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  • Rulebook Modules

    • Anti-Money Laundering, Counter-Terrorist Financing and Sanctions Module (AML) [VER13/02-17]

      • AML 1 Introduction

        • AML 1.1 Application

          • AML 1.1.1

            This module (AML) applies to:

            (a) every Relevant PersonG in respect of all its activities carried on in or from the DIFCG ;
            (b) the persons specified in Rule 1.2.1 as being responsible for a Relevant Person'sG compliance with this module; and
            (c) a Relevant PersonG , which is a DIFCG entity, to the extent required by Rule 14.1.

            except to the extent that a provision of AML provides for a narrower application.
            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

          • AML 1.1.2

            For the purposes of these Rules, a Relevant PersonG means:

            (a) an Authorised FirmG other than a Credit Rating AgencyG ;
            (b) an Authorised Market InstitutionG ;
            (c) a DNFBPG ; or
            (d) a Registered AuditorG .
            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM132/2014 (Made 21st August 2014). [VER10/06-14]

        • AML 1.2 Responsibility for compliance with this module

          • AML 1.2.1

            (1) Responsibility for a Relevant Person'sG compliance with this module lies with every member of its senior management.
            (2) In carrying out their responsibilities under this module every member of a Relevant Person'sG senior management must exercise due skill, care and diligence.
            (3) Nothing in this Rule precludes the DFSAG from taking enforcement action against any person including any one or more of the following persons in respect of a breach of any Rule in this module:
            (a) a Relevant PersonG ;
            (b) members of a Relevant Person'sG senior management; or
            (c) an EmployeeG of a Relevant PersonG .
            Derived from RM117/2013 [VER9/07-13]

        • AML 1.3 Application table

          • AML 1.3 Guidance

            Relevant PersonG Applicable ChaptersG
            Authorised PersonG 1–14
            Representative OfficeG 1–5* 10- 14
            Registered AuditorG 1 -8 10–14
            DNFBP 1–8 10–15

            * Chapters 6–9 are unlikely to apply to a Representative OfficeG as such an office is only permitted to carry on limited activities in the DIFCG and therefore must not have CustomersG .

            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM132/2014 (Made 21st August 2014). [VER10/06-14]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

      • AML 2 Overview and Purpose of the Module

        • AML 2 Guidance

          1. In this module, for simplicity, a reference to "money laundering" also includes terrorist financing and the financing of unlawful organisations (see AML Rule 3.1.1).

          Overview of the DIFC's AML regime

          2. The DIFCG is governed by two separate and complementary regimes in relation to AML regulation, both administered by the DFSA:
          a. The Federal regime: Under Article 3 of Federal Law No. 8 of 2004, the provisions of Federal Law No. 4 of 2002 on Combating Money Laundering and Terrorist Financing and Federal Law No. 7 of 2014 on Combating Terrorism Offences and the implementing regulations under those laws apply in the DIFCG . The DFSA, as the DIFC's supervisory authority for the purposes of those laws, is obliged to issue regulations and guidance in the DIFC relating to the regulation of anti-money laundering and combating the financing of terrorism and unlawful organisations. The DFSA may also impose administrative penalties for breaches of those laws and the implementing regulations. See Article 11(2) of Federal Law No. 4 of 2002 and also Article 17 of Cabinet Resolution No. 38 of 2014; and
          b. The DIFCG regime: Under Article 70(3) of the DIFC Regulatory Law 2004 (the "Regulatory Law"), the DFSA has jurisdiction for the regulation of anti-money laundering in the DIFCG . The DIFCG specific regime is contained in Chapter 2 of Part 4 of the Regulatory Law and any DFSA Rules made in connection with anti-money laundering measures, policies and procedures.
          3. Note that under Article 71(1) of the Regulatory Law, the DIFCG regime requires compliance with the Federal regime. It follows that a failure to comply with a provision of Federal Law No. 4 of 2002 on Combating Money Laundering and Terrorist Financing or Federal Law No. 7 of 2014 on Combating Terrorism Offences or the implementing regulations under those laws may also provide evidence of failure to comply with Article 71(1), which may then be addressed under the disciplinary and remedial provisions of the Regulatory Law and DFSA Rules.

          Purpose of the AML module

          4. The AML module has been designed to provide a single reference point for all persons and entities (collectively called Relevant PersonsG ) who are supervised by the DFSAG for Anti-Money LaunderingG (AML), Counter-Terrorist FinancingG (CTF) and sanctions compliance under the two regimes referred to above. Accordingly it applies to Authorised FirmsG , Authorised Market InstitutionsG , Designated Non-Financial Businesses and ProfessionsG (DNFBPs), and Registered AuditorsG . The AML module takes into consideration the fact that Relevant PersonsG have differing AML risk profiles. A Relevant PersonG should familiarise itself with this module, and assess the extent to which the chapters and sections apply to it.
          5. The AML module cannot be read in isolation from other relevant legislation or developments in international policy and best practice and, to the extent applicable, Relevant PersonsG need to be aware of, and take into account, how these aforementioned matters may impact on the Relevant Person'sG day to day operations. This is particularly relevant when considering United Nations Security Council Resolutions (UNSCRs) which apply in the DIFCG , and unilateral sanctions imposed by other jurisdictions which may apply to a Relevant PersonG depending on the Relevant Person'sG jurisdiction of origin, its business and/or customer base.

          Structure of the AML module

          6. Chapter 1 of this module contains an application table which should assist a Relevant PersonG to navigate through the module and to determine which chapters are applicable to it. Chapter 1 also specifies who is ultimately responsible for a Relevant Person'sG compliance with the AML module. The DFSAG expects the senior management of a Relevant PersonG to establish a robust and effective AML/CTF and sanctions compliance culture for the business.
          7. Chapter 2 provides an overview of the AML module and chapter 3 sets out the key definitions in the module. Note that not all definitions used in this module are capitalised.
          8. Chapter 4 explains the meaning of the risk-based approach (RBA), which should be applied when complying with this module. The RBA requires a risk-based assessment of a Relevant Person'sG business (in chapter 5) and its customers (in chapter 6). A risk-based assessment should be a dynamic process involving regular review, and the use of these reviews to establish the appropriate processes to match the levels of risk. No two Relevant PersonsG will have the same approach, and implementation of the RBA and the AML module permits a Relevant PersonG to design and implement systems that should be appropriate to their business and customers, with the obvious caveat being that such systems should be reasonable and proportionate in light of the AML risks. The DFSAG expects the RBA to determine the breadth and depth of the Customer Due Diligence (CDDG ) which is undertaken for a particular customer under chapter 7, though the DFSAG understands that there is an inevitable overlap between the risk-based assessment of the customer in chapter 6 and CDDG in chapter 7. This overlap may occur at the initial stages of customer on-boarding but may also occur when undertaking on-going CDDG .
          9. Chapter 8 sets out when and how a Relevant PersonG may rely on a third party to undertake all or some of its CDDG obligations. Reliance on a third-party CDDG reduces the need to duplicate CDDG already performed for a customer. Alternatively, a Relevant PersonG may outsource some or all of its CDDG obligations to a service provider.
          10. Chapter 9 sets out certain obligations in relation to correspondent banking, wire transfers and other matters which apply to Authorised PersonsG , and, in particular, to banks.
          11. Chapter 10 sets out a Relevant Person'sG obligations in relation to United Nations Security Council resolutions and sanctions, and government, regulatory and international findings (in relation to AML, terrorist financing and the financing of weapons of mass destruction).
          12. Chapter 11 sets out the obligation for a Relevant PersonG to appoint a Money Laundering Reporting Officer (MLROG ) and the responsibilities of such a person.
          13. Chapter 12 sets out the requirements for AML training and awareness. A Relevant PersonG should adopt the RBA when complying with chapter 12, so as to make its training and awareness proportionate to the AML risks of the business and the employee role.
          14. Chapter 13 contains the obligations applying to all Relevant PersonsG concerning Suspicious Activity ReportsG , which are required to be made under Federal Law No. 4 of 2002.
          15. Chapter 14 contains the general obligations applying to all Relevant PersonsG , including GroupG policies, notifications, record-keeping requirements and the annual AML Return.
          16. Chapter 15 sets out specific Rules applying to DNFBPsG , including the requirement to register with the DFSAG , and Chapter 16 contains certain transitional Rules.

          The U.A.E. criminal law

          17. The U.A.E.G criminal law applies in the DIFCG and, therefore, persons in the DIFCG must be aware of their obligations in respect of the criminal law as well as these Rules. Relevant U.A.E.G criminal laws include Federal Law No. 4 of 2002 on Combating Money Laundering and Terrorist Financing, Federal Law No. 7 of 2014 on Combating Terrorism Offences and the Penal Code of the U.A.E.
          18. Under Federal AML legislation, a PersonG may be criminally liable for the offence of money laundering if it intentionally commits specified acts in relation to funds which it knows are the proceeds of crime. The DFSA notes that:
          a. the failure to report suspicions of money laundering;
          b. "tipping off"; and
          c. assisting in the commission of money laundering,
          may each constitute a criminal offence that is punishable under the laws of the StateG .
          19. The U.A.E Central Bank has the power under Federal AML legislation to freeze funds or other assets suspected of relating to money laundering, terrorist financing or the financing of unlawful organisations. Federal authorities also have powers to apply for the confiscation of funds or other assets that have been used for such purposes.
          20. In a number of places in this module, Guidance cross-refers to specific requirements in Federal AML legislation. As interpretation of Federal AML legislation is a matter for the relevant Federal authorities rather than the DFSA, any question about those requirements should be directed to the relevant Federal authorities. Rules or Guidance in this module should not be relied upon to interpret or determine the application of the laws of the State.

          Financial Action Task Force

          21. The Financial Action Task ForceG (FATFG ) is an inter-governmental body whose purpose is the development and promotion of international standards to combat money laundering and terrorist financing.
          22. The DFSAG has had regard to the FATFG Recommendations in making these Rules. A Relevant PersonG may wish to refer to the FATFG Recommendations and interpretive notes to assist it in complying with these Rules. However, in the event that a FATFG Recommendation or interpretive note conflicts with a Rule in this module, the relevant Rule takes precedence.
          23. A Relevant PersonG may also wish to refer to the FATFG typology reports which may assist in identifying new money laundering threats and which provide information on money laundering and terrorist financing methods. The FATFG typology reports cover many pertinent topics for Relevant PersonsG , including corruption, new payment methods, money laundering using trusts and company service providers, and vulnerabilities of free trade zones. These typology reports can be found on the FATFG website www.fatf-gafi.org.
          24. The U.A.E.G , as a member of the United Nations, is required to comply with sanctions issued and passed by the United Nations Security Council (UNSC). These UNSC obligations apply in the DIFCG and their importance is emphasised by specific obligations contained in this module requiring Relevant PersonsG to establish and maintain effective systems and controls to comply with UNSC sanctions and resolutions (See chapter 10).
          25. The FATFG has issued guidance on a number of specific UNSC sanctions and resolutions regarding the countering of the proliferation of weapons of mass destruction. Such guidance has been issued to assist in implementing the targeted financial sanctions and activity based financial prohibitions. This guidance can be found on the FATFG website www.fatf-gafi.org.
          26. In relation to unilateral sanctions imposed in specific jurisdictions such as the European Union, the U.K. (HM Treasury) and the U.S. (Office of Foreign Assets Control), the DFSAG expects a Relevant PersonG to consider and take positive steps to ensure compliance where required or appropriate.

          Tax Issues and Exchange of Information for Tax purposes

          27. The DIFCG benefits from an international customer base with a growing number of customers who may be investing with financial institutions outside their country of residence. These factors create a risk of the services of Relevant PersonsG being used to hide assets which are subject to taxation, or to launder the unlawful proceeds of tax crimes.
          28. The DFSA is committed to protecting the DIFCG from being used to facilitate tax crimes and believes that strong AML policies, procedures, systems and controls, including robust customer due diligence requirements, are needed to mitigate the risk of tax crimes.
          29. Such measures will also ensure that a Relevant PersonG is able to comply with other international obligations such as the OECD Automatic Exchange of Information for Tax Purposes Programme and FATF Recommendations, which were updated in 2012 to expand the scope of money laundering predicate offences to include tax crimes (related to direct and indirect taxes).
          30. A Relevant PersonG should therefore establish and maintain appropriate policies, procedures, systems and controls to enable it to detect and deter the laundering of proceeds of tax crimes. For example, as part of its risk-based approach under chapter 4, it should consider its tax risk exposure as a result of the nature of its business, customers, products, services and other relevant factors. It should also conduct appropriate customer due diligence to identify customers who may be subject to tax crime risk (see also the Guidance after AML Rule 6.1.4).
          Derived from RM117/2013 [VER9/07-13]
          [Amended] DFSA RM132/2014 (Made 21st August 2014). [VER10/06-14]
          [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

      • AML 3 Interpretation and Terminology

        • AML 3.1 Interpretation

          • AML 3.1.1

            A reference in this module to "money laundering" in lower case includes a reference to terrorist financing and the financing of unlawful organisations, unless the context provides or implies otherwise.

            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 3.1.1 Guidance

              Chapter 6, section 6.2, of the General (GEN) module sets out how to interpret the Rulebook, including this module.

              Derived from RM117/2013 [VER9/07-13]

        • AML 3.2 Glossary for AML

          • AML 3.2 Guidance

            1. A Relevant PersonG should note that, in order to make this module easier to read, some of the defined terms in this module have not had the initial letter of each word capitalised in the same way as in other Rulebook modules.
            2. Some of the defined terms and abbreviations in this module may also be found in the DFSA'sG Glossary module (GLO). Where a defined term in this module does not appear in Rule 3.2.1, a Relevant PersonG should look in GLO to find the meaning.
            3. In accordance with the interpretation provisions in the Regulatory LawG , a reference to legislation includes a reference to the legislation as amended or re-enacted from time to time.
            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

          • AML 3.2.1

            In this module, the terms and abbreviations listed in the table below have the following meanings:

            AML Means either "anti-money laundering" or this Anti-Money Laundering, Counter-Terrorist Financing and Sanctions module, depending on the context.
            AMLSCUG Means the Anti-Money Laundering Suspicious Cases Unit, the Financial Intelligence Unit of the U.A.E. Central Bank.
            Authorised PersonG Means an Authorised FirmG or an Authorised Market InstitutionG .
            beneficial owner Means, in relation to a customer, a natural person:
            (a) who ultimately controls, directly or indirectly, a customer;
            (b) who, in relation to a customer which is a legal person or arrangement, exercises (whether directly or indirectly) ultimate effective control over the person or arrangement, or the management of such person or arrangement;
            (c) who ultimately owns or has an ownership interest in the customer, whether legally or beneficially, directly or indirectly;
            (d) on whose behalf or for whose benefit a transaction is being conducted; or
            (e) on whose instructions the signatories of an account, or any intermediaries instructing such signatories, are for the time being accustomed to act.
            A person not falling into (a) or (b) is not a beneficial owner by reason of (c) or (d) if, having regard to a risk-based assessment of the customer, the ownership interest is small and in the circumstances poses no or negligible risk of money laundering.

