Dubai Regulator Rethinks Penal Law

by Lorys Charalambous, Tax-News.com, Cyprus

28 April 2010

The Dubai Financial Services Authority (DFSA) has released a consultation paper on changes to rules with respect to the regulator's enforcement framework, which could lead to increased fines for misconduct.

According to the regulator, the proposed changes are designed to enhance the current framework to ensure the DFSA is able to regulate in an effective and efficient manner, and to reflect the DFSA’s risk-based approach to regulation.

The changes will affect the Regulatory Law 2004 and the Enforcement Module (ENF).

The key changes proposed are as follows:

• Increasing the amount that a person may be fined, under the Regulatory Law 2004;
• Widening the scope of contraventions and breaches for which an administrative fine or censure can be imposed; and
• Enabling the DFSA to commence proceeding in the DIFC Court or before the Financial Markets Tribunal following a Notice of Objection to a fine for a contravention of the law or breach of the Rules.

In relation to fines, provisions governing the maximum amount that can be imposed on non compliant entities have not been amended since September 2004. The law currently stipulates that a natural person can be fined a maximum of USD5,000, and a corporate body USD25,000.

Following a review of comparable jurisdictions' enforcement policies, the DFSA has proposed increasing these amounts to USD20,000 for a natural person and USD100,000 for a corporate body. The DFSA has underscored that these new maximums would only be enforced in cases of deliberate gross misconduct, or severe regulatory breaches.

Interested parties have been asked to submit comment on the proposals by May 25, 2010.

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