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Dubai Financial Services Authority (DFSA): Contents

Dubai Financial Services Authority (DFSA)
Laws
Rulebook Modules
Conduct of Business Module (COB) [VER33/07-19]
Sourcebook Modules
Consultation Papers
Policy Statements
DFSA Codes of Practice
Amendments to Legislation
Media Releases
Notices
Financial Markets Tribunal
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  • COB 6.12 Client Money

    • COB 6.12.1

      All MoneyG held or controlled on behalf of a ClientG in the course of, or in connection with, the carrying on of Investment BusinessG or the Operation of a Crowdfunding PlatformG in or from the DIFC is Client MoneyG , except MoneyG which is:

      (a) held by the Authorised FirmG as a BankG in an account with itself, provided the Authorised FirmG notifies the ClientG in writing that the Client MoneyG is held by it as a BankG and not in accordance with this chapter;
      (b) immediately due and payable by the ClientG to the Authorised FirmG ;
      (c) belonging to another PersonG within the Authorised Firm'sG GroupG unless that PersonG is an Authorised FirmG or Regulated Financial InstitutionG and that PersonG has confirmed to the Authorised FirmG , in writing, that the beneficial owner of the MoneyG is a PersonG who is not part of the Authorised Firm'sG GroupG ;
      (d) in an account in the Client'sG name over which the Authorised FirmG has a mandate or similar authority and where the Authorised FirmG is in compliance with COB Rule 6.11.3 (2), provided it is not a mandate to manage the MoneyG on a discretionary basis;
      (e) received in the form of a cheque, or other payable order, made payable to a third party other than a PersonG or account controlled by the Authorised FirmG , provided the cheque or other payable order is intended to be forwarded to the third party within 1 business day of receipt; or
      (f) Fund PropertyG of a FundG .
      Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]
      [Amended] DFSA RM202/2017 (Made 14th June 2017). [VER29/08-17]
      [Amended] DFSA RM226/2018 (Made 6th June 2018). [VER30/08-18]

      • COB 6.12.1 Guidance

        1. Authorised FirmsG are reminded that the exemption in COB Rule 6.12.1(a) would not apply to MoneyG which is passed to a third party i.e. not held in an account with the Authorised FirmG itself.
        2. Pursuant to COB Rule 6.12.1(b), examples of MoneyG which is immediately due and payable to an Authorised FirmG includes MoneyG which is:
        a. paid by the way of brokerage, fees and other charges to the Authorised FirmG or where it is entitled to deduct such remuneration from the Client MoneyG held or controlled;
        b. paid by the Authorised FirmG in relation to a ClientG purchase or in settlement of a margin payment in advance of receiving a payment from the ClientG ; or
        c. owed by the ClientG to the Authorised FirmG in respect of unpaid purchases by or for the ClientG if delivery of InvestmentsG has been made to the ClientG or credited to his account.
        3. The CIR module contains specific provisions relating to the handing of Fund PropertyG and also provisions relating to a Fund AdministratorG holding or controlling monies or assets belonging to third parties.
        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

    • Client Money Provisions

      • COB 6.12.2

        (1) An Authorised FirmG in Category 4G must not hold Client MoneyG , except if it does so in connection with it Operating a Crowdfunding PlatformG .
        (2) An Authorised FirmG which holds or controls Client MoneyG for a ClientG must, subject to (3), comply with the Client Money ProvisionsG in App5.
        (3) Where the ClientG is a Market CounterpartyG , an Authorised FirmG may exclude the application of the Client Money ProvisionsG but only where it has obtained the prior written consent of the Market CounterpartyG to do so.
        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]
        [Amended] DFSA RM66/2009 (Made 1st August 2009). [VER16/08-09]
        [Amended] DFSA RM113/2012 (Made 15th October 2012). [VER21/12-12]
        [Amended] DFSA RMI202/2017 (Made 14th June 2017). [VER29/08-17]

        • COB 6.12.2 Guidance

          In accordance with GEN chapter 8, an Authorised FirmG which holds or controls Client MoneyG must arrange for a Client Money Auditor's ReportG to be submitted to the DFSA on an annual basis.

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

    • Client Disclosure

      • COB 6.12.3

        (1) If an Authorised FirmG holds or controls Client MoneyG which is not subject to the Client Money ProvisionsG pursuant to COB Rule 6.12.2 (2), it must disclose to that Market CounterpartyG in writing that:
        (a) the protections conferred by the Client Money ProvisionsG do not apply to such Client MoneyG ;
        (b) as a consequence of (a), such Client MoneyG may be mixed with MoneyG belonging to the Authorised FirmG , and may be used by the Authorised FirmG in the course of the Authorised Firm'sG business; and
        (c) in the event of insolvency, winding up or other Distribution EventG stipulated by the DFSA:
        (i) in the case of a Domestic FirmG , such Client MoneyG will be subject to and distributed in accordance with the DFSA Client Money Distribution RulesG ; and
        (ii) in the case of a non-Domestic FirmG , such Client MoneyG will be subject to a regime which may differ from the regime applicable in the DIFC.
        (2) The Authorised FirmG must obtain that Market Counterparty'sG written acknowledgement of the disclosures made in (1) prior to holding or controlling Client MoneyG for that Market CounterpartyG .
        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]
        [Amended] DFSA RM66/2009 (Made 1st August 2009). [VER16/08-09]

    • Distribution Event

      • COB 6.12.4

        Following a Distribution EventG , an Authorised FirmG must comply with the Client Money Distribution RulesG and all Client MoneyG will be subject to such Rules.

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

    • Record Keeping

      • COB 6.12.5

        (1) An Authorised FirmG must maintain records:
        (a) which enable the Authorised FirmG to demonstrate compliance with COB Rule 6.11.2;
        (b) which enable the Authorised FirmG to demonstrate and explain all entries of MoneyG held or controlled in accordance with this chapter; and
        (c) of all cheques received and forwarded in accordance with COB Rule 6.12.1(e).
        (2) Records must be kept for a minimum of six years.
        Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]

        • COB 6.12.5 Guidance

          The DFSA expects an Authorised FirmG to maintain proper books and accounts based on the double-entry booking principle. They should be legible, up to date and contain narratives with the entries which identify and provide adequate information about each transaction. Entries should be made in chronological order and the current balance should be shown on each of the Authorised Firm'sG ledgers.

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