            In (a) to (e), a reference to a "customer" includes a customer account, customer assets and the underlying legal person or arrangements which constitute or make up the customer, customer account or customer assets.
            BranchG Means a place of business within the DIFCG :
            (a) which has no separate legal personality;
            (b) which forms a legally dependant part of a Relevant PersonG whose principal place of business and head office is in a jurisdiction other than the DIFCG ; and
            (c) through which the Relevant PersonG carries on business in or from the DIFCG .
            Cabinet Resolution No. 38 of 2014 Means Federal Cabinet Resolution No. 38 of 2014 on the Implementing Regulations of Federal Law No. 4 of 2002.
            ClientG Has the meaning in chapter 2 of the Conduct of Business module.
            company service provider Means a person, not falling into parts (1)(a) to (e) or (g) of the definition of a DNFBPG that, by way of business, provides any of the following services to a customer:
            (a) acting as a formation agent of legal persons;
            (b) acting as (or arranging for another person to act as) a director or secretary of a company, a partner of a partnership, or a similar position in relation to other legal persons;
            (c) providing a registered office, business address or accommodation, correspondence or administrative address for a company, a partnership or any other legal person or arrangement; or
            (d) acting as (or arranging for another person to act as) a nominee shareholder for another person.
            Contract of InsuranceG Has the meaning in GEN Rule A4.1.1.
            CTF Means counter-terrorist financing.
            customer Unless otherwise provided, means:
            (a) a person where, in relation to a business relationship between the person and a Relevant PersonG , there is a firm intention or commitment by each party to enter into a contractual relationship or where there is a firm commitment by each party to enter into a transaction, in connection with a product or service provided by the Relevant PersonG ;
            (b) a ClientG of an Authorised FirmG ;
            (c) a MemberG or prospective MemberG of, or an applicant for admission of SecuritiesG to trading on, an Authorised Market InstitutionG ;
            (d) in relation to a Single Family OfficeG , a member of the Single FamilyG ; or
            (e) a person with whom a Relevant PersonG is otherwise establishing or has established a business relationship.
            Customer Due DiligenceG (CDD) Has the meaning in Rule 7.3.1.
            Designated Non-Financial Business or ProfessionG (DNFBP) Means:
            (1) The following class of persons whose business or profession is carried on in or from the DIFCG :
            (a) a real estate developer or agency which carries out transactions with a customer involving the buying or selling of real property;
            (b) a dealer in precious metals or precious stones;
            (c) a dealer in any saleable item of a price equal to or greater than $15,000;
            (d) a law firm, notary firm, or other independent legal business;
            (e) an accounting firm, audit firm or insolvency firm;
            (f) a company service provider; or
            (g) a Single Family OfficeG .
            (2) A person who is an Authorised PersonG or a Registered AuditorG is not a DNFBPG .
            DIFCG entity Means a legal person which is incorporated or registered in the DIFCG (excluding a registered BranchG ).
            Domestic FundG A FundG established or domiciled in the DIFCG .
            EmployeeG Means an individual:
            (a) who is employed or appointed by a person in connection with that person's business, whether under a contract of service or for services or otherwise; or
            (b) whose services, under an arrangement between that person and a third party, are placed at the disposal and under the control of that person.
            Enhanced Customer Due DiligenceG Means undertaking Customer Due DiligenceG and the enhanced measures under Rule 7.4.1.
            FATFG Means the Financial Action Task Force.G
            FATFG Recommendations Means the publication entitled the "International Standards on Combatting Money Laundering and the Financing of Terrorism and Proliferation" as published and amended from time to time by FATFG .
            Federal AML legislation Means all U.A.E Federal Laws and their implementing regulations relating to money laundering, terrorist financing and the financing of unlawful organisations, as well as sanctions compliance, including Federal Law No. 4 of 2002, Federal Law No. 7 of 2014 and Cabinet Resolution No. 38 of 2014.
            Federal Law No. 4 of 2002 Means U.A.EG Federal Law No. 4 of 2002 on Combating Money Laundering and Terrorist Financing.
            Federal Law No. 7 of 2014 Means U.A.E Federal Law No. 7 of 2014 on Combating Terrorism Offences.
            Financial InstitutionG A regulated or unregulated entity, whose activities are primarily financial in nature.
            Financial Services RegulatorG Means a regulator of financial services activities established in a jurisdiction other than the DIFC.
            Governing BodyG Means the board of directors, partners, committee of management or other governing body of:
            (a) a Body CorporateG or PartnershipG ; or
            (b) an unincorporated association carrying on a trade or business, with or without a view to profit.
            GroupG Means a GroupG of entities which includes an entity (the 'first entity') and:
            (a) any parent of the first entity; and
            (b) any subsidiaries (direct or indirect) of the parent or parents in (a) or the first entity; or
            (c) for a legal person which is not a body corporate, refers to that person and any other associated legal persons who are in an equivalent relationship to that in (a) and (b).
            International Organisation Means an organisation established by formal political agreement between member countries, where the agreement has the status of an international treaty, and the organisation is recognised in the law of countries which are members.
            Law Means the Regulatory Law.
            legal person Means any entity other than a natural person that can establish a customer relationship with a Relevant PersonG or otherwise own property. This can include companies, bodies corporate or unincorporate, trusts, foundations, anstalten, partnerships, associations, states and governments and other relevantly similar entities.
            MemberG A person admitted as a member of an Authorised Market InstitutionG in accordance with its Business Rules.
            Money Laundering Reporting OfficerG (MLRO) Means the person appointed by a Relevant PersonG pursuant to Rule 11.2.1(1).
            natural person Means an individual.
            person Means a natural or legal person.
            Politically Exposed PersonG (PEP) Means a natural person (and includes, where relevant, a family member or close associate) who is or has been entrusted with a prominent public function, whether in the StateG or elsewhere, including but not limited to, a head of state or of government, senior politician, senior government, judicial or military official, ambassador, senior person in an International Organisation, senior executive of a state owned corporation, an important political party official, or a member of senior management or an individual who has been entrusted with similar functions such as a director or a deputy director.

            This definition does not include middle ranking or more junior individuals in the above categories.
            Public Listed CompanyG Has the meaning given in Schedule 1 to the Regulatory Law.
            Registered AuditorG Has the meaning given to that term in the Regulatory LawG
            Regulated ExchangeG Means an exchange regulated by a Financial Services RegulatorG .
            Regulated Financial InstitutionG A person who does not hold a LicenceG but who is authorised in a jurisdiction other than the DIFCG to carry on any financial service by another Financial Services RegulatorG .
            Relevant PersonG Has the meaning given to that term in Rule 1.1.2.
            senior management Means, in relation to a Relevant PersonG every member of the Relevant Person'sG executive management and includes:
            (a) for a DIFCG entity, every member of the Relevant Person'sG Governing BodyG ;
            (b) for a BranchG , the person or persons who control the day to day operations of the Relevant PersonG in the DIFCG and would include, at a minimum, the SEO or equivalent, such as the managing director; or
            (c) for a Registered AuditorG , every member of the Relevant Person'sG executive management in the U.A.E.G
            Shell Bank A bank that has no physical presence in the country in which it is incorporated or licensed and which is not affiliated with a regulated financial group that is subject to effective consolidated supervision.
            Simplified Customer Due DiligenceG Means Customer Due DiligenceG as modified under Rule 7.5.1.
            Single Family Has the meaning given to that term in the DIFCG Single Family OfficeG Regulations.
            Single Family OfficeG Has the meaning given to that term in the DIFCG Single Family OfficeG Regulations.
            source of funds Means the origin of customer's funds which relate to a transaction or service and includes how such funds are connected to a customer's source of wealth.
            source of wealth Means how the customer's global wealth or net worth is or was acquired or accumulated.
            StateG Means the U.A.E.
            Suspicious Activity Report (SAR) Means a report in the prescribed format regarding suspicious activity (including a suspicious transaction) made to the AMLSCUG under Rule 13.3.1(c).
            transaction Means any transaction undertaken by a Relevant PersonG for or on behalf of a customer in the course of carrying on a business in or from the DIFCG .
            unlawful organisation Means an organisation the establishment or activities of which have been declared to be criminal under Federal AML legislation.
            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM132/2014 (Made 21st August 2014). [VER10/06-14]
            [Amended] DFSA RM156/2015 (Made 9th December 2015) [VER35/02-16]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

      • AML 4 Applying a Risk-Based Approach

        Figure 1. The Risk-Based Approach (RBA)

        Derived from RM117/2013 [VER9/07-13]

        • AML 4.1 The Risk-Based Approach

          • AML 4.1.1

            A Relevant PersonG must:

            (a) assess and address its AML risks under this module by reviewing the risks to which the person is exposed as a result of the nature of its business, customers, products, services and any other matters which are relevant in the context of money laundering and then adopting a proportionate approach to mitigate those risks; and
            (b) ensure that, when undertaking any risk-based assessment for the purposes of complying with a requirement of this module, such assessment is:
            (i) objective and proportionate to the risks;
            (ii) based on reasonable grounds;
            (iii) properly documented; and
            (iv) reviewed and updated at appropriate intervals.
            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 4.1.1 Guidance

              1. Rule 4.1.1 requires a Relevant PersonG to adopt an approach to AML which is proportionate to the risks. This is called the "risk-based approach" ("RBA") and is illustrated in figure 1 above. The DFSAG expects the RBA to be a key part of the Relevant Person'sG money laundering compliance culture and to cascade down from the senior management to the rest of the organisation. Embedding the RBA within its business allows a Relevant PersonG to make decisions and allocate AML resources in the most efficient and effective way.
              2. In implementing the RBA, a Relevant PersonG is expected to have in place processes to identify and assess money laundering risks. After the risk assessment, the Relevant PersonG is expected to monitor, manage and mitigate the risks in a way that is proportionate to the Relevant Person's exposure to those money laundering risks. The general principle is that where there are higher risks of money laundering, a Relevant PersonG is required to take enhanced measures to manage and mitigate those risks, and that, correspondingly, when the risks are lower, simplified measures are permitted.
              3. The RBA discourages a "tick-box" approach to AML. Instead a Relevant PersonG is required to assess relevant money laundering risks and adopt a proportionate response to such risks. The outcome of using the RBA is akin to using a sliding scale, where the type of CDDG undertaken on each customer will ultimately depend on the outcome of the risk-based assessment made of such customer under this chapter.
              4. The Rules regarding record-keeping for the purposes of this module are in section 14.4. These Rules apply in relation to Rule 4.1.1(b)(iii).
              Derived from RM117/2013 [VER9/07-13]
              [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

      • AML 5 Business Risk Assessment

        Figure 2. Business risk-based assessment

        Derived from RM117/2013 [VER9/07-13]

        • AML 5.1 Assessing business AML risks

          • AML 5.1.1

            A Relevant PersonG must:

            (a) take appropriate steps to identify and assess money laundering risks to which its business is exposed, taking into consideration the nature, size and complexity of its activities;
            (b) when identifying and assessing the risks in (a), take into account, to the extent relevant, any vulnerabilities relating to:
            (i) its type of customers and their activities;
            (ii) the countries or geographic areas in which it does business;
            (iii) its products, services and activity profiles;
            (iv) its distribution channels and business partners;
            (v) the complexity and volume of its transactions;
            (vi) the development of new products and new business practices, including new delivery mechanisms, channels and partners; and
            (vii) the use of new or developing technologies for both new and pre-existing products;
            (c) take appropriate measures to ensure that any risk identified as part of the assessment in (a) is taken into account in its day to day operations, including in relation to:
            (i) the development of new products;
            (ii) the taking on of new customers; and
            (iii) changes to its business profile.
            Derived from RM117/2013 [VER9/07-13]

          • AML 5.1.2

            A Relevant PersonG must use the information obtained in undertaking its business risk assessment to:

            (a) develop and maintain its AML policies, procedures, systems and controls required by Rule 5.2.1;
            (b) ensure that its AML policies, procedures, systems and controls adequately mitigate the risks identified as part of the assessment in Rule 5.1.1;
            (c) assess the effectiveness of its AML policies, procedures, systems and controls as required by Rule 5.2.1(c);
            (d) assist in allocation and prioritisation of AML resources; and
            (e) assist in the carrying out of the customer risk assessment under chapter 6.
            Derived from RM117/2013 [VER9/07-13]

            • AML 5.1.2 Guidance

              1. Unless a Relevant PersonG understands the money laundering risks to which it is exposed, it cannot take appropriate steps to prevent its business being used for the purposes of money laundering. Money laundering risks vary from business to business depending on the nature of the business, the type of customers a business has, and the nature of the products and services sold.
              2. Using the RBA, a Relevant PersonG should assess its own vulnerabilities to money laundering and take all reasonable steps to eliminate or manage such risks. The results of this assessment will also feed into the Relevant Person'sG risk assessment of its customers under chapter 6. For instance, if a Relevant PersonG reasonably concludes that a particular business line poses a negligible risk of money laundering, it may decide, using the RBA, that all its customers in that business line should be treated as posing a lower risk of money laundering, and it may apply Simplified Customer Due DiligenceG .
              Derived from RM117/2013 [VER9/07-13]
              [Amended] RM196/2016 (Made 7th December 2016). [VER13/02-17]

        • AML 5.2 AML Systems and Controls

          • AML 5.2.1

            A Relevant PersonG must:

            (a) establish and maintain effective policies, procedures, systems and controls to prevent opportunities for money laundering in relation to the Relevant PersonG and its activities;
            (b) ensure that its systems and controls in (a):
            (i) include the provision to the Relevant Person'sG senior management of regular management information on the operation and effectiveness of its AML systems and controls necessary to identify, measure, manage and control the Relevant Person'sG money laundering risks;
            (ii) enable it to determine whether a customer or a beneficial owner is a Politically Exposed PersonG ; and
            (iii) enable the Relevant PersonG to comply with these Rules and Federal AML legislation; and
            (c) ensure that regular risk assessments are carried out on the adequacy of the Relevant Person'sG AML systems and controls to ensure that they continue to enable it to identify, assess, monitor and manage money laundering risk adequately, and are comprehensive and proportionate to the nature, scale and complexity of its activities.
            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 5.2.1 Guidance

              In Rule 5.2.1(c) the regularity of risk assessments will depend on the nature, size and complexity of the Relevant Person'sG business.

              Derived from RM117/2013 [VER9/07-13]

      • AML 6 Customer Risk Assessment

        Figure 3. Customer risk-based assessment

        Derived from RM117/2013 [VER9/07-13]

        • AML 6 Guidance

          1. This chapter prescribes the risk-based assessment that must be undertaken by a Relevant PersonG on a customer and the proposed business relationship, transaction or product. The outcome of this process is to produce a risk rating for a customer, which determines the level of Customer Due DiligenceG (CDD) which will apply to that customer under chapter 7. That chapter prescribes the requirements of CDDG and of Enhanced CDDG for high risk customers and Simplified CDDG for low risk customers.
          2. CDDG in the context of AML refers to the process of identifying a customer, verifying such identification and monitoring the customer's business and money laundering risk on an ongoing basis. CDDG is required to be undertaken following a risk-based assessment of the customer and the proposed business relationship, transaction or product.
          3. Relevant PersonsG should note that the ongoing CDDG requirements in Rule 7.6.1 require a Relevant PersonG to ensure that it reviews a customer's risk rating to ensure that it remains appropriate in light of the AML risks.
          4. The DFSAG is aware that in practice there will often be some degree of overlap between the customer risk assessment and CDDG . For example, a Relevant PersonG may undertake some aspects of CDDG , such as identifying a beneficial owner, when it performs a risk assessment of the customer. Conversely, a Relevant PersonG may also obtain relevant information as part of CDDG which has an impact on its customer risk assessment. Examples of such relevant information include information on the source of funds or wealth or information on the ownership and control structure of the customer. Where information obtained as part of CDDG of a customer affects the risk rating of a customer, the change in risk rating should be reflected in the degree of CDDG undertaken.
          Derived from RM117/2013 [VER9/07-13]

        • AML 6.1 Assessing Customer AML Risks

          • AML 6.1.1

            (1) A Relevant PersonG must:
            (a) undertake a risk-based assessment of every customer; and
            (b) assign the customer a risk rating proportionate to the customer's money laundering risks.
            (2) The customer risk assessment in (1) must be completed prior to undertaking Customer Due DiligenceG for new customers, and whenever it is otherwise appropriate for existing customers.
            (3) When undertaking a risk-based assessment of a customer under (1)(a) a Relevant PersonG must:
            (a) identify the customer and any beneficial owner;
            (b) obtain information on the purpose and intended nature of the business relationship;
            (c) take into consideration the nature of the customer, its ownership and control structure, and its beneficial ownership (if any);
            (d) take into consideration the nature of the customer business relationship with the Relevant PersonG ;
            (e) take into consideration the customer's country of origin, residence, nationality, place of incorporation or place of business;
            (f) take into consideration the relevant product, service or transaction; and
            (g) take into consideration the outcomes of business risk assessment under chapter 5.
            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

          • AML 6.1.2

            A Relevant PersonG must not establish a business relationship with the customer which is a legal person if the ownership or control arrangements of the customer prevent the Relevant PersonG from identifying one or more of the customer's beneficial owners.

