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Dubai Financial Services Authority (DFSA): Contents

Dubai Financial Services Authority (DFSA)
Laws
Rulebook Modules
Conduct of Business Module (COB) [VER32/02-19]
Sourcebook Modules
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Policy Statements
DFSA Codes of Practice
Amendments to Legislation
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Financial Markets Tribunal
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  • COB 5 Additional Rules — Providing Trust Services

    • COB 5.1 Application

      • COB 5.1.1

        This chapter applies to a Trust Service ProviderG with respect to the conduct of Providing Trust ServicesG .

        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

        • COB 5.1.1 Guidance

          The requirements in COB chapter 3 also apply to Trust Service ProvidersG .

          Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

    • COB 5.2 General

      • COB 5.2.1

        For the purposes of this chapter, a settlor, a trustee or a named beneficiary of a trust in respect of which the Trust Service ProviderG is engaged in Providing Trust ServicesG may be treated as a ClientG of the Authorised FirmG .

        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

      • COB 5.2.2

        A Trust Service ProviderG must maintain adequate knowledge of, and comply with, all applicable DIFC laws, Rules and RegulationsG relevant to Providing Trust ServicesG .

        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

      • COB 5.2.3

        A Trust Service ProviderG must be able to demonstrate that it is in compliance with appropriate standards of corporate governance.

        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

      • COB 5.2.4

        A Trust Service ProviderG must transact its business (including the establishing, transferring or closing of business relationships with its ClientsG ) in an expeditious manner where appropriate unless there are reasonable grounds to do otherwise.

        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

      • Exercise of Discretion

        • COB 5.2.5

          Where a Trust Service ProviderG is responsible for exercising discretion for, or in relation to, its ClientsG , it must take all reasonable steps to obtain sufficient information in order to exercise, subject to COB Rule 5.2.6, its discretion or other powers in a proper manner.

          Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

        • COB 5.2.6

          A Trust Service ProviderG must only exercise its power or discretion for a proper purpose.

          Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

        • COB 5.2.7

          The Trust Service ProviderG must ensure that its understanding of a Client'sG business is refreshed by means of regular reviews.

          Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

        • COB 5.2.8

          The Trust Service ProviderG must ensure that any trustee exercises his discretion in accordance with his fiduciary and other duties under the laws governing the trust of which he is a trustee.

          Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

      • Delegation of Duties or Powers

        • COB 5.2.9

          Any delegation of duties or powers by a Trust Service ProviderG , whether by PowerG of AttorneyG or otherwise, must only be entered into for a proper purpose, permissible by law and limited and monitored as appropriate.

          Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

    • COB 5.3 Reviews

      • COB 5.3.1

        A Trust Service ProviderG must ensure that adequate procedures are implemented to ensure that regular reviews at appropriate intervals are conducted in respect of Providing Trust ServicesG to its ClientsG .

        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

    • COB 5.4 Professional Indemnity Insurance Cover

      • COB 5.4.1

        A Trust Service ProviderG must maintain professional indemnity insurance cover appropriate to the nature and size of the Trust Service Provider'sG business.

        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

      • COB 5.4.2

        A Trust Service ProviderG must:

        (a) provide the DFSA with a copy of its professional indemnity insurance cover; and
        (b) notify the DFSA of any changes to the cover including termination and renewal.
        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

      • COB 5.4.3

        A Trust Service ProviderG must provide the DFSA on a yearly basis, with the details of the arrangements in force together with evidence of the cover. Any claims in excess of $10,000 or changes to the arrangements previously notified to the DFSA under this Rule must be notified to the DFSA as they arise.

        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

    • COB 5.5 Dual Control

      • COB 5.5.1

        The Trust Service ProviderG must have adequate internal controls, including having two PersonsG with appropriate skills and experience managing the business.

        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

      • COB 5.5.2

        While a Trust Service ProviderG may have a single PersonG with overall responsibility, at least another PersonG must have the skills and experience to be able to run the business of the Trust Service ProviderG in the absence of the senior PersonG and must be in a position to challenge the actions of the senior PersonG where they consider that those actions may be contrary to the provisions of DIFC Laws, Rules or Regulations or any other applicable legislation, may not be in the interests of the ClientG , or may be contrary to sound business principles.

        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

    • COB 5.6 Internal Reporting

      • COB 5.6.1

        A Trust Service ProviderG must have arrangements for internal reporting to ensure that the directors or the partners can satisfy themselves that:

        (a) the requirements of the relevant legislation are being met on an on going basis;
        (b) the Trust Service Provider'sG business is being managed according to sound business principles and, in particular, that it can meet its financial commitments as they fall due;
        (c) the affairs of its ClientsG are being managed in accordance with the service agreements;
        (d) the trustees are acting in accordance with their fiduciary and other duties;
        (e) the affairs of its ClientsG are being properly monitored and in particular that the ClientG is not using the trust structure to hide assets from legitimate enquiry, to avoid proper obligations in other jurisdictions or to engage in illegal activities in other jurisdictions;
        (f) the assets of its ClientsG are properly managed and safeguarded; and
        (g) the recruitment, training and motivation of staff is sufficient to meet the obligations of the business.
        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

    • COB 5.7 Recording of Selection Criteria

      • COB 5.7.1

        Where the Trust Service ProviderG seeks the advice of a third party in connection with a Client'sG affairs, for example to advise on or manage investments, the Trust Service ProviderG must record the criteria for selection of the adviser and the reasons for the selection made.

