DFSA Proposed Changes to Authorised Individuals Regime (CP165)

The Riffle

This report summarizes key proposals from the Dubai Financial Services Authority (DFSA) Consultation Paper No. 165 (CP165), issued on March 6, 2025. The consultation seeks public input on changes to Licensed Functions and Authorised Individuals, shifting greater responsibility to firms for ensuring the fitness and propriety of key personnel. Aligning with international regulators in Australia, Hong Kong, Singapore, and the UK, these updates reflect supervisory insights and form part of a broader corporate governance review within the DIFC.

Key Features of CP165

1. Introduction of "Designated Functions" & "Designated Individuals"

• DFSA approval no longer required for Compliance Officers, Finance Officers, and Senior Managers.

• These roles transition from "Licensed Functions" (DFSA-regulated) to "Designated Functions" (firm-regulated).

• Authorised Firms will bear full responsibility for ensuring these individuals are competent, trustworthy, and financially sound.

2. Retention of DFSA Approval for Key Roles

• Senior Executive Officer (SEO) and Money Laundering Reporting Officer (MLRO) will continue to require DFSA approval.

• The Compliance Officer and Finance Officer roles remain mandatory for most firms, with potential exemptions for certain low-risk firms.

3. Expanded Conduct Rules & Accountability

• "Principles for Authorised Individuals" renamed as "Conduct Principles" to cover a broader range of employees.

• These principles will now apply to Designated Individuals and other key employees involved in financial services.

• Firms must ensure proper training for these individuals to uphold integrity, diligence, and compliance standards.

4. Changes to Finance & Compliance Officer Roles

• Finance Officer no longer required to be a Director, Partner, or Senior Manager—but must have "sufficient seniority and independence."

• Compliance Officer role definition revised to focus on the implementation and management of control frameworks.

5. Greater Transparency with DFSA Public Register

• Designated Individuals will be publicly listed, just like Authorised Individuals, to enhance regulatory transparency.

6. Implementation & Next Steps

• Proposed Rulebook amendments to be published in July 2025.

• Changes take effect from September 1, 2025.

• Existing individuals in affected roles will automatically transition to Designated Individuals unless notified otherwise.

• Firms must report new appointments and removals to the DFSA and provide annual attestations on individuals' fitness and propriety.

• The DFSA is seeking public comments and will hold a webinar for further clarification.

What This Means for Firms

• More autonomy & accountability: Firms gain control over key appointments but must ensure proper vetting.

• Increased compliance burden: Enhanced record-keeping & reporting requirements to demonstrate regulatory adherence.

• Stronger governance & transparency: Clearer role definitions and inclusion of Designated Individuals in the DFSA public register.

These changes mark a significant shift in DFSA’s regulatory approach, emphasizing firm-led responsibility while maintaining robust oversight for critical financial roles.

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