage to the reputation of DIFC. 

Legal Aspects and Dubai Financial Services Authority

Interestingly, the DFSA performs a number of functions. Also, the agency is the sole independent financial services regulator for the DIFC. Let’s have a look at the functions of DFSA. The policy and rule-making, authorization, recognition, supervision, enforcement, international co-operation, and listing. As can be seen from the information stated above, the agency plays an especially important role.

It is worth noting that DFSA should take into account the following guiding principles. For instance, the agency must cooperate with and provide assistance to regulatory authorities in the United Arab Emirates and other jurisdictions. Moreover, it is desirable to minimize the adverse effects of the activities of the DFSA when it comes to competition in the financial services industry. Furthermore, the should take into consideration the cost of regulation, etc.

Importantly, DFSA administers the Regulatory Law 2004. Moreover, this law is the cornerstone of the regulatory regime. The Law establishes the constitution of DFSA. Moreover, it enables the creation of the regulatory framework within which entities may be licensed, authorized, registered, and supervised by the DFSA. Notably, the agency also administers other laws as well such as Markets Law, Collective Investment Law. Moreover, the Law Regulating Islamic Financial Business and the Investment Trust Law.

Functions of the DFSA

As state above, DFSA performs a number of functions. Importantly, DFSA’s regulatory includes asset management, banking and credit services, securities, collective investment funds. Moreover, custody and trust services, commodities futures trading, Islamic finance, insurance. Also, an international equities exchange and an international commodities derivatives exchange.

Notably, entities need to obtain a license from the DFSA, in order to conduct financial services in or from the DIFC. Moreover, to conduct ancillary services in or from the DIFC, firms need to be registered by the DFSA. However, authorization is only part of the process. Companies won’t be able to conduct financial services without recognition.

However, after acquiring the status of a Recognized Member or Recognized Body from DFSA, the firm has the opportunity to conduct certain financial services on an Authorized Market Institution.

We mentioned authorization and recognition. Let’s discuss other functions as well. Interestingly, when it comes to supervision DFSA operates a risk-based supervision framework. Importantly, the agency monitors compliance with the laws and rules including provisions regarding the anti-money laundering.

Enforcement also falls under the jurisdiction of DFSA. The agency has the authority to conduct investigations into suspected contraventions of the legislation. Moreover, DFSA refers any conduct which could represent a breach of criminal law to the relevant local, federal, and international authority.

International cooperation is very important for DFSA. The agency continues to forge close ties with other regulatory agencies with international regulators and organizations.

Last but not least, companies and individuals should pay more attention to rules and regulations. As a result, it will be easier to identify potential risk factors.

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