            Derived from RM117/2013 [VER9/07-13]

            • AML 6.1.2 Guidance [Deleted]

              [Deleted] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 6.1.2 Guidance [Deleted]

              [Deleted] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 6.1.2 [Deleted]

              [Deleted] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

          • AML 6.1.3

            A Relevant PersonG must not establish or maintain a business relationship with a Shell BankG .

            Derived from RM196/2016 (Made 7th December 2016). [VER13/02-17]

          • AML 6.1.4

            A Relevant PersonG must not establish or maintain an anonymous account, an account in a fictitious name, or a nominee account which is held in the name of one person but which is controlled by or held for the benefit of another person whose identity has not been disclosed to the Relevant PersonG .

            Derived from DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 6.1.4 Guidance on the customer risk assessment

              1. In assessing the nature of a customer, a Relevant PersonG should consider such factors as the legal structure of the customer, the customer's business or occupation, the location of the customer's business and the commercial rationale for the customer's business model.
              2. In assessing the customer business relationship, a Relevant PersonG should consider how the customer is introduced to the Relevant PersonG and how the customer is serviced by the Relevant PersonG , including for example, whether the PersonG will be a private banking customer, will open a bank account or whether the business relationship will be purely advisory.
              3. The risk assessment of a customer, which is illustrated in figure 3 above, requires a Relevant PersonG to allocate an appropriate risk rating to every customer. The DFSAG would expect risk ratings to be either descriptive, such as "low", "medium" or "high", or a sliding numeric scale such as 1 for the lowest risk to 10 for the highest. Depending on the outcome of a Relevant Person'sG assessment of its customer's money laundering risk, a Relevant PersonG should decide to what degree CDDG will need to be performed.
              4. Using the RBA, a Relevant PersonG could, when assessing two customers with near identical risk profiles, consider that one is high risk and the other low risk. This may occur, for example, where both customers may be from the same high risk country, but one customer may be a customer in relation to a low risk product or may be a long-standing customer of a GroupG company who has been introduced to the Relevant PersonG .
              5. In AML Rule 6.1.2, ownership arrangements which may prevent the Relevant PersonG from identifying one or more beneficial owners include bearer shares and other negotiable instruments in which ownership is determined by possession.
              Derived from DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 6.1.4 Guidance on the term "customer"

              6. The point at which a person becomes a customer will vary from business to business. However, the DFSAG considers that it would usually occur at or prior to the business relationship being formalised, for example, by the signing of a customer agreement or the acceptance of terms of business.
              7. The DFSAG does not consider that a person would be a customer of a Relevant PersonG merely because such person receives marketing information from a Relevant PersonG or where a Relevant PersonG refers a person who is not a customer to a third party (including a GroupG member).
              8. The DFSAG considers that a counterparty would generally be a "customer" for the purposes of this module and would therefore require a Relevant PersonG to undertake CDDG on such a person. However, this would not include a counterparty in a transaction undertaken on a Regulated ExchangeG . Nor would it include suppliers of ordinary business services, for consumption by the Relevant PersonG such as cleaning, catering, stationery, IT or other similar services.
              9. A Representative OfficeG should not have any customers in relation to its DIFCG operations.
              Derived from DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 6.1.2 Guidance on high risk customers

              10. In complying with AML Rule 6.1.1, the DFSAG considers that a Relevant PersonG should consider the following factors, which may indicate that a customer poses a higher risk of money laundering:
              a. the business relationship is conducted in unusual circumstances (e.g. significant unexplained geographic distance between the location of the Relevant PersonG and the customer);
              b. legal persons or arrangements that are personal investment vehicles;
              c. companies that have nominee shareholders or directors or shares in bearer form;
              d. businesses that are cash-intensive;
              e. the ownership structure of the legal person appears unusual or excessively complex given the nature of the legal person's business or activities;
              f. countries identified by credible sources, such as mutual evaluation or detailed assessment reports or published follow-up reports, as not having adequate AML systems;
              g. countries subject to sanctions, embargos or similar measures issued by, for example, the United Nations Security Council or identified by credible sources as having significant levels of corruption or other criminal activity;
              h. countries or geographic areas identified by credible sources as providing funding or support for terrorist activities, or that have designated terrorist organisations operating within their country;
              i. a person not meeting the definition of a PEPG but whose high profile or influence poses an elevated risk of corruption;
              j. anonymous transactions (which may include cash);
              k. private banking relationships;
              l. non-face-to-face business relationships or transactions;
              m. payment received from unknown or un-associated third parties;
              n. discretionary trusts; and
              o. charitable trusts and waqfs.
              Derived from DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 6.1.2 Guidance on low risk customers

              11. In complying with AML Rule 6.1.1, the DFSA considers that the following types of customers may pose a lower risk of money laundering:
              a. an Authorised FirmG ;
              b. an Authorised Market InstitutionG ;
              c. a Regulated Financial InstitutionG whose entire operations are subject to regulation and supervision, including AML regulation and supervision, in a jurisdiction with AML regulations which are equivalent to the standards set out in the FATFG recommendations;
              d. a SubsidiaryG of a Regulated Financial InstitutionG referred to in (c), if the law that applies to the Parent ensures that the SubsidiaryG also observes the same AML standards as its Parent;
              e. a law firm, notary firm, or other independent legal business that carries on its business in or from the DIFCG ;
              f. an accounting firm, Registered AuditorG or other audit firm or insolvency firm that carries on its business in or from the DIFCG ;
              g. a person carrying on a business in another jurisdiction that is equivalent to the businesses specified in (e) or (f) if:
              (i) the jurisdiction has AML regulations which are equivalent to the standards set out in the FATFG Recommendations; and
              (ii) the person's entire operations are subject to AML regulation and supervision by a competent authority;
              h. a company whose SecuritiesG are listed on a Regulated ExchangeG and which is subject to disclosure obligations broadly equivalent to those set out in the Markets RulesG ;
              i. a government body or a non-commercial government entity in the State or a FATFG member country; and
              j. a customer where the business relationship is limited to providing one or more of the following products or services:
              (i) a Contract of InsuranceG which is non-life insurance;
              (ii) a Contract of InsuranceG which is a life insurance product with no investment return or redemption or surrender value;
              (iii) a Contract of InsuranceG which is life insurance where the annual premium is no more than $1,000 or where a single premium of no more than $2,500 is paid;
              (iv) a Contract of InsuranceG for the purposes of a pension scheme where the contract contains no surrender clause and cannot be used as collateral;
              (v) a Contract of InsuranceG which is a reinsurance contract not falling into (i) to (iv) which is ceded by an insurer who is a Regulated Financial InstitutionG ;
              (vi) a pension, superannuation or similar scheme which provides retirement benefits to employees, where contributions are made by an employer or by way of deduction from an Employee's wages and the scheme rules do not permit the assignment of a member's interest under the scheme; or
              (vii) arbitration, litigation or advice on litigation prospects.
              12. The assignment of a low risk customer AML rating should not be automatic and should be applied only after an assessment of a customer's actual AML risk as required in AML Rule 6.1.1. In conducting this assessment, however, Relevant Persons may wish to make use of, and build upon, the risk assessments it has conducted under AML Rule 5.1.1.
              Derived from DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 6.1.2 Guidance on Shell Banks

              13. AML Rule 6.1.3 prohibits a Relevant PersonG from establishing or maintaining a business relationship with a Shell Bank.G A Shell BankG is a bank that has no physical presence in the country in which it is incorporated or licensed, and is not affiliated with a regulated financial GroupG that is subject to effective consolidated supervision. The DFSA does not consider that the existence of a local agent or low level staff constitutes physical presence.
              Derived from DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 6.1.2 Guidance on fictitious and anonymous accounts

              14. A Relevant PersonG should note that, in addition to the prohibition in AML Rule 6.1.4 against establishing anonymous or fictitious accounts or accounts for unknown persons, the Federal AML legislation also prohibits the opening of accounts held under borrowed, mock or fake names or with numbers without the names of account holders.
              15. A Relevant PersonG may internally use a numbered account or an account with an abbreviated name. However, it must ensure that the account holder is subject to the same customer due diligence procedures as apply to all other account holders. Also, it should ensure that the identity of the account holder is known to a sufficient number of its staff, and that staff performing AML, compliance, audit and other oversight functions have full access to information about the account holder. Finally, a numbered account or an account with an abbreviated name should only be used for internal purposes.
              Derived from DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 6.1.2 Guidance on Tax Issues

              16. A Relevant PersonG should, when carrying out a customer risk assessment, consider and assess the tax crime risk associated with the customer and factor such risks into the overall risk assigned to that customer. Many of the factors described in Guidance item 10 on higher risk customers could also be an indicator of potential tax crimes, for example, the use of complex or unusual corporate structures, the customer's business not being located where the customer lives (without adequate explanation), unusual customer interface or reluctance by the customer to communicate directly with the Relevant PersonG or the customer being unable or unwilling to disclose the source of funds and wealth.
              17. If it is justified based on the risk assessment and where concerns arise, a Relevant PersonG may wish to seek comfort from its customers by obtaining disclosures or declarations to ascertain if a legitimate explanation exists for the concerns and therefore to allay those concerns.
              Derived from DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

      • AML 7 Customer Due Diligence

        Figure 4. CDD

        Derived from RM117/2013 [VER9/07-13]

        • AML 7.1 Requirement to Undertake Customer Due Diligence

          • AML 7.1.1

            (1) A Relevant PersonG must:
            (a) undertake Customer Due DiligenceG under Rule 7.3.1 for each of its customers; and
            (b) in addition to (a), undertake Enhanced Customer Due DiligenceG under Rule 7.4.1 in respect of any customer it has assigned as high risk.
            (2) A Relevant PersonG may undertake Simplified Customer Due DiligenceG in accordance with Rule 7.5.1 by modifying Customer Due DiligenceG under Rule 7.3.1 for any customer it has assigned as low risk.
            Derived from RM117/2013 [VER9/07-13]

            • AML 7.1.1 Guidance

              A Relevant PersonG should undertake CDDG in a manner proportionate to the customer's money laundering risks identified under Rule 6.1.1(1). This means that all customers are subject to CDDG under Rule 7.3.1. However, for high risk customers, additional Enhanced CDDG measures should also be undertaken under Rule 7.4.1. For low risk customers, Rule 7.3.1 may be modified according to the risks in accordance with Rule 7.5.1.

              Derived from RM117/2013 [VER9/07-13]

        • AML 7.2 Timing of Customer Due Diligence

          • AML 7.2.1

            (1) A Relevant PersonG must:
            (a) undertake the appropriate Customer Due DiligenceG under AML Rule 7.3.1(1)(a) to (c) when it is establishing a business relationship with a customer; and
            (b) undertake the appropriate Customer Due DiligenceG under AML Rule 7.3.1(1)(d) after establishing a business relationship with a customer.
            (2) A Relevant PersonG must also undertake appropriate Customer Due DiligenceG if, at any time:
            (a) in relation to an existing customer, it doubts the veracity or adequacy of documents, data or information obtained for the purposes of Customer Due DiligenceG ;
            (b) it suspects money laundering in relation to a person; or
            (c) there is a change in risk-rating of the customer, or it is otherwise warranted by a change in circumstances of the customer.
            (3) A Relevant PersonG may establish a business relationship with a customer before completing the verification required by AML Rule 7.3.1 if the following conditions are met:
            (a) deferral of the verification of the customer or beneficial owner is necessary in order not to interrupt the normal conduct of a business relationship;
            (b) there is little risk of money laundering occurring and any such risks identified can be effectively managed by the Relevant PersonG ;
            (c) in relation to a bank account opening, there are adequate safeguards in place to ensure that the account is not closed and transactions are not carried out by or on behalf of the account holder (including any payment from the account to the account holder) before verification has been completed; and
            (d) subject to (4), the relevant verification is completed as soon as reasonably practicable and in any event no later than 30 days after the establishment of a business relationship.
            (4) Where a Relevant PersonG is not reasonably able to comply with the 30 day requirement in (3)(d), it must, prior to the end of the 30 day period:
            (a) document the reason for its non-compliance;
            (b) complete the verification in (3) as soon as possible; and
            (c) record the non-compliance event in its annual AML Return.
            (5) The DFSAG may specify a period within which a Relevant PersonG must complete the verification required by (3) failing which the DFSAG may direct the Relevant PersonG to cease any business relationship with the customer.
            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 7.2.1 Guidance

              1. For the purposes of Rule 7.2.1(2)(a), examples of situations which might lead a Relevant PersonG to have doubts about the veracity or adequacy of documents, data or information previously obtained could be where there is a suspicion of money laundering in relation to that customer, where there is a material change in the way that the customer's account is operated, which is not consistent with the customer's business profile, or where it appears to the Relevant PersonG that a person other than the customer is the real customer.
              2. In Rule 7.2.1(3)(a), situations that the Relevant PersonG may take into account include, for example, accepting subscription monies during a short offer period or executing a time critical transaction, which if not executed immediately, would or may cause a customer to incur a financial loss due to price movement or loss of opportunity or when a customer seeks immediate insurance cover.
              3. When complying with Rule 7.2.1, a Relevant PersonG should also, where relevant, consider Rule 7.7.1 regarding failure to conduct or complete CDDG and chapter 13 regarding SARs and tipping off.
              4. For the purposes of Rule 7.2.1(3)(d), the DFSAG considers that in most situations as soon as reasonably practicable would be within 30 days after the establishment of a business relationship. However, it will depend on the nature of the customer business relationship.
              Derived from RM117/2013 [VER9/07-13]

        • AML 7.3 Customer Due Diligence Requirements

          • AML 7.3.1

            (1) In undertaking Customer Due DiligenceG required by AML Rule 7.1.1(1)(a) a Relevant Person must:
            (a) verify the identity of the customer and any beneficial owner on the basis of original or properly certified documents, data or information issued by or obtained from a reliable and independent source;
            (b) understand the customer's source of funds;
            (c) understand the customer's source of wealth; and
            (d) undertake on-going due diligence of the customer business relationship under AML Rule 7.6.1.
            (2) In complying with (1)(a) for life insurance or other similar policies, a Relevant PersonG must:
            (a) verify the identity of any named beneficiaries of the insurance policy; and
            (b) verify the identity of the persons in any class of beneficiary, or where these are not identifiable, ensure that it obtains sufficient information to be able to verify the identity of such persons at the time of payout of the insurance policy.
            (3) Where a customer, or a beneficial owner of the customer, is a Politically Exposed PersonG , a Relevant PersonG must ensure that, in addition to (1) it also:
            (a) increases the degree and nature of monitoring of the business relationship, in order to determine whether the customer's transactions or activities appear unusual or suspicious; and
            (b) obtains the approval of senior management to commence a business relationship with the customer.
            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 7.3.1 Guidance on CDD

