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Regulatory Framework for Digital Investment Management in ADGM
FSRA Supplementary Guidance | Effective Immediately
Bhumika Arora
November 11, 2025
The Riffle
The FSRA has issued targeted guidance for Digital Investment Managers operating in ADGM. It sets expectations around required permissions, capital, governance, and client-protection when investment services are delivered using algorithm-based tools, including AI. The objective is to encourage innovation while ensuring oversight, transparency, and investor protection.
Key Highlights
1. Who qualifies
Algorithm-based investment services with limited/optional human interaction.
Applies to fully digital or hybrid models.
Excludes pure tech vendors and firms using algorithms for back-office only.
2. Permissions & Capital
FSPs typically needed: Advising, Managing Assets, Arranging Deals.
Managing Assets permission covers advisory/arranging if incidental.
Capital: $250k for Managing Assets; $50k for other Category 4 activities.
FSRA may grant regulatory relief for RegTech-enabled supervision.
3. Governance
Strong algorithm governance with documented, explainable models.
Board oversight, skilled staff, access controls, error reporting, and contingency plans.
Ongoing monitoring + possible third-party audits for complex models.
4. Technology & Financial Crime
Controls for data protection, cyber-security, and system resilience.
Full AML–TFS compliance tailored to digital business models.
5. Client Protection
Robust online Risk Profile Questionnaire (proportionate info, knock-out checks, inconsistencies flagged).
Clear disclosures on services, algorithm role/limitations, risks, custody, conflicts, fees.
Conclusion / Actions
Firms intending to operate as Digital Investment Managers should:
Confirm correct FSPs and capital category
Strengthen algorithm and tech governance
Review AML–TFS frameworks
Update suitability tools and disclosures
This guidance forms the foundation for responsible, transparent AI-driven investment management in ADGM.
Read the full briefing document Presented by 10 leaves here -
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