DFSA Censures Bank

by Lorys Charalambous, Tax-News.com, Cyprus

28 March 2011

The Dubai Financial Services Authority (DFSA) has censured Saxo Bank Dubai Limited (SBDL) for its failure to comply with the DFSA’s Rules regarding the taking on of clients. This followed admissions by SBDL that it had breached the client take-on and anti-money laundering (AML) systems and control requirements in the DFSA’s Rules.

SBDL had failed to properly classify clients, enter into client agreements with them, obtain sufficient and satisfactory verification of their identities, permanent addresses and sources of wealth, perform ongoing due diligence, adequately monitor client transactions and establish and maintain appropriate systems and controls in relation to Politically Exposed Persons (PEPs).

The DFSA said that these failings increased the risk of SBDL’s Dubai International Financial Centre (DIFC) business being used for the purposes of money laundering, although it found no evidence of any money laundering having taken place. SBDL consented to the DFSA’s censure.

The censure arose from a DFSA investigation into the conduct of SBDL, which found that SBDL’s failures arose, in part, because SBDL referred its clients to its parent, Saxo Bank A/S in Denmark, and did not carry out sufficient client classification in accordance with the Laws and Rules of the DIFC. In censuring SBDL, the DFSA acknowledged mitigating factors in regard to SBDL’s conduct.

Ian Johnston, Deputy Chief Executive and Managing Director of the DFSA, said that the DFSA considers the know your client and AML systems and controls of firms in the DIFC to be of fundamental importance to maintaining the DIFC’s integrity.

Stephen Glynn, DFSA’s Head of Enforcement said: “The DFSA vigilantly supervises and detects systems and control failures relating to know your client, AML and counter terrorist financing obligations. The DFSA expends considerable resources educating the regulated community in respect of these obligations and will take strong action to enforce the applicable Laws and Rules when lapses occur.

“Clients, therefore, should expect firms in the DIFC to request information from them to confirm their identity, residential address and source of funds. The request for this information is to fulfill not only the firms’ obligations under the DIFC Laws and Rules but also the Federal Law and international standards.”

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