              1. A Relevant PersonG should, in complying with AML Rule 7.3.1(1)(a), and adopting the RBA, obtain, verify and record, for every customer who is a natural person, the following identification information:
              a. full name (including any alias);
              b. date of birth;
              c. nationality;
              d. legal domicile; and
              e. current residential address (not a P.O. box).
              2. Items (a) to (c) above should be obtained from a current valid passport or, where a customer does not possess a passport, an official identification document which includes a photograph. The concept of domicile generally refers to the place which a person regards as his permanent home and with which he has the closest ties or which is his place of origin.
              3. A Relevant PersonG should, in complying with AML Rule 7.3.1(1)(a), and adopting the RBA, obtain, verify and record, for every customer which is a legal person, the following identification information:
              a. full business name and any trading name;
              b. registered or business address;
              c. date of incorporation or registration;
              d. place of incorporation or registration;
              e. a copy of the certificate of incorporation or registration;
              f. a valid commercial or professional licence;
              g. the identity of the directors, partners, trustees or equivalent persons with executive authority of the legal person; and
              h. for a trust, a certified copy of the trust deed to ascertain the nature and purpose of the trust and documentary evidence of the appointment of the current trustees.
              4. In complying with AML Rule 7.3.1(1)(a), it may not always be possible to obtain original documents. Where identification documents cannot be obtained in original form, for example, because a Relevant PersonG has no physical contact with the customer, the Relevant PersonG should obtain a copy certified as a true copy by a person of good standing such as a registered lawyer or notary, a chartered accountant, a bank manager, a police officer, an EmployeeG of the person's embassy or consulate, or other similar person. The DFSAG considers that downloading publicly-available information from an official source (such as a regulator's or other official government website) is sufficient to satisfy the requirements of AML Rule 7.3.1(1)(a). The DFSAG also considers that CDDG information and research obtained from a reputable company or information-reporting agency may also be acceptable as a reliable and independent source as would banking references and, on a risk-sensitive basis, information obtained from researching reliable and independent public information found on the internet or on commercial databases.
              5. For higher risk situations the DFSAG would expect identification information to be independently verified, using both public and non-public sources. For lower risk situations, not all of the relevant identification information would need to be verified.
              6. In complying with AML Rule 7.3.1(1) (b), a Relevant PersonG is required to "understand" a customer's source of funds. This process involves understanding where the funds for a particular service or transaction will come from (e.g. a specific bank account held with a specific financial institution) and whether that funding is consistent with the customer's source of wealth. The best way of understanding the source of funds is by obtaining information directly from the customer, which will usually be obtained during the on-boarding process. The Relevant Person should keep appropriate evidence of how they were able to understand the source of funds, for example, a copy of the customer account opening form, customer questionnaire or a memo of a call with the relationship manager at a financial institution
              7. In complying with AML Rule 7.3.1(1)(c), a Relevant PersonG is required to "understand" a customer's source of wealth. For a natural person, this might include questions about the source of wealth in an application form or customer questionnaire. The understanding may also be gained through interactions with the relationship manager at a financial institution. It could also be gained by obtaining information from a reliable and independent publicly available source, for example, from published accounts or a reputable news source. The understanding need not be a dollar for dollar account of the customer's global wealth, but it should provide sufficient detail to give the Relevant PersonG comfort that the customer's wealth is legitimate and also to provide a base line for subsequent ongoing due diligence. The understanding of the customer's source of wealth should be clearly documented.
              8. Understanding a customer's source of funds and wealth is also important for the purposes of undertaking ongoing due diligence under AML Rule 7.3.1(1)(d). Initial funding of an account or investments from an unknown or unexpected source may pose a money laundering risk. Similarly, a sound understanding of the customer's source of funds and wealth also provides useful information for a Relevant Person's transaction monitoring programme.
              9. An insurance policy which is similar to a life policy would include life-related protection, or a pension, or investment product which pays out to the policy holder or beneficiary upon a particular event occurring or upon redemption.
              Derived from RM117/2013 [VER9/07-13]
              [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 7.3.1 Guidance on identification and verification of beneficial owners

              10. In determining whether an individual meets the definition of a beneficial owner or controller, regard should be had to all the circumstances of the case, in particular the size of an individual's legal or beneficial ownership in a transaction. The question of what is a "small" ownership interest for the purposes of the definition of a beneficial owner will depend on the individual circumstances of the customer. The DFSAG considers that the question of whether an ownership interest is small should be considered in the context of the Relevant Person'sG knowledge of the customer and the customer risk assessment and the risk of money laundering.
              11. When identifying beneficial owners, a Relevant PersonG is expected to adopt a substantive (as opposed to form over substance) approach to CDDG for legal persons. Adopting a substantive approach means focusing on the money laundering risks of the customer and the product/service and avoiding an approach which focusses purely on the legal form of an arrangement or sets fixed percentages at which beneficial owners are identified (or not). It should take all reasonable steps to establish and understand a corporate customer's legal ownership and control and to identify the beneficial owner. The DFSAG does not set explicit ownership or control thresholds in defining the beneficial owner because the DFSAG considers that the applicable threshold to adopt will ultimately depend on the risks associated with the customer, and so the DFSAG expects a Relevant PersonG to adopt the RBA and justify on reasonable grounds an approach which is proportionate to the risks identified. A Relevant PersonG should not set fixed thresholds for identifying the beneficial owner without objective and documented justification as required by AML Rule 4.1.1. An overly formal approach to defining the beneficial owner may result in a criminal "gaming" the system by always keeping his financial interest below the relevant threshold
              12. The DFSAG considers that in some circumstances no threshold should be used when identifying beneficial owners because it may be important to identify all underlying beneficial owners in order to ensure that they are not associated or connected in some way. This may be appropriate where there are a small number of investors in an account or fund, each with a significant financial holding and the customer-specific risks are higher. However, where the customer-specific risks are lower, a threshold can be appropriate. For example, for a low-risk corporate customer which, combined with a lower-risk product or service, a percentage threshold may be appropriate for identifying "control" of the legal person for the purposes of the definition of a beneficial owner.
              13. For a retail investment fund which is widely-held and where the investors invest via pension contributions, the DFSAG would not expect the manager of the fund to look through to any underlying investors where there are none with any material control or ownership levels in the fund. However, for a closely-held fund with a small number of investors, each with a large shareholding or other interest, the DFSAG would expect a Relevant PersonG to identify and verify each of the beneficial owners, depending on the risks identified as part of its risk-based assessment of the customer. For a corporate health policy with defined benefits, the DFSAG would not expect a Relevant PersonG to identify the beneficial owners.
              14. Where a Relevant PersonG carries out identification and verification in respect of actual and potential beneficial owners of a trust, this should include the trustee, settlor, the protector, the enforcer, beneficiaries, other persons with power to appoint or remove a trustee and any person entitled to receive a distribution, whether or not such person is a named beneficiary.
              15. Under Federal AML legislation, if the customer is a legal person, the Relevant PersonG must obtain information identifying the names and addresses of partners and shareholders who each hold more than 5% of the capital of the legal person i.e. it applies a specified threshold. This does not affect the approach that should be taken under AML Rule 7.3.1(1)(a) for verifying the identity of beneficial owners, where no threshold is specified (see Guidance items 10 to 14 above). As a result, under the Federal AML legislation a Relevant PersonG will need to obtain information identifying partners and shareholders who hold more than 5% of the capital of the legal person. Then, in accordance with the risk-based approach in Guidance items 10 to 14, the Relevant PersonG should determine whether it is necessary also to identify other persons who may be beneficial owners, and verify their identity
              Derived from RM117/2013 [VER9/07-13]
              [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 7.3.1 Guidance on politically exposed persons

              16. Individuals who have, or have had, a high political profile, or hold, or have held, public office, can pose a higher money laundering risk to a Relevant PersonG as their position may make them vulnerable to corruption. This risk also extends to members of their families and to known close associates. Politically Exposed PersonG ("PEP") status itself does not, of course, incriminate individuals or entities. It does, however, put the customer into a higher risk category.
              17. Generally, a foreign PEPG presents a higher risk of money laundering because there is a greater risk that such person, if he was committing money laundering, would attempt to place his money offshore where the customer is less likely to be recognised as a PEPG and where it would be more difficult for law enforcement agencies in his home jurisdiction to confiscate or freeze his criminal property.
              18. Corruption-related money laundering risk increases when a Relevant PersonG deals with a PEPG . Corruption may involve serious crimes and has become the subject of increasing global concern. Corruption offences are predicate crimes under the Federal AML legislation. A Relevant PersonG should note that customer relationships with family members or close associates of PEPsG involve similar risks to those associated with PEPsG themselves.
              19. The DFSAG considers that after leaving office a PEPG may remain a higher risk for money laundering if such person continues to exert political influence or otherwise pose a risk of corruption.
              Derived from RM117/2013 [VER9/07-13]
              [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

        • AML 7.4 Enhanced Customer Due Diligence

          • AML 7.4.1

            Where a Relevant PersonG is required to undertake Enhanced Customer Due DiligenceG under AML Rule 7.1.1(1)(b) it must, to the extent applicable to the customer:

            (a) obtain and verify additional:
            (i) identification information on the customer and any beneficial owner;
            (ii) information on the intended nature of the business relationship; and
            (iii) information on the reasons for a transaction;
            (b) update more regularly the Customer Due DiligenceG information which it holds on the customer and any beneficial owners;
            (c) verify information on:
            (i) the customer's source of funds;
            (ii) the customer's source of wealth;
            (d) increase the degree and nature of monitoring of the business relationship, in order to determine whether the customer's transactions or activities appear unusual or suspicious;
            (e) obtain the approval of senior management to commence a business relationship with a customer; and
            (f) where applicable, require that any first payment made by a customer in order to open an account with a Relevant PersonG must be carried out through a bank account in the customer's name with:
            (i) a BankG ;
            (ii) a Regulated Financial InstitutionG whose entire operations are subject to regulation and supervision, including AML regulation and supervision, in a jurisdiction with AML regulations which are equivalent to the standards set out in the FATF recommendations; or
            (iii) a SubsidiaryG of a Regulated Financial InstitutionG referred to in (ii), if the law that applies to the ParentG ensures that the Subsidiary also observes the same AML standards as its ParentG .
            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 7.4.1 Guidance

              1. In AML Rule 7.4.1 Enhanced CDDG measures are only mandatory to the extent that they are applicable to the relevant customer or the circumstances of the business relationship and to the extent that the risks would reasonably require it. Therefore, the extent of additional measures to conduct is a matter for the Relevant PersonG to determine on a case by case basis.
              2. In AML RM117/2013(e), senior management approval may be given by an individual member of the Relevant Person'sG senior management or by a committee of senior managers appointed to consider high risk customers. It may also be outsourced within the Group.
              3. For high risk customers, a Relevant PersonG should, in order to mitigate the perceived and actual risks, exercise a greater degree of diligence throughout the customer relationship and should endeavour to understand the nature of the customer's business and consider whether it is consistent and reasonable.
              4. A Relevant PersonG should be satisfied that a customer's use of complex legal structures and/or the use of trust and private investment vehicles, has a genuine and legitimate purpose.
              5. For enhanced CDDG , where there is a beneficial owner, verification of the customer's source of funds and wealth may require enquiring into the beneficial owner's source of funds and wealth because the source of the funds would normally be the beneficial owner and not the customer.
              6. The DFSAG considers that verification of source of funds includes obtaining independent corroborating evidence such as proof of dividend payments connected to a shareholding, bank statements, salary/bonus certificates, loan documentation and proof of a transaction which gave rise to the payment into the account. A customer should be able to demonstrate and document how the relevant funds are connected to a particular event which gave rise to the payment into the account or to the source of the funds for a transaction.
              7. The DFSAG considers that verification of source of wealth includes obtaining independent corroborating evidence such as share certificates, publicly-available registers of ownership, bank or brokerage account statements, probate documents, audited accounts and financial statements, news items from a reputable source and other similar evidence. For example:
              a. for a legal person, this might be achieved by obtaining its financial or annual reports published on its website or news articles and press releases that reflect its financial situation or the profitability of its business; and
              b. for a natural person, this might include documentary evidence which corroborates answers given to questions on the source of wealth in an application form or customer questionnaire. For example, if a natural person attributes the source of his wealth to inheritance, he may be asked to provide a copy of the relevant will or grant of probate. In other cases, a natural person may be asked to provide sufficient bank or salary statements covering a number of years to draw up a picture of his source of wealth.
              8. A Relevant PersonG may commission a third party vendor report to obtain further information on a customer or transaction or to investigate a customer or beneficial owner in very high risk cases. A third party vendor report may be particularly useful where there is little or no publicly-available information on a person or on a legal arrangement or where a Relevant PersonG has difficulty in obtaining and verifying information.
              9. In AML Rule 7.4.1(f), circumstances where it may be applicable to require the first payment made by a customer in order to open an account with a Relevant PersonG to be carried out through a bank account in the customer's name with a financial institution specified in that paragraph include:
              a. where, following the use of other Enhanced CDDG measures, the Relevant PersonG is not satisfied with the results of due diligence; or
              b. as an alternative measure, where one of the measures in AML Rule 7.4.1 (a) to (e) cannot be carried out.
              Derived from RM117/2013 [VER9/07-13]
              [Amended] RM196/2016 (Made 7th December 2016). [VER13/02-17]

        • AML 7.5 Simplified customer due diligence

          • AML 7.5.1

            (1) Where a Relevant PersonG is permitted to undertake Simplified Customer Due DiligenceG under AML Rule 7.1.1(2), modification of AML Rule 7.3.1 may include:
            (a) verifying the identity of the customer and identifying any beneficial owners after the establishment of the business relationship under AML Rule 7.2.1(3);
            (b) deciding to reduce the frequency of, or as appropriate not undertake, customer identification updates;
            (c) deciding not to verify an identified beneficial owner;
            (d) deciding not to verify an identification document other than by requesting a copy;
            (e) not enquiring as to a customer's source of funds or source of wealth;
            (f) reducing the degree of on-going monitoring of transactions, based on a reasonable monetary threshold or on the nature of the transaction; or
            (g) not collecting specific information or carrying out specific measures to understand the purpose and intended nature of the business relationship, but infering such purpose and nature from the type of transactions or business relationship established.
            (2) The modification in (1) must be proportionate to the customer's money laundering risks.
            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 7.5.1 Guidance

              1. AML Rule 7.5.1(1) provides examples of Simplified CDDG measures. Other measures may also be used by a Relevant PersonG to modify CDDG in accordance with the customer risks.
              2. A Relevant PersonG should not use a "one size fits all" approach for all its low risk customers. Notwithstanding that the risks may be low for all such customers, the degree of CDDG undertaken needs to be proportionate to the specific risks identified on a case by case basis. For example, for customers where the money laundering risks are very low, a Relevant PersonG may decide to simply identify the customer and verify such information only to the extent that this is commercially necessary. On the other hand, a low risk customer which is undertaking a complex transaction might require more comprehensive Simplified CDDG .
              3. For the avoidance of doubt, a Relevant PersonG is always required to 'identify' beneficial owners, except for retail investment funds which are widely held and investment funds where the investor invests via pension contributions. However, a Relevant PersonG may decide not to 'verify' beneficial owners of a low risk customer.
              4. An example of circumstances where a Relevant PersonG might reasonably reduce the frequency of or, as appropriate, eliminate customer identification updates would be where the money laundering risks are low and the service provided does not offer a realistic opportunity for money laundering.
              5. An example of where a Relevant PersonG might reasonably reduce the degree of on-going monitoring and scrutinising of transactions, based on a reasonable monetary threshold or on the nature of the transaction, would be where the transaction is a recurring, fixed contribution to a savings scheme, investment portfolio or fund or where the monetary value of the transaction is not material for money laundering purposes given the nature of the customer and the transaction type.
              Derived from RM117/2013 [VER9/07-13]
              [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

        • AML 7.6 Ongoing Customer Due Diligence

          • AML 7.6.1

            When undertaking ongoing Customer Due DiligenceG under Rule 7.3.1(1)(d), a Relevant PersonG must, using the risk-based approach:

            (a) monitor transactions undertaken during the course of its customer relationship to ensure that the transactions are consistent with the Relevant Person'sG knowledge of the customer, his business and risk rating;
            (b) pay particular attention to any complex or unusually large transactions or unusual patterns of transactions that have no apparent or visible economic or legitimate purpose;
            (c) enquire into the background and purpose of the transactions in (b);
            (d) periodically review the adequacy of the Customer Due DiligenceG information it holds on customers and beneficial owners to ensure that the information is kept up to date, particularly for customers with a high risk rating; and
            (e) periodically review each customer to ensure that the risk rating assigned to a customer under Rule 6.1.1(1)(b) remains appropriate for the customer in light of the money laundering risks.
            Derived from RM117/2013 [VER9/07-13]

            • AML 7.6.1 Guidance

              1. In complying with Rule 7.6.1(d), a Relevant PersonG should undertake a periodic review to ensure that non-static customer identity documentation is accurate and up-to-date. Examples of non-static identity documentation include passport number and residential/business address and, for a legal person, its share register or list of partners.
              2. A Relevant PersonG should undertake a review under Rule 7.6.1 (d) and (e) particularly when:
              a. the Relevant PersonG changes its CDDG documentation requirements;
              b. an unusual transaction with the customer is expected to take place;
              c. there is a material change in the business relationship with the customer; or
              d. there is a material change in the nature or ownership of the customer.
              3. The degree of the on-going due diligence to be undertaken will depend on the customer risk assessment carried out under Rule 6.1.1.
              4. A Relevant Person'sG transaction monitoring policies, procedures, systems and controls, which may be implemented by manual or automated systems, or a combination thereof, are one of the most important aspects of effective CDDG . Whether a Relevant PersonG should undertake the monitoring by means of a manual or computerised system (or both) will depend on a number of factors, including:
              a. the size and nature of the Relevant Person'sG business and customer base; and
              b. the complexity and volume of customer transactions.
              Derived from RM117/2013 [VER9/07-13]

          • AML 7.6.2

            A Relevant PersonG must review its customers, their business and transactions against United Nations Security Council sanctions lists and against any other relevant sanctions list when complying with Rule 7.6.1(d).

