UAE: DFSA imposes a Dh5 million fine on a Dubai firm for compliance violations
R.J. O'Brien (Mena) Capital Limited has been hit with a hefty fine of Dh5,023,375 by the Dubai Financial Services Authority (DFSA), which cited infractions of compliance system-related DFSA regulations.
It was discovered that the company had not properly anticipated or evaluated its ability to fulfil continuing regulatory requirements after acquiring a second brokerage. Remarkably, high management knew there weren't enough resources for compliance, yet they didn't do anything about it.
Compliance System Violations:
- R.J. O’Brien (Mena) Capital Limited did not conduct sufficient planning and analysis to ensure compliance with ongoing regulatory obligations post-acquisition.
- Senior management was aware of the deficient compliance resources but failed to address the issue adequately.
Lack of Deliberate Intent:
While the DFSA identified these violations, it did not find any evidence suggesting a deliberate intent by the firm to violate the law. This acknowledgment plays a significant role in shaping the regulatory response.
Corrective Measures:
In response to the identified deficiencies, R.J. O’Brien (Mena) Capital Limited has committed to remedying the issues in its systems. As part of these corrective measures, the firm has engaged an external compliance expert. This expert will assist in addressing the identified shortcomings and verifying that the necessary remediation is completed.
Reduced Fine:
In light of the company's pledge to address the noncompliance and seek outside assistance, the DFSA decided to lower the original fine recommendation. The Dh10,251,789 fine, which was initially greater, was reduced in appreciation of the company's proactive efforts to correct the deficiencies found.
DFSA's Emphasis on Compliance:
Patrick Meaney, the Head of Enforcement at the DFSA, underscored the vital necessity for authorised firms to ensure they possess ample compliance resources. Compliance should not be seen as an ancillary expense in business operations; instead, it is recognised as an essential function requiring substantial resourcing, encompassing both the quantity and calibre of personnel.
This regulatory action underscores the DFSA's commitment to upholding compliance standards within the financial services sector in Dubai and promoting a culture of adherence to regulatory obligations.
