The Dubai Financial Services Authority (DFSA) has launched a consultation paper to introduce proposals for a fixed penalty regime for firms in the Dubai International Financial Centre (DIFC).
The regime will be for breaches of certain reporting requirements and, at a later point in time, may extend to cover other breaches of DFSA regulation. The deadline for providing comments is 17 July 2023.
The maximum penalty for the regime will be $50,000 (£40,215, €45,589)
The regulator said: “In order for the DFSA to meet its regulatory objectives, it is essential that firms provide data to us in a timely manner. This puts the DFSA in the best position to provide proper and effective oversight of financial services and related business conducted in or from the DIFC. We set reporting requirements for firms in several areas, including setting deadlines for the submission of certain information.
“We are proposing to introduce a fixed penalty regime to deal with clear breaches of these requirements. We want this proposed regime to act as a deterrent and to encourage firms to comply with DFSA Rules and DFSA administered legislation. By sanctioning firms who do not meet their reporting obligations, we are seeking to incentivise timely submission of information.
“To design a regime that is fair, transparent, simple and acts both as a sanction and a deterrent, we looked to other jurisdictions to understand what they did. Many of the jurisdictions we looked to use fixed penalty or infringement notices (or similar) as an alternative to, for example, further enforcement action being taken, or to prosecution action being taken in court. The fixed penalty or infringement notice regimes typically act as an incentive for a person to pay a penalty, promoting compliance, so that they avoid the expense/inconvenience of that further action.”
Details
The DFSA gave a four step process for how the regime will work.
The steps include:
- Step 1: the DFSA has reason to believe a person has contravened a prescribed provision that is subject to a fixed penalty notice (FPN);
- Step 2: The DFSA may or may not need to issue a FPN giving the person an opportunity to avoid a sanction by payment of the fixed penalty. The DFSA will not take any action during the period specified in the FPN, which it is proposing to be a period of 14 days following the date of the notice. For the purposes of the regime, the DFSA has proposed an FPN may only be issued within 12 months after the breach has taken place;
- Step 3: If a person complies with the FPN within the 14-day period and the breach is no longer ongoing (where applicable), then the DFSA will not seek to fine or publicly censure the person; and
- Step 4: Where a firm chooses not to pay the penalty, or the contravention has been going on more than the 14- day period, the DFSA may take enforcement action.