            Derived from RM117/2013 [VER9/07-13]

            • AML 7.6.2 Guidance

              In AMLRule 7.6.2, a "relevant sanctions list" may include U.A.E EU, U.K. HM Treasury, U.S. OFAC lists and any other list which may apply to a Relevant PersonG .

              Derived from RM117/2013 [VER9/07-13]
              [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

        • AML 7.7 Failure to conduct or complete customer due diligence

          • AML 7.7.1

            (1) Where, in relation to any customer, a Relevant PersonG is unable to conduct or complete the requisite Customer Due DiligenceG in accordance with AML Rule 7.1.1 it must, to the extent relevant:
            (a) not carry out a transaction with or for the customer through a bank account or in cash;
            (b) not open an account or otherwise provide a service;
            (c) not otherwise establish a business relationship or carry out a transaction;
            (d) terminate or suspend any existing business relationship with the customer;
            (e) return any monies or assets received from the customer; and
            (f) consider whether the inability to conduct or complete Customer Due DiligenceG necessitates the making of a Suspicious Activity Report under AML Rule 13.3.1(c).
            (2) A Relevant PersonG is not obliged to comply with (1) (a) to (e) if:
            (a) to do so would amount to "tipping off" the customer, in breach of Federal AML legislation; or
            (b) the AMLSCUG directs the Relevant PersonG to act otherwise.
            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 7.7.1 Guidance

              1. In complying with Rule 7.7.1(1) a Relevant PersonG should apply one or more of the measures in (a) to (f) as appropriate in the circumstances. Where CDDG cannot be completed, it may be appropriate not to carry out a transaction pending completion of CDDG . Where CDDG cannot be conducted, including where a material part of the CDDG , such as identifying and verifying a beneficial owner cannot be conducted, a Relevant PersonG should not establish a business relationship with the customer.
              2. A Relevant PersonG should note that Rule 7.7.1 applies to both existing and prospective customers. For new customers it may be appropriate for a Relevant PersonG to terminate the business relationship before a product or service is provided. However, for existing customers, while termination of the business relationship should not be ruled out, suspension may be more appropriate depending on the circumstances. Whichever route is taken, the Relevant PersonG should be careful not to tip off the customer.
              3. A Relevant PersonG should adopt the RBA for CDDG of existing customers. For example, if a Relevant PersonG considers that any of its existing customers (which may include customers which it migrates into the DIFCG ) have not been subject to CDDG at an equivalent standard to that required by this module, it should adopt the RBA and take remedial action in a manner proportionate to the risks and within a reasonable period of time whilst complying with Rule 7.7.1.
              Derived from RM117/2013 [VER9/07-13]

      • AML 8 Reliance and Outsourcing

        Derived from RM117/2013 [VER9/07-13]

        • AML 8.1 Reliance on a third party

          • AML 8.1.1

            (1) A Relevant PersonG may rely on the following third parties to conduct one or more elements of Customer Due DiligenceG on its behalf:
            (a) an Authorised PersonG ;
            (b) a law firm, notary, or other independent legal business, accounting firm, audit firm or insolvency practitioner or an equivalent person in another jurisdiction;
            (c) a Financial InstitutionG ; or
            (d) a member of the Relevant Person'sG Group.
            (2) In (1), a Relevant PersonG may rely on the information previously obtained by a third party which covers one or more elements of Customer Due DiligenceG .
            (3) Where a Relevant PersonG seeks to rely on a person in (1) it may only do so if and to the extent that:
            (a) it immediately obtains the necessary Customer Due DiligenceG information from the third party in (1);
            (b) it takes adequate steps to satisfy itself that certified copies of the documents used to undertake the relevant elements of Customer Due DiligenceG will be available from the third party on request without delay;
            (c) the person in (1)(b) to (d) is subject to regulation, including AML regulation, by a Financial Services RegulatorG or other competent authority in a country with AML regulations which are equivalent to the standards set out in the FATFG Recommendations and it is supervised for compliance with such regulations;
            (d) the person in (1) has not relied on any exception from the requirement to conduct any relevant elements of Customer Due DiligenceG which the Relevant PersonG seeks to rely on; and
            (e) in relation to (2), the information is up to date.
            (4) Where a Relevant PersonG relies on a member of its GroupG , such GroupG member need not meet the condition in (3)(c) if:
            (a) the GroupG applies and implements a GroupG -wide policy on Customer Due DiligenceG and record keeping which is equivalent to the standards set by FATFG ; and
            (b) where the effective implementation of those Customer Due DiligenceG and record keeping requirements and AML programmes are supervised at GroupG level by a Financial Services RegulatorG or other competent authority in a country with AML regulations which are equivalent to the standards set out in the FATFG Recommendations.
            (5) If a Relevant PersonG is not reasonably satisfied that a customer or beneficial owner has been identified and verified by a third party in a manner consistent with these Rules, the Relevant PersonG must immediately perform the Customer Due DiligenceG itself with respect to any deficiencies identified.
            (6) Notwithstanding the Relevant Person'sG reliance on a person in (1), the Relevant PersonG remains responsible for compliance with, and liable for any failure to meet the Customer Due DiligenceG requirements in this module.
            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 8.1.1 Guidance

              1. In complying with AML Rule 8.1.1(3)(a), "immediately obtaining the necessary CDDG information" means obtaining all relevant CDDG information, and not just basic information such as name and address. Compliance can be achieved by having that relevant information sent by email or other appropriate means. For the avoidance of doubt, a Relevant PersonG is not required automatically to obtain the underlying certified documents used by the third party to undertake its CDDG . A Relevant PersonG must, however, under AML Rule 8.1.1(3)(b) ensure that the certified documents are readily available from the third party on request.
              2. The DFSAG would expect a Relevant PersonG , in complying with AML Rule 8.1.1(5), to fill any gaps in the CDDG process as soon as it becomes aware that a customer or beneficial owner has not been identified and verified in a manner consistent with these Rules.
              3. If a Relevant PersonG acquires another business, either in whole or in part, the DFSAG would permit the Relevant PersonG to rely on the CDDG conducted by the business it is acquiring but would expect the Relevant PersonG to have done the following:
              a. as part of its due diligence for the acquisition, to have taken a reasonable sample of the prospective customers to assess the quality of the CDDG undertaken; and
              b. to undertake CDDG on all the customers to cover any deficiencies identified in a. as soon as possible following the acquisition, prioritising high risk customers.
              4. Where a particular jurisdiction's laws (such as secrecy or data protection legislation) would prevent a Relevant PersonG from having access to CDDG information upon request without delay as referred to in AML Rule 8.1.1(3)(b), the Relevant PersonG should undertake the relevant CDDG itself and should not seek to rely on the relevant third party.
              5. If a Relevant PersonG relies on a third party located in a foreign jurisdiction to conduct one or more elements of CDD on its behalf, the Relevant PersonG must ensure that the foreign jurisdiction has AML regulations that are equivalent to the standards in the FATFG Recommendations (see AML Rule 8.1.1(3)(c)).
              6. When assessing if AML regulations in another jurisdiction are equivalent to FATF standards, a Relevant PersonG may consider a number of factors including, but not limited to: FATF membership, FATF Mutual Evaluation reports, FATF-style or IMF/World Bank evaluations, membership of an international or regional 'group' such as the MENAFATF or the Gulf Cooperation Council, contextual factors such as political stability or the level of corruption, evidence of relevant criticism of a jurisdiction including FATF advisory notices or independent and public assessments of the jurisdiction's overall AML regime such as IMF/World Bank or other reports by reputable NGOs or specialised commercial agencies. A Relevant PersonG should, in making its assessment, rely only on sources that are up-to-date and that include the latest AML developments from a reliable and competent source. The assessment may also take into account whether adequate arrangements exist for co-operation between the AML regulator in that jurisdiction and the DFSAG . The DFSAG expects a Relevant PersonG to keep sufficient records of the sources and materials considered when undertaking this AML assessment.
              Derived from RM117/2013 [VER9/07-13]
              [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

        • AML 8.2 Outsourcing

          • AML 8.2.1

            A Relevant PersonG which outsources any one or more elements of its Customer Due DiligenceG to a service provider (including within its GroupG ) remains responsible for compliance with, and liable for any failure to meet, such obligations.

            Derived from RM117/2013 [VER9/07-13]

            • AML 8.2.1 Guidance

              1. Prior to appointing an outsourced service provider to undertake CDDG , a Relevant PersonG should undertake appropriate due diligence to assure itself of the suitability of the outsourced service provider and should ensure that the outsourced service provider's obligations are clearly documented in a binding agreement.
              2. An Authorised PersonG should be mindful of its obligations regarding outsourcing set out in GEN Rules 5.3.21 and 5.3.22.
              Derived from RM117/2013 [VER9/07-13]

      • AML 9 Correspondent Banking, Wire Transfers and Audit

        • AML 9.1 Application

          • AML 9.1.1

            This chapter applies only to an Authorised PersonG .

            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

        • AML 9.2 Correspondent Banking

          • AML 9.2.1

            An Authorised FirmG proposing to have a correspondent banking relationship with a respondent bank must:

            (a) undertake appropriate Customer Due DiligenceG on the respondent bank;
            (b) as part of (a), gather sufficient information about the respondent bank to understand fully the nature of the business, including making appropriate enquiries on its management, its major business activities and the countries or jurisdictions in which it operates;
            (c) determine from publicly-available information the reputation of the respondent bank and the quality of supervision, including whether it has been subject to a money laundering or terrorist financing investigation or relevant regulatory action;
            (d) assess the respondent bank's AML controls and ascertain if they are adequate and effective in light of the FATFG Recommendations;
            (e) ensure that prior approval of the Authorised Firm'sG senior management is obtained before entering into a new correspondent banking relationship;
            (f) ensure that the respective responsibilities of the parties to the correspondent banking relationship are properly documented; and
            (g) be satisfied that, in respect of any customers of the respondent bank who have direct access to accounts of the Authorised FirmG , the respondent bank:
            (i) has undertaken Customer Due DiligenceG (including ongoing Customer Due DiligenceG ) at least equivalent to that in Rule 7.3.1 in respect of each customer; and
            (ii) is able to provide the relevant Customer Due DiligenceG information in (i) to the Authorised FirmG upon request; and
            (h) document the basis for its satisfaction that the requirements in (a) to (g) are met.
            Derived from RM117/2013 [VER9/07-13]

          • AML 9.2.2

            An Authorised FirmG must:

            (a) not enter into a correspondent banking relationship with a Shell BankG ; and
            (b) take appropriate measures to ensure that it does not enter into, or continue a corresponding banking relationship with, a bank which is known to permit its accounts to be used by Shell BankSG .
            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 9.2.2 Guidance

              AML Rule 9.2.2 prohibits an Authorised FirmG from entering into a correspondent banking relationship with a Shell BankG or a bank which is known to permit its accounts to be used by Shell BanksG . See the Guidance after AML Rule 6.1.4 for more information about what constitutes a Shell BankG .

              Derived from RM117/2013 [VER9/07-13]
              [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

        • AML 9.3 Wire transfers

          • AML 9.3.1

            In this section:

            (a) "beneficiary" means the natural or legal person or legal arrangement who is identified by the originator as the receiver of the requested wire transfer;
            (b) "originator" means the account holder who instructs the wire transfer from the relevant account, or where there is no account, the natural or legal person that places the order with the ordering Financial InstitutionG to perform the wire transfer; and
            (c) "wire transfer" includes any value transfer arrangement.
            Derived from RM117/2013 [VER9/07-13]

          • AML 9.3.2

            (1) An Authorised PersonG must:
            (a) when it sends or receives funds by wire transfer on behalf of a customer, ensure that the wire transfer and any related messages contain accurate originator and beneficiary information;
            (b) ensure that, while the wire transfer is under its control, the information in (a) remains with the wire transfer and any related message throughout the payment chain; and
            (c) monitor wire transfers for the purpose of detecting those wire transfers that do not contain originator and beneficiary information and take appropriate measures to identify any money laundering risks.
            (2) The requirement in (1) does not apply to an Authorised PersonG which transfers funds to another Financial InstitutionG where both the originator and the beneficiary are Financial InstitutionsG acting on their own behalf.
            (3) An Authorised PersonG must ensure that information accompanying all wire transfers contains at a minimum:
            (a) the name of the originator;
            (b) the originator account number where such an account is used to process the transaction;
            (c) the originator's address, or national identity number, or customer identification number, or date and place of birth;
            (d) the name of the beneficiary; and
            (e) the beneficiary account number where such an account is used to process the transaction.
            Derived from RM117/2013 [VER9/07-13]

            • AML 9.3.2 Guidance

              1. In the absence of an account number, a unique transaction reference number should be included which permits traceability of the transaction.
              2. The DFSAG considers that concealing or removing in a wire transfer any of the information required by Rule 9.3.2(3) would be a breach of the requirement to ensure that the wire transfer contains accurate originator and beneficiary information.
              Derived from RM117/2013 [VER9/07-13]

        • AML 9.4 Audit

          • AML 9.4.1

            An Authorised PersonG must ensure that its audit function, established under GEN Rule 5.3.13, includes regular reviews and assessments of the effectiveness of the Authorised Person's money laundering policies, procedures, systems and controls, and its compliance with its obligations in this AML module.

