ADGM's Financial Regulatory Guidance and Policy Manual

The Riffle

The Abu Dhabi Global Market (ADGM) has issued the Financial Services Regulatory Authority’s (FSRA) Guidance and Policy Manual (GPM) — a comprehensive document outlining how financial services are authorised, supervised, and enforced within the ADGM.

Built on a risk-based approach, the Manual reflects the FSRA’s core philosophy: ensuring that regulatory focus and resources are concentrated on areas posing the greatest risk to market integrity and financial stability.

1️⃣ The Regulatory Framework and Authorisation Process

At the heart of ADGM’s regulatory structure lies the General Prohibition under the Financial Services and Markets Regulations (FSMR) — which bars any person from conducting regulated activity “by way of business” in or from ADGM without authorisation.

Key Highlights:

• Fit and Proper Test: Every applicant must demonstrate integrity, competence, and financial soundness. Assessments include the applicant’s reputation, ownership structure, resources, systems, and governance.

• Approved Persons: Individuals performing Controlled Functions undergo fitness and propriety assessments covering integrity, capability, and financial soundness.

• Start-Ups and Retail Firms: Subject to enhanced scrutiny — start-ups for capital adequacy, governance, and systems; retail firms for client protection and disclosure controls.

• Islamic Financial Business: Must hold specific permissions and demonstrate appropriate Shari’a governance structures.

• Representative Offices: Restricted to marketing and referral activities; no advisory functions allowed.

• Naming Conventions: Firm names must accurately reflect licensed activities and legal status.

2️⃣ The Supervisory Framework

The FSRA applies a risk-based supervisory philosophy, ensuring proportional oversight aligned to each firm’s scale and complexity.

Two Core Ratings:

• Impact Rating: Reflects a firm’s potential impact on the financial system.

• Risk Rating: Gauges probability of failure based on governance, liquidity, AML/CFT controls, and conduct.

Supervisory Tools Include:

• Desktop reviews and analysis of periodic returns

• On-site inspections

• Communications and thematic reviews

• External auditor reports and special-purpose audits

• Risk mitigation programmes

The FSRA also works closely with foreign regulators to ensure effective cross-border supervision, particularly for branches and subsidiaries of international firms.

3️⃣ Enforcement and Disciplinary Framework

The FSRA’s enforcement function is designed to be fair, timely, and proportionate — aimed at deterring non-compliance and addressing harm swiftly.

The Six-Step Enforcement Process:

1. Assessment of complaints or referrals

2. Commencement of Investigation

3. Information Gathering (interviews, document production, site visits)

4. Analysis of evidence

5. Assessment of Remedies

6. Conclusion and closure of matter

Available Enforcement Powers:

• Suspension or revocation of licences

• Financial penalties and public censures

• Prohibition orders and private warnings

• Court-ordered injunctions, restitution, or winding-up orders

• Enforceable Undertakings (EUs) and settlements

4️⃣ Penalty Determination and Decision-Making

The FSRA follows a transparent and structured approach to penalty setting through a five-step framework:

1. Disgorgement – removal of any economic gain

2. Seriousness – penalty reflecting impact and gravity

3. Aggravating/Mitigating Factors – cooperation, intent, history

4. Deterrence – ensuring penalties deter future misconduct

5. Settlement Discount – reduction for early settlement

Decisions adhere to principles of natural justice — including the right to be heard and impartial review.

Under the Part 21 process, affected parties receive a Warning Notice, can make representations, and may appeal to an independent Appeals Panel for a full merits review.

FSRA maintains a strong commitment to transparency by publishing enforcement outcomes, final notices, and enforceable undertakings to promote market confidence.

Conclusion

The FSRA’s Guidance and Policy Manual reinforces ADGM’s position as a trusted, transparent, and well-regulated international financial centre.

From authorisation to enforcement, the Manual encapsulates a clear message — regulation in ADGM is structured, proportionate, and grounded in fairness.

Read the full briefing document presented by 10 Leaves here -