        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

      • COB 5.7.2

        The Trust Service ProviderG must monitor the performance of the adviser and ensure that it is in a position to change advisers if it is in the interests of the ClientG .

        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

    • COB 5.8 Qualification and Experience of Trust Service Provider Staff

      • COB 5.8.1

        Staff employed or PersonsG recommended by the Trust Service ProviderG must have appropriate qualifications and experience.

        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

      • COB 5.8.2

        A Trust Service ProviderG must ensure that all transactions or decisions entered into, taken by or on behalf of ClientsG are properly authorised and handled by PersonsG with an appropriate level of knowledge, experience, qualifications and status according to the nature and status of the transactions or decisions involved (this applies also to decisions taken by trustees who are recommended by, but not employed by, a Trust Service ProviderG ).

        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

      • COB 5.8.3

        A Trust Service ProviderG must ensure that, each of its officers and employees, agents, PersonsG acting with its instructions and PersonsG it recommends to act as trustees have an appropriate understanding of the fiduciary and other duties of a trustee and any duties arising under the laws relevant to the administration and affairs of ClientsG for which they are acting in the jurisdictions in which they are carrying on business and in which the assets being managed are held.

        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

      • COB 5.8.4

        A Trust Service ProviderG must ensure that staff competence is kept up to date through training and continuous professional development as appropriate.

        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

      • COB 5.8.5 [Deleted]

        [Deleted] RM123/2013 (Made 13th June 2013). [VER22/07-13]

    • COB 5.9 Books and Records

      • COB 5.9.1

        The books and records of a Trust Service ProviderG must be sufficient to demonstrate adequate and orderly management of Clients' affairs. A Trust Service ProviderG must prepare proper accounts, at appropriately regular intervals on the trusts and underlying companies administered for its ClientsG . Where trusts and underlying companies are governed by the laws of a jurisdiction that require accounts to be kept in a particular form, the Trust Service ProviderG must meet those requirements. In any case, the Trust Service Provider'sG books and records must be sufficient to allow the recreation of the transactions of the business and its ClientsG and to demonstrate what assets are due to each ClientG and what liabilities are attributable to each ClientG . The books and records must also include sufficient details about service providers and agents engaged on behalf of the trust.

        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]
        [Amended] DFSA RM232/2018 (Made 6th June 2018) [VER31/09-18]

    • COB 5.10 Due Diligence

      • COB 5.10.1

        A Trust Service ProviderG must, at all times, have verified documentary evidence of the settlors, trustees (in addition to the Trust Service ProviderG itself) and principal named beneficiaries of trusts for which it Provides Trust ServicesG . In the case of discretionary trusts with the capacity for the trustee to add further beneficiaries, a Trust Service ProviderG must also have verified, where reasonably possible, documentary evidence of any PersonG who receives a distribution from the trust and any other PersonG who is named in a memorandum or letter of wishes as being a likely recipient of a distribution from a trust.

        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

      • COB 5.10.2

        A Trust Service ProviderG must demonstrate that it has knowledge of the source of funds that have been settled into trusts or have been used to provide capital to companies, or have been used in transactions with which the Trust Service ProviderG has an involvement.

        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

    • COB 5.11 Fitness and Propriety of Persons Acting as Trustees

      • COB 5.11.1

        Where a Trust Service ProviderG arranges for a PersonG who is not an employee of the Trust Service ProviderG to act as trustee for a ClientG of the Trust Service ProviderG , the Trust Service ProviderG must ensure that such PersonG is fit and proper.

        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

      • COB 5.11.2

        A Trust Service ProviderG must notify the DFSA of the appointment of a PersonG under COB Rule 5.11.1, including the name and business address if applicable and the date of commencement of the appointment.

        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

      • COB 5.11.3

        Prior to the appointment of such a PersonG to act as a trustee, the Trust Service ProviderG must take reasonable steps to ensure that the PersonG has the required skills, experience and resources to act as a trustee for a ClientG of the Trust Service ProviderG .

        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

      • COB 5.11.4

        A Trust Service ProviderG must notify the DFSA immediately if the appointment of such a PersonG is or is about to be terminated, or on the resignation of such PersonG , giving the reasons for the resignation and the measures which have been taken to ensure that a new trustee has been appointed.

        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

      • COB 5.11.5

        A PersonG appointed to act as trustee for a ClientG of a Trust Service ProviderG who is not an EmployeeG of the Trust Service ProviderG , must agree in writing to be bound by and comply with the same legal and regulatory requirements as if he were an EmployeeG of the Trust Service ProviderG .

        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]