            Derived from RM117/2013 [VER9/07-13]

            • AML 9.4.1 Guidance

              1. The review and assessment undertaken for the purposes of Rule 9.4.1 may be undertaken:
              a. internally by the Authorised Person'sG internal audit function; or
              b. by a competent firm of independent auditors or compliance professionals.
              2. The review and assessment undertaken for the purposes of Rule 9.4.1 should cover at least the following:
              a. sample testing of compliance with the Authorised Person'sG CDDG arrangements;
              b. an analysis of all notifications made to the MLROG to highlight any area where procedures or training may need to be enhanced; and
              c. a review of the nature and frequency of the dialogue between the senior management and the MLROG .
              Derived from RM117/2013 [VER9/07-13]

        • AML 9.5 [Deleted]

          • AML 9.5.1 [Deleted]

            Deleted by DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

      • AML 10 Sanctions and Other International Obligations

        • AML 10.1 [Deleted]

          • AML 10.1.1 [Deleted]

            [deleted]

            Deleted by DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

        • AML 10.2 Relevant United Nations resolutions and sanctions

          • AML 10.2.1

            (1) A Relevant PersonG must establish and maintain effective systems and controls to ensure that on an ongoing basis it is properly informed as to, and takes reasonable measures to comply with, relevant resolutions or sanctions issued by the United Nations Security Council.
            (2) A Relevant PersonG must immediately notify the DFSAG when it becomes aware that it is:
            (a) carrying on or about to carry on an activity;
            (b) holding or about to hold money or other assets; or
            (c) undertaking or about to undertake any other business whether or not arising from or in connection with (a) or (b);
            for or on behalf of a person, where such carrying on, holding or undertaking constitutes or may constitute a contravention of a relevant sanction or resolution issued by the United Nations Security Council.
            (3) A Relevant PersonG must ensure that the notification stipulated in (2) above includes the following information:
            (a) a description of the relevant activity in (2) (a), (b) or (c); and
            (b) the action proposed to be taken or that has been taken by the Relevant PersonG with regard to the matters specified in the notification.
            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 10.2.1 Guidance

              1. In AML Rule 10.2.1(1), taking reasonable measures to comply with a resolution or sanction may mean that a Relevant PersonG cannot undertake a transaction for or on behalf of a person or that it may need to undertake further due diligence in respect of a person.
              2. Relevant resolutions or sanctions mentioned in AML Rule 10.2.1 may, among other things, relate to money laundering, terrorist financing or the financing of weapons of mass destruction or otherwise be relevant to the activities carried on by the Relevant PersonG . For example:
              a. a Relevant PersonG should exercise due care to ensure that it does not provide services to, or otherwise conduct business with, a person engaged in money laundering, terrorist financing or the financing of weapons of mass destruction; and
              b. an Authorised Market InstitutionG should exercise due care to ensure that it does not facilitate fund raising activities or listings by persons engaged in money laundering or terrorist financing or financing of weapons of mass destruction.
              3. A Relevant PersonG should be proactive in checking for, and taking measures to comply with, relevant resolutions or sanctions issued by the United Nations Security Council. The DFSA expects Relevant PersonsG to perform checks on an ongoing basis against their customer databases and records for any names appearing in resolutions or sanctions issued by the United Nations Security Council as well as to monitor transactions accordingly.
              4. A Relevant PersonG may use a database maintained elsewhere for an up-to-date list of resolutions and sanctions, or to perform checks of customers or transactions against that list. For example, it may wish to use a database maintained by its head office or a GroupG member. However, the Relevant PersonG retains responsibility for ensuring that its systems and controls are effective to ensure compliance with this module.
              Derived from RM117/2013 [VER9/07-13]
              [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

        • AML 10.3 Government, Regulatory and International Findings

          • AML 10.3.1

            (1) A Relevant PersonG must establish and maintain systems and controls to ensure that on an ongoing basis it is properly informed as to, and takes reasonable measures to comply with, any findings, recommendations, guidance, directives, resolutions, sanctions, notices or other conclusions (each of which is referred to in this Rule as a "finding") issued by:
            (a) the government of the U.A.E.G or any government departments in the U.A.E.;
            (b) the Central Bank of the U.A.E.G or the AMLSCUG ;
            (c) FATFG ;
            (d) U.A.E.G enforcement agencies; and
            (e) the DFSAG ,
            concerning the matters in (2).
            (2) For the purposes of (1), the relevant matters are:
            (a) arrangements for preventing money laundering, terrorist financing or the financing of weapons of mass destruction in a particular country or jurisdiction, including any assessment of material deficiency against relevant countries in adopting international standards; and
            (b) the names of persons, groups, organisations or entities or any other body where suspicion of money laundering or terrorist financing or the financing of weapons of mass destruction exists.
            (3) A Relevant PersonG must immediately notify the DFSA in writing if it becomes aware of non-compliance by a person with a finding and provide the DFSA with sufficient details of the person concerned and the nature of the non-compliance.
            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 10.3.1 Guidance

              1. The purpose of this Rule is to ensure that a Relevant PersonG takes into consideration the broad range of tools used by competent authorities and international organisations to communicate AML/CTF risks to stakeholders.
              2. A Relevant PersonG should examine and pay special attention to any transactions or business relationship with persons located in countries or jurisdictions mentioned by the persons in AML Rule 10.3.1(1)(a) to (e).
              3. Relevant PersonsG considering transactions or business relationships with persons located in countries or jurisdictions that have been identified as deficient, or against which the U.A.E.G or the DFSAG have outstanding advisories, should be aware of the background against which the assessments, or the specific recommendations have been made. These circumstances should be taken into account in respect of introduced business from such jurisdictions, and when receiving inward payments for existing customers or in respect of inter-bank transactions.
              4. The Relevant Person'sG MLROG is not obliged to report all transactions from these countries or jurisdictions to the AMLSCUG if they do not qualify as suspicious under the Federal AML legislation. See AML chapter 13 on Suspicious Activity Reports.
              5. Transactions with counterparties located in countries or jurisdictions which are no longer identified as deficient or have been relieved from special scrutiny (for example, taken off sources mentioned in this Guidance) may nevertheless require attention which is higher than normal.
              6. In order to assist Relevant PersonsG , the DFSAG will, from time to time, publish U.A.E.G , FATFG or other findings, guidance, directives or sanctions. However, the DFSAG expects a Relevant PersonG to take its own steps in acquiring relevant information from various available sources. For example, a Relevant PersonG may obtain relevant information from the consolidated list of financial sanctions in the U.A.E Cabinet, European Union Office, HM Treasury (United Kingdom) lists, and the Office of Foreign Assets Control (OFAC) of the United States Department of Treasury.
              7. In addition, the systems and controls mentioned in AML Rule 10.3.1 should be established and maintained by a Relevant PersonG taking into account its risk assessment under chapters 5 and 6. In AML Rule 10.3.1, taking reasonable measures to comply with a finding may mean that a Relevant PersonG cannot undertake a transaction for or on behalf of a person or that it may need to undertake further due diligence in respect of such a person.
              8. A Relevant PersonG should be proactive in obtaining and appropriately using available national and international information, for example, suspect lists or databases from credible public or private sources with regard to money laundering, including obtaining relevant information from sources mentioned in Guidance 6 above. The DFSAG encourages Relevant PersonsG to perform checks against their customer databases and records for any names appearing on such lists and databases as well as to monitor transactions accordingly. As set out in the Guidance after Rule 10.2.1, a Relevant PersonG may use a database maintained elsewhere for an up-todate list of sanctions or to conduct checks of customers or transactions against the list. However, it retains responsibility for ensuring the effectiveness of its systems and controls.
              9. The risk of terrorists entering the financial system can be reduced if Relevant PersonsG apply effective AML strategies, particularly in respect of CDDG . Relevant PersonsG should assess which countries carry the highest risks and should conduct an analysis of transactions from countries or jurisdictions known to be a source of terrorist financing.
              10. The DFSAG may require Relevant PersonsG to take any special measures it may prescribe with respect to certain types of transactions or accounts where the DFSAG reasonably believes that any of the above may pose a money laundering risk to the DIFCG .
              Derived from RM117/2013 [VER9/07-13]
              [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

      • AML 11 Money Laundering Reporting Officer

        • AML 11.1 [Deleted]

          [deleted]

          Deleted by DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

          • AML 11.1.1 [Deleted]

            Deleted by DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

        • AML 11.2 Appointment of a MLRO

          • AML 11.2.1

            (1) A Relevant PersonG must appoint an individual as MLROG , with responsibility for implementation and oversight of its compliance with the Rules in this module, who has an appropriate level of seniority and independence to act in the role.
            (2) The MLROG in (1) and AML Rule 11.2.5 must be resident in the U.A.E.G , except in the case of the MLRO for a Registered AuditorG .
            Derived from RM117/2013 [VER9/07-13]
            [Amended] RM196/2016 (Made 7th December 2016). [VER13/02-17]

          • AML 11.2.2

            The individual appointed as the MLROG of a Representative OfficeG must be the same individual who holds the position of Principal RepresentativeG of that Representative OfficeG .

            Derived from RM117/2013 [VER9/07-13]

            • AML 11.2.2 Guidance

              1. Authorised FirmsG are reminded that under GEN Rule 7.5.1, the MLROG function is a mandatory appointment. For the avoidance of doubt, the individual appointed as the MLROG of an Authorised FirmG , other than a Representative OfficeG , is the same individual who holds the Licensed FunctionG of Money Laundering Reporting OfficerG of that Authorised FirmG . Authorised FirmsG are also reminded that the guidance under GEN Rule 7.5.2 sets out the grounds under which the DFSAG will determine whether to grant a waiver from the residence requirements for an MLROG . The same guidance would apply by analogy to other Relevant PersonsG seeking a waiver from the MLROG residence requirements.
              2. The individual appointed as the MLROG of an Authorised Market InstitutionG is the same individual who holds the position of Money Laundering Reporting OfficerG of that Authorised Market InstitutionG under the relevant AMIG Rule.
              Derived from RM117/2013 [VER9/07-13]

          • AML 11.2.3

            An Authorised FirmG , other than a Representative OfficeG , must appoint an individual to act as a deputy MLROG of the Authorised FirmG to fulfil the role of the MLROG in his absence.

            Derived from RM117/2013 [VER9/07-13]

          • AML 11.2.4

            A Relevant Person'sG MLROG must deal with the DFSAG in an open and co-operative manner and must disclose appropriately any information of which the DFSA would reasonably be expected to be notified.

            Derived from RM117/2013 [VER9/07-13]

            • AML 11.2.4 Guidance

              1. The individual appointed as the deputy MLROG of an Authorised FirmG need not apply for Authorised IndividualG status for performing the Licensed FunctionG of Money Laundering Reporting OfficerG , subject to Rules in GEN section 11.6.
              2. A Relevant PersonG other than an Authorised FirmG should make adequate arrangements to ensure that it remains in compliance with this module in the event that its MLROG is absent. Adequate arrangementsG would include appointing a temporary MLROG for the period of the MLRO'sG absence or making sure that the Relevant Person'sG AML systems and controls allow it to continue to comply with these Rules when the MLROG is absent.
              Derived from RM117/2013 [VER9/07-13]

          • AML 11.2.5

            A Relevant PersonG may outsource the role of MLROG to an individual outside the Relevant PersonG provided that the relevant individual under the outsourcing agreement is and remains suitable to perform the MLROG role.

            Derived from RM117/2013 [VER9/07-13]

            • AML 11.2.5 Guidance

              Where a Relevant PersonG outsources specific AML tasks of its MLROG to another individual or a third party provider, including within a corporate GroupG , the Relevant PersonG remains responsible for ensuring compliance with the responsibilities of the MLROG . The Relevant PersonG should satisfy itself of the suitability of anyone who acts for it.

              Derived from RM117/2013 [VER9/07-13]

        • AML 11.3 Qualities of a MLRO

          • AML 11.3.1

            A Relevant PersonG must ensure that its MLROG has:

            (a) direct access to its senior management;
            (b) sufficient resources including, if necessary, an appropriate number of appropriately trained EmployeesG to assist in the performance of his duties in an effective, objective and independent manner;
            (c) a level of seniority and independence within the Relevant PersonG to enable him to act on his own authority; and
            (d) timely and unrestricted access to information sufficient to enable him to carry out his responsibilities in Rule 11.4.1.
            Derived from RM117/2013 [VER9/07-13]

            • AML 11.3.1 Guidance

              The DFSAG considers that a Relevant PersonG will need to consider this Rule when appointing an outsourced MLROG . Any external MLROG that is appointed will need to have the actual or effective level of seniority that the role requires.

              Derived from RM117/2013 [VER9/07-13]

        • AML 11.4 Responsibilities of a MLRO

          • AML 11.4.1

            A Relevant PersonG must ensure that its MLROG implements and has oversight of and is responsible for the following matters:

            (a) the day-to-day operations for compliance by the Relevant PersonG with its AML policies, procedures, systems and controls;
            (b) acting as the point of contact to receive notifications from the Relevant Person'sG EmployeesG under AML Rule 13.2.2;
            (c) taking appropriate action under AML Rule 13.3.1 following the receipt of a notification from an EmployeeG ;
            (d) making Suspicious Activity ReportsG in accordance with Federal AML legislation;
            (e) acting as the point of contact within the Relevant PersonG for competent U.A.E.G authorities and the DFSAG regarding money laundering issues;
            (f) responding promptly to any request for information made by competent U.A.E.G authorities or the DFSAG ;
            (g) receiving and acting upon any relevant findings, recommendations, guidance, directives, resolutions, sanctions, notices or other conclusions described in chapter 10; and
            (h) establishing and maintaining an appropriate money laundering training programme and adequate awareness arrangements under chapter 12.
            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

      • AML 12 AML Training and Awareness

        • AML 12.1 Training and awareness

          • AML 12.1.1

            A Relevant PersonG must

            (a) provide AML training to all relevant EmployeesG at appropriate and regular intervals;
            (b) ensure that its AML training enables its EmployeesG to:
            (i) understand the relevant legislation relating to money laundering, including Federal AML legislation;
            (ii) understand its policies, procedures, systems and controls related to money laundering and any changes to these;
            (iii) recognise and deal with transactions and other activities which may be related to money laundering;
            (iv) understand the types of activity that may constitute suspicious activity in the context of the business in which an EmployeeG is engaged and that may warrant a notification to the MLROG under AML Rule 13.2.2;
            (v) understand its arrangements regarding the making of a notification to the MLROG under AML Rule 13.2.2;
            (vi) be aware of the prevailing techniques, methods and trends in money laundering relevant to the business of the Relevant PersonG ;
            (vii) understand the roles and responsibilities of EmployeesG in combating money laundering, including the identity and responsibility of the Relevant Person'sG MLROG and deputy, where applicable; and
            (viii) understand the relevant findings, recommendations, guidance, directives, resolutions, sanctions, notices or other conclusions described in chapter 10; and
            (c) ensure that its AML training:
            (i) is appropriately tailored to the Relevant Person'sG activities, including its products, services, customers, distribution channels, business partners, level and complexity of its transactions; and
            (ii) indicates the different levels of money laundering risk and vulnerabilities associated with the matters in (c)(i).
            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 12.1.1 Guidance

              1. The DFSAG considers it appropriate that all new relevant Employees of a Relevant PersonG be given appropriate AML training as soon as reasonably practicable after commencing employment with the Relevant PersonG .
              2. Relevant PersonsG should take a risk-based approach to AML training. The DFSAG considers that AML training should be provided by a Relevant PersonG to each of its relevant EmployeesG at intervals appropriate to the role and responsibilities of the EmployeeG . In the case of an Authorised FirmG the DFSAG expects that training should be provided to each relevant EmployeeG at least annually.
              3. The manner in which AML training is provided by a Relevant PersonG need not be in a formal classroom setting, rather it may be via an online course or any other similarly appropriate manner.
              4. A relevant EmployeeG would include a member of the senior management or operational staff, any EmployeeG with customer contact or which handles or may handle customer monies or assets, and any other EmployeeG who might otherwise encounter money laundering in the business.
              5. Relevant PersonsG should be aware of their duty under Cabinet Resolution No. 38 of 2014 to establish and provide AML training programmes in co-ordination with the AMLSCU.
              Derived from RM117/2013 [VER9/07-13]
              [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

      • AML 13 Suspicious Activity Reports

        • AML 13.1 Application and Definitions

          • AML 13.1.1 [Deleted]

            [deleted]

            Deleted by DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

          • AML 13.1.2

            In this chapter, "money laundering" and "terrorist financing" mean the criminal offences defined in the Federal AML legislation.

            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

        • AML 13.2 Internal Reporting Requirements

          • AML 13.2.1

            A Relevant PersonG must establish and maintain policies, procedures, systems and controls in order to monitor and detect suspicious activity or transactions in relation to potential money laundering or terrorist financing.

            Derived from RM117/2013 [VER9/07-13]

          • AML 13.2.2

            A Relevant PersonG must have policies, procedures, systems and controls to ensure that whenever any EmployeeG , acting in the ordinary course of his employment, either:

            (a) knows;
            (b) suspects; or
            (c) has reasonable grounds for knowing or suspecting;

            that a person is engaged in or attempting money laundering or terrorist financing, that EmployeeG promptly notifies the Relevant Person'sG MLROG and provides the MLROG with all relevant details.

            Derived from RM117/2013 [VER9/07-13]

            • AML 13.2.2 Guidance

              1. Circumstances that might give rise to suspicion or reasonable grounds for suspicion include:
              a. Transactions which have no apparent purpose, which make no obvious economic sense, or which are designed or structured to avoid detection;
              b. Transactions requested by a person without reasonable explanation, which are out of the ordinary range of services normally requested or are outside the experience of a Relevant PersonG in relation to a particular customer;
              c. where the size or pattern of transactions, without reasonable explanation, is out of line with any pattern that has previously emerged or are deliberately structured to avoid detection;
              d. where a customer refuses to provide the information requested without reasonable explanation;
              e. where a customer who has just entered into a business relationship uses the relationship for a single transaction or for only a very short period of time;
              f. an extensive use of offshore accounts, companies or structures in circumstances where the customer's economic needs do not support such requirements;
              g. unnecessary routing of funds through third party accounts; or
              h. unusual transactions without an apparently profitable motive.
              2. The requirement for EmployeesG to notify the Relevant Person'sG MLROG should include situations when no business relationship was developed because the circumstances were suspicious.
              3. A Relevant PersonG may allow its EmployeesG to consult with their line managers before sending a report to the MLROG . The DFSAG would expect that such consultation does not prevent making a report whenever an EmployeeG has stated that he has knowledge, suspicion or reasonable grounds for knowing or suspecting that a person may be involved in money laundering. Whether or not an EmployeeG consults with his line manager or other EmployeesG , the responsibility remains with the EmployeeG to decide for himself whether a notification to the MLROG should be made.
              4. An EmployeeG , including the MLROG , who considers that a person is engaged in or engaging in activity that he knows or suspects to be suspicious would not be expected to know the exact nature of the criminal offence or that the particular funds were definitely those arising from the crime of money laundering or terrorist financing.
              5. CDDG measures form the basis for recognising suspicious activity. Sufficient guidance must therefore be given to the Relevant Person'sG EmployeesG to enable them to form a suspicion or to recognise when they have reasonable grounds to suspect that money laundering or terrorist financing is taking place. This should involve training that will enable relevant EmployeesG to seek and assess the information that is required for them to judge whether a person is involved in suspicious activity related to money laundering or terrorist financing.
              6. A transaction that appears unusual is not necessarily suspicious. Even customers with a stable and predictable transaction profile will have periodic transactions that are unusual for them. Many customers will, for perfectly good reasons, have an erratic pattern of transactions or account activity. So the unusual is, in the first instance, only a basis for further inquiry, which may in turn require judgement as to whether it is suspicious. A transaction or activity may not be suspicious at the time, but if suspicions are raised later, an obligation to report then arises.
              7. Effective CDDG measures may provide the basis for recognising unusual and suspicious activity. Where there is a customer relationship, suspicious activity will often be one that is inconsistent with a customer's known legitimate activity, or with the normal business activities for that type of account or customer. Therefore, the key to recognising 'suspicious activity' is knowing enough about the customer and the customer's normal expected activities to recognise when their activity is abnormal.
              8. A Relevant PersonG may consider implementing policies and procedures whereby disciplinary action is taken against an EmployeeG who fails to notify the Relevant Person'sG MLROG .
              Derived from RM117/2013 [VER9/07-13]
              [Amended] RM196/2016 (Made 7th December 2016). [VER13/02-17]

        • AML 13.3 Suspicious Activity Report

          • AML 13.3.1

            A Relevant PersonG must ensure that where the Relevant Person'sG MLROG receives a notification under AML Rule 13.2.2, the MLROG , without delay:

            (a) inquires into and documents the circumstances in relation to which the notification made under AML Rule 13.2.2 was made;
            (b) determines whether in accordance with Federal AML legislation a Suspicious Activity Report must be made to the AMLSCUG and documents such determination;
            (c) if required, makes a Suspicious Activity Report to the AMLSCUG as soon as practicable; and
            (d) notifies the DFSAG of the making of such Suspicious Activity Report immediately following its submission to the AMLSCUG .
            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

          • AML 13.3.2

            Where, following a notification to the MLROG under 13.2.2, no Suspicious Activity Report is made, a Relevant PersonG must record the reasons for not making a Suspicious Activity Report.

            Derived from RM117/2013 [VER9/07-13]

          • AML 13.3.3

            A Relevant PersonG must ensure that if the MLROG decides to make a Suspicious Activity Report, his decision is made independently and is not subject to the consent or approval of any other person.

            Derived from RM117/2013 [VER9/07-13]

          • AML 13.3.4 [Deleted]

            Deleted by DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

            • AML 13.3.4 Guidance

              1. Relevant PersonsG are reminded that the failure to report suspicions of money laundering or terrorist financing may constitute a criminal offence that is punishable under the laws of the StateG .
              2. SARs under Federal AML legislation should be emailed or faxed to the AMLSCUG . The dedicated email address and fax numbers, and the template for making a SAR are available on the DFSAG website.
              3. In the preparation of a SAR, if a Relevant PersonG knows or assumes that the funds which form the subject of the report do not belong to a customer but to a third party, this fact and the details of the Relevant Person'sG proposed course of further action in relation to the case should be included in the report.
              4. If a Relevant PersonG has reported a suspicion to the AMLSCUG , the AMLSCUG may instruct the Relevant PersonG on how to continue its business relationship, including effecting any transaction with a person. If the customer in question expresses his wish to move the funds before the Relevant PersonG receives instruction from the AMLSCUG on how to proceed, the Relevant PersonG should immediately contact the AMLSCUG for further instructions.
              Derived from RM117/2013 [VER9/07-13]
              [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

        • AML 13.4 Tipping-off

          • AML 13.4 Guidance

            1. Relevant PersonsG are reminded that in accordance with Federal AML legisaltion, Relevant PersonsG or any of their EmployeesG must not tip-off any person, that is, inform any person that he is being scrutinised for possible involvement in suspicious activity related to money laundering, or that any other competent authority is investigating his possible involvement in suspicious activity relating to money laundering.
            2. If a Relevant PersonG reasonably believes that performing CDDG measures will tip-off a customer or potential customer, it may choose not to pursue that process and should file a SAR. Relevant PersonsG should ensure that their EmployeesG are aware of and sensitive to these issues when considering the CDDG measures.
            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

        • AML 13.5 Freezing assets

          • AML 13.5 Guidance

            The DFSA has power under the Regulatory LawG to restrict an Authorised PersonG from disposing of or transferring property including, for example, assets or other funds suspected of relating to money laundering. It may also apply to the CourtG for an order restraining a person from transferring or disposing of any assets suspected of relating to money laundering. In cases involving suspected money laundering, the DFSA will usually take such action in co-ordination with the AMLSCU.

            Derived from DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

      • AML 14 General Obligations

        • AML 14.1 Groups, branches and subsidiaries

          • AML 14.1.1

            (1) A Relevant PersonG which is a DIFCG entity must ensure that its policies, procedures, systems and controls required by Rule 5.2.1 apply to:
            (a) any of its branches or SubsidiariesG ; and
            (b) any of its GroupG entities in the DIFCG .
            (2) The requirement in (1) does not apply if the Relevant PersonG can satisfy the DFSAG that the relevant branch, SubsidiaryG or GroupG entity is subject to regulation, including AML, by a Financial Services RegulatorG or other competent authority in a country with AML regulations which are equivalent to the standards set out in the FATFG Recommendations and is supervised for compliance with such regulations.
            (3) Where the law of another jurisdiction does not permit the implementation of policies, procedures, systems and controls consistent with those of the Relevant PersonG , the Relevant PersonG must:
            (a) inform the DFSAG in writing; and
            (b) apply appropriate additional measures to manage the money laundering risks posed by the relevant branch or SubsidiaryG .
            Derived from RM117/2013 [VER9/07-13]

            • AML 14.1.1 Guidance

              A Relevant PersonG which is a DIFCG entity should conduct a periodic review to verify that any branch or SubsidiaryG operating in another jurisdiction is in compliance with the obligations imposed under these Rules.

              Derived from RM117/2013 [VER9/07-13]

          • AML 14.1.2

            A Relevant PersonG must:

            (a) communicate the policies and procedures which it establishes and maintains in accordance with these Rules to its GroupG entities, branches and SubsidiariesG ; and
            (b) document the basis for its satisfaction that the requirement in Rule 14.1.1(2) is met.
            Derived from RM117/2013 [VER9/07-13]

            • AML 14.1.2 Guidance

              In relation to an Authorised FirmG , if the DFSAG is not satisfied in respect of AML compliance of its branches and SubsidiariesG in a particular jurisdiction, it may take action, including making it a condition on the Authorised Firm'sG LicenceG that it must not operate a branch or SubsidiaryG in that jurisdiction.

              Derived from RM117/2013 [VER9/07-13]

        • AML 14.2 Group policies

          • AML 14.2.1

            A Relevant PersonG which is part of a GroupG must ensure that it:

            (a) understands the policies and procedures covering the sharing of information between GroupG entities, particularly when sharing Customer Due DiligenceG information;
            (b) has in place adequate safeguards on the confidentiality and use of information exchanged between Group entities, including consideration of relevant data protection legislation;
            (c) remains aware of the money laundering risks of the GroupG as a whole and of its exposure to the GroupG and takes active steps to mitigate such risks;
            (d) contributes to a GroupG -wide risk assessment to identify and assess money laundering risks for the GroupG ; and
            (e) provides its GroupG -wide compliance, audit and AML functions with customer account and transaction information from branches and subsidiaries when necessary for AML purposes.
            Derived from RM117/2013 [VER9/07-13]

        • AML 14.3 Notifications

          • AML 14.3.1

            A Relevant PersonG must inform the DFSAG in writing as soon as possible if, in relation to its activities carried on in or from the DIFCG or in relation to any of its branches or SubsidiariesG , it:

            (a) receives a request for information from a regulator or agency responsible for AML, counter-terrorism financing, or sanctions regarding enquiries into potential money laundering or terrorist financing or sanctions breaches;
            (b) becomes aware, or has reasonable grounds to believe, that a money laundering event has occurred or may have occurred in or through its business;
            (c) becomes aware of any money laundering or sanctions matter in relation to the Relevant PersonG or a member of its GroupG which could result in adverse reputational consequences to the Relevant PersonG ; or
            (d) becomes aware of a significant breach of a Rule in this module or a breach of Federal AML legislation by the Relevant PersonG or any of its Employees.
            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

        • AML 14.4 Record keeping

          • AML 14.4.1

            A Relevant PersonG must maintain the following records:

            (a) a copy of all documents and information obtained in undertaking initial and ongoing Customer Due DiligenceG ;
            (b) the supporting records (consisting of the original documents or certified copies) in respect of the customer business relationship, including transactions;
            (c) notifications made under AML Rule 13.2.2};
            (d) Suspicious Activity Reports and any relevant supporting documents and information, including internal findings and analysis;
            (e) any relevant communications with the AMLSCUG ; and
            (f) the documents in AML Rule 14.4.2,

            for at least six years from the date on which the notification or report was made, the business relationship ends or the transaction is completed, whichever occurs last.

            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

          • AML 14.4.2

            A Relevant Person must document, and provide to the DFSAG on request, any of the following:

            (a) the risk assessment of its business undertaken under Rule 5.1.1;
            (b) how the assessment in (a) was used for the purposes of complying with Rule 6.1.1(1);
            (c) the risk assessment of the customer undertaken under Rule 6.1.1(1)(a); and
            (d) the determination made under Rule 6.1.1(1)(b).
            Derived from RM117/2013 [VER9/07-13]

            • AML 14.4.2 Guidance

              1. The records required to be kept under Rule 14.4.1 may be kept in electronic format, provided that such records are readily accessible and available to respond promptly to any DFSAG requests for information. Authorised PersonsG are reminded of their obligations in GEN Rule 5.3.24.
              2. If the date on which the business relationship with a customer has ended remains unclear, it may be taken to have ended on the date of the completion of the last transaction.
              3. The records maintained by a Relevant PersonG should be kept in such a manner that:
              a. the DFSAG or another competent authority is able to assess the Relevant Person'sG compliance with legislation applicable in the DIFCG ;
              b. any transaction which was processed by or through the Relevant PersonG on behalf of a customer or other third party can be reconstructed;
              c. any customer or third party can be identified; and
              d. the Relevant PersonG can satisfy, within an appropriate time, any regulatory enquiry or court order to disclose information.
              Derived from RM117/2013 [VER9/07-13]

          • AML 14.4.3

            Where the records referred to in Rule 14.4.1 are kept by the Relevant PersonG outside the DIFCG , a Relevant PersonG must:

            (a) take reasonable steps to ensure that the records are held in a manner consistent with these Rules;
            (b) ensure that the records are easily accessible to the Relevant PersonG ; and
            (c) upon request by the DFSAG , ensure that the records are available for inspection within a reasonable period of time.
            Derived from RM117/2013 [VER9/07-13]

          • AML 14.4.4

            A Relevant PersonG must:

            (a) verify if there is secrecy or data protection legislation that would restrict access without delay to the records referred to in Rule 14.4.1 by the Relevant PersonG , the DFSAG or the law enforcement agencies of the U.A.E.G ; and
            (b) where such legislation exists, obtain without delay certified copies of the relevant records and keep such copies in a jurisdiction which allows access by those persons in (a).
            Derived from RM117/2013 [VER9/07-13]

          • AML 14.4.5

            A Relevant Person must be able to demonstrate that it has complied with the training and awareness requirements in chapter 12 through appropriate measures, including the maintenance of relevant training records.

            Derived from RM117/2013 [VER9/07-13]

            • AML 14.4.5 Guidance

              1. In complying with Rule 14.4.3, Authorised PersonsG are reminded of their obligations in GEN Rule 5.3.24.
              2. The DFSAG considers that "appropriate measures" in Rule 14.4.5 may include the maintenance of a training log setting out details of:
              a. the dates when the training was given;
              b. the nature of the training; and
              c. the names of EmployeesG who received the training.
              Derived from RM117/2013 [VER9/07-13]

        • AML 14.5 Annual AML Return

          • AML 14.5.1

            A Relevant PersonG which is:

            (a) an Authorised PersonG ;
            (b) a Registered AuditorG ; or
            (c) a person who is a DNFBPG in one of the following classes:
            (i) a real estate developer or agency which carries out transactions with a customer involving the buying or selling of real property;
            (ii) a law firm, notary firm, or other independent legal business;
            (iii) an accounting firm, audit firm or insolvency firm; or
            (iv) a company service provider,

            must complete the AML Return form in AFNG and submit it to the DFSAG by the end of September each year. The annual AML Return must cover the period from 1 August of the previous year to 31 July of the reporting year.

            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM132/2014 (Made 21st August 2014). [VER10/06-14]
            [Amended] DFSA RM177/2016 (Made 19th June 2016) [VER12/08-16]

            • AML 14.5.1 Guidance

              Relevant PersonsG should be aware of their obligation under Cabinet Resolution No. 38 of 2014 to prepare AML reports and copy them to the AMLSCU.

              Derived from DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

          • Transitional

            • AML 14.5.2

              A Relevant PersonG must:

              (a) for its financial year ending in 2016, complete and submit the AML Return form under AML Rule 14.5.1 within four months of its financial year end and the return must cover that financial year; and
              (b) for the 2017 calendar year, complete and submit the AML Return form by the end of September 2017 and the return must cover the period from 1 August 2016 until 31 July 2017.
              Derived from DFSA RM177/2016 (Made 19th June 2016) [VER12/08-16]

              • AML 14.5.2 Guidance

                In respect of a financial year ending in 2016, a Relevant PersonG must submit its AML Return four months after its financial year end. For the 2017 calendar year, it must report for the period 1 August 2016 to 31 July 2017. For some Relevant PersonsG , this may result in an overlap of periods covered by each return.

                Derived from DFSA RM177/2016 (Made 19th June 2016) [VER12/08-16]

        • AML 14.6 Communication with the DFSA

          • AML 14.6.1

            A Relevant PersonG must:

            (a) be open and cooperative in all its dealings with the DFSAG ; and
            (b) ensure that any communication with the DFSAG is conducted in the English language.
            Derived from RM117/2013 [VER9/07-13]

        • AML 14.7 Employee Disclosures

          • AML 14.7.1

            A Relevant PersonG must ensure that it does not prejudice an EmployeeG who discloses any information regarding money laundering to the DFSAG or to any other relevant body involved in the prevention of money laundering.

            Derived from RM117/2013 [VER9/07-13]

            • AML 14.7.1 Guidance

              The DFSAG considers that "relevant body" in Rule 14.7.1 would include the AMLSCUG or another financial intelligence unit, the police, or a Dubai or Federal ministry.

              Derived from RM117/2013 [VER9/07-13]

      • AML 15 DNFBP Registration and Supervision

        • AML 15 Guidance

          1. A DNFBPG should ensure that it complies with and has regard to relevant provisions of the Regulatory Law. The Regulatory Law gives the DFSAG a power to supervise DNFBPs'G , compliance with relevant AML laws in the StateG It also gives the DFSAG a number of other important powers in relation to DNFBPsG , including powers of enforcement. This includes a power to obtain information and to conduct investigations into possible breaches of the Regulatory Law. The DFSAG may also impose fines for breaches of the Regulatory Law or the Rules.
          2. The DFSAG takes a risk-based approach to regulation of persons which it supervises. Generally, the DFSAG will work with DNFBPsG to identify, assess, mitigate and control relevant risks where appropriate. RPP describes the DFSA'sG enforcement powers under the Regulatory Law and outlines its policy for using these powers.
          3. AML Rule 3.2.1 defines a DNFBP by setting out a list of businesses or professions which, if carried on in or from the DIFCG , constitute a DNFBP.
          4. In determining if a person is carrying on a business or profession in the DIFCG that falls within the DNFBP definition, the DFSA will adopt a 'substance over form' approach. That is, it will consider what business or profession is in fact being carried on, and its main characteristics, and not just what business or profession the person purports, or is licensed, to carry on in the DIFCG .
          5. The DFSA considers that "a law firm, notary firm or other independent legal business" in paragraph (1)(d) of the DNFBP definition, includes any business or profession that involves a legal service, including advice or services related to laws in the State or other jurisdictions. The DFSA does not consider it necessary for the purposes of the definition that:
          a. the relevant person is licensed to provide legal services in the State; or
          b. the individuals or employees providing the legal service are qualified or authorised to do so, whether in the State or in any other jurisdiction.
          6. The DFSA considers that "an accounting firm, audit firm or insolvency firm" in paragraph (1)(e) of the DNFBP definition, includes forensic accounting services that use accounting skills, principles and techniques to investigate suspected illegal activity or to analyse financial information for use in legal proceedings.
          7. The DFSA would also consider a tax advisory business carried on in or from the DIFCG to be a DNFBP as it is likely to involve elements of both legal and accounting services i.e. advice on taxation law and the use of accounting skills to analyse financial records, and so fall within either paragraph (1)(d) or (e) of the DNFBP definition.
          Derived from RM117/2013 [VER9/07-13]
          [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

        • AML 15.1 Registration and Notifications

          • AML 15.1.1

            A DNFBPG must register with the DFSAG by way of a notification by completing and submitting the appropriate form in the AFN Sourcebook.

            Derived from RM117/2013 [VER9/07-13]

          • AML 15.1.2

            A DNFBPG must promptly notify the DFSAG of any change in its:

            (a) name;
            (b) legal status;
            (c) address;
            (d) MLROG ; or
            (e) beneficial ownership.
            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

        • AML 15.2 Withdrawal of Registration

          • AML 15.2.1

            A DNFBPG must notify the DFSAG in writing when it proposes to cease carrying on its business activities in or from the DIFCG .

            Derived from RM117/2013 [VER9/07-13]

          • AML 15.2.2

            A DNFBPG which proposes to cancel its registration as a DNFBPG must provide the DFSAG with 14 days' written notice of such cancellation and provide written evidence of the basis of its withdrawal.

            Derived from RM117/2013 [VER9/07-13]

          • AML 15.2.3

            (1) The DFSAG may cancel the registration of a DNFBPG :
            (a) if the DNFBPG notifies the DFSAG of the cancellation in accordance with Rule 15.2.2 and the DFSAG is satisfied with the evidence provided;
            (b) if the DNFBP'sG commercial licence is cancelled or expires and a reasonable time has passed without such licence being renewed;
            (c) following a request by the ROC;
            (d) in the event of the insolvency or the entering into administration of the DNFBPG ; or
            (e) if the DFSAG considers it necessary or desirable in the interests of the DIFCG .
            (2) The procedures in Schedule 3 to the Regulatory Law apply to a decision of the DFSAG to cancel registration under (1)(b) to (e).
            (3) If the DFSAG decides to exercise its power to cancel registration under (1)(b) to (e), the DNFBPG may refer the matter to the FMTG for review.
            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM132/2014 (Made 21st August 2014). [VER10/06-14]

          • AML 15.2.4 [Deleted]

            [Deleted] DFSA RM132/2014 (Made 21st August 2014). [VER10/06-14]

          • AML 15.2.5 [Deleted]

            [Deleted] DFSA RM132/2014 (Made 21st August 2014). [VER10/06-14]

            • AML 15.2.5 Guidance

              1. A DNFBPG may request a cancellation of its registration because, for example, it no longer meets the definition of a DNFBPG , becomes insolvent or enters into administration, or proposes to leave the DIFCG .
              2. The DFSAG would expect to use the power to cancel the registration of a DNFBPG under Rule 15.2.3(1)(e) once its supervisory tools have been exhausted. Examples of when it might use this power include where a DNFBPG commits serious or persistent breaches of the AML Rules which it fails to rectify, or where the DNFBPG or its activities in or from the DIFCG create risks to the DFSA'sG regulatory objectives.
              Derived from RM117/2013 [VER9/07-13]
              [Amended] DFSA RM132/2014 (Made 21st August 2014). [VER10/06-14]

        • AML 15.3 Disclosure of regulatory status

          • AML 15.3.1

            A DNFBPG must not:

            (a) misrepresent its regulatory status with respect to the DFSAG expressly or by implication; or
            (b) use or reproduce the DFSAG logo without express written permission from the DFSAG and in accordance with any conditions for use.
            Derived from RM117/2013 [VER9/07-13]

      • AML 16 Transitional Rules

        • AML 16.1 Application

          • AML 16.1.1

            This chapter applies to every person to whom a provision of the Previous Regime applied.

            Derived from RM117/2013 [VER9/07-13]

          • AML 16.1.2

            For the purposes of this chapter:

            (a) "Ancillary Service ProviderG " has the meaning that it had under the Previous Regime;
            (b) "Commencement Date" means 14 July 2013;
            (c) "Current Regime" means the Rules in force on the Commencement Date;
            (d) "DNFBPG " has the meaning that it had in DNF chapter 2 under the Previous Regime; and
            (e) "Previous Regime" means the Rules that were in force immediately prior to the Commencement Date.
            Derived from RM117/2013 [VER9/07-13]
            [Amended] DFSA RM196/2016 (Made 7th December 2016). [VER13/02-17]

        • AML 16.2 General

          • AML 16.2.1

            A Relevant PersonG must continue to maintain any records required to be maintained under the Previous Regime until such time as the requirement to hold such record would have expired had the Previous Regime still been in force.

            Derived from RM117/2013 [VER9/07-13]

        • AML 16.3 Specific relief — Ancillary Service Provider and DNFBPs

          • AML 16.3.1

            A person who, immediately prior to the Commencement Date, was an Ancillary Service ProviderG or was registered as a DNFBPG is deemed, on the Commencement Date, to be registered as a DNFBPG for the purposes of the Current Regime.

            Derived from RM117/2013 [VER9/07-13]

    • Authorised Market Institutions (AMI) [VER18/02-17]

      • Part 1 Introduction

        • AMI 1 Application, Interpretation and Overview

          • AMI 1.1 Application

            • AMI 1.1.1

              (1) This module applies to:
              (a) every PersonG who carries on, or intends to carry on, either or both of the Financial ServicesG of Operating an ExchangeG or Operating a Clearing HouseG in or from the DIFCG ;
              (b) a Key IndividualG , or a PersonG intending to be a Key IndividualG , of a PersonG referred to in (a); and
              (c) a ControllerG , or a PersonG intending to be a ControllerG , of a PersonG referred to in (a).
              (2) This module also applies to an Authorised Market InstitutionG where it:
              (a) carries on, or intends to carry on, the Financial ServiceG of Operating an Alternative Trading SystemG to the extent that such activities constitute operating a Multilateral Trading FacilityG ; or
              (b) acts as a Trade RepositoryG .
              (3) This module does not apply to a Recognised BodyG .
              Derived from RM118/2013 [VER15/07-13]

          • AMI 1.2 Overview of the Module

            • AMI 1.2 Guidance

              The regulatory framework

              1. The Regulatory LawG 2004 ("the Regulatory Law") and the Markets LawG 2012 ("the Markets Law ") provide the framework for the licensing and supervision of Authorised Market InstitutionsG and for taking regulatory action against those licensed institutions.
              2. In particular, while Article 41 of the Regulatory LawG prohibits a PersonG from carrying on Financial ServicesG in or from the DIFCG , Article 42 of that Law permits PersonsG duly authorised and Licensed to conduct Financial ServicesG in providing their services.
              3. The Markets LawG establishes a framework in relation to how an Official List of SecuritiesG is maintained and administered by the Listing AuthorityG . Either the DFSAG , or an Authorised Market InstitutionG where it has been granted an endorsement on its LicenceG to do so, may maintain an Official List of SecuritiesG .
              4. The GENG module prescribes the Financial ServicesG which may be carried on by an Authorised FirmG or Authorised Market InstitutionG and the detailed requirements that must be met by such firms. In addition, the GENG module also sets out the circumstances under which an Authorised Market InstitutionG may be authorised to carry out certain functions by way of an endorsement on its LicenceG .
              5. The RPP SourcebookG contains, amongst other things, the detailed policies and procedures relating to how the DFSAG exercises its licensing and supervisory functions relating to Authorised Market InstitutionsG .

              The AMI module

              6. The AMI Module is comprised of four Parts containing 12 chapters and three Appendices.
              7. Part 1 contains chapter 1, which sets out the application provisions and the overview of the AMI module.
              8. Part 2 contains chapters 2 and 3. Chapter 2 sets out the requirements relating to application for a LicenceG to Operate an ExchangeG or Clearing HouseG (or both) and an endorsement to operate a Multilateral Trading FacilityG or to maintain an Official List of SecuritiesG . Chapter 3 sets out the assessment of application related requirements, including application to obtain Key IndividualG status of an Authorised Market InstitutionG .
              9. Part 3 contains chapters 4, 5, 6 and 7. These chapters set out the substantive requirements (called the "Licensing RequirementsG ") that must be met by a PersonG at the point of grant of a LicenceG to be an Authorised Market InstitutionG and thereafter on an on-going basis. Chapter 4 contains the provisions which prescribe what the Licensing RequirementsG are, and the procedures an Authorised Market InstitutionG must follow in order to make any material changes to the arrangements it has in place to meet the Licensing RequirementsG . Chapter 5 contains the Licensing RequirementsG that are common to both ExchangesG and Clearing HousesG . Chapter 6 contains the additional Licensing RequirementsG that are specific to ExchangesG and chapter 7 contains the additional Licensing RequirementsG that are specific to Clearing HousesG .
              10. Part 4 contains chapters 8, 9, 10, 11 and 12. These chapters set out a range of miscellaneous provisions covering the requirements relating to the approval of ControllersG of Authorised Market InstitutionsG (chapter 8), the provisions governing the supervision of Authorised Market InstitutionsG (chapter 9), the procedures for withdrawal of a LicenceG or endorsement (chapter 10), appeal procedures from the decisions of the DFSAG (chapter 11) and the transitional provisions (chapter 12).
              11. There are three Appendices, Appendix 1 contains the requirements relevant to testing of technology systems, Appendix 2 contains the requirements relating to the use of price information providers and Appendix 3 contains the contract delivery specifications applicable to Derivative contracts which require physical delivery.G
              Derived from RM118/2013 [VER15/07-13]

      • Part 2 Application and Authorisation

        • AMI 2 Application for a Licence or Endorsement

          • AMI 2.1 Application

            • AMI 2.1.1

              (1) This chapter applies to a PersonG who intends to carry on either or both of the Financial ServicesG of Operating an ExchangeG or Operating a Clearing HouseG in or from the DIFCG .
              (2) This chapter also applies to a PersonG referred to in (1), who intends to obtain an endorsement on its LicenceG to:
              (a) carry on the Financial ServiceG of Operating an Alternative Trading SystemG to the extent that such activities constitute operating a Multilateral Trading FacilityG ; or
              (b) act as a Trade RepositoryG .
              (3) A PersonG who intends to carry on the Financial ServicesG and activities referred to in (1) and (2) is referred to in this chapter as an "applicant" unless the context otherwise provides.
              (4) This chapter also applies to an Authorised Market InstitutionG applying to change the scope of its LicenceG , or where a condition or restriction has previously been imposed on its LicenceG , to have such a condition or restriction varied or withdrawn. Such an Authorised Market InstitutionG may be referred to as an "applicant" in this chapter.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 2.1.1 Guidance

                1. The activity of operating a Multilateral Trading FacilityG ("MTF") is an activity that falls within the definition of the Financial ServiceG of Operating an Alternative Trading SystemG (see GEN Rule 2.22.1). A PersonG needs to be LicensedG as an Authorised FirmG to carry on that Financial ServiceG . However, pursuant to GEN Rule 2.2.12, a holder of a LicenceG to Operate an ExchangeG may also operate an MTFG if it has obtained an endorsement on its LicenceG permitting it to do so.
                2. Acting as a Trade RepositoryG is not a Financial ServiceG , and may be carried on by an Authorised FirmG or Authorised Market InstitutionG with an endorsement on its LicenceG permitting it to do so (see GEN Rule 2.2.13).
                3. A new applicant for a LicenceG or an existing holder of a LicenceG may apply to have an endorsement on its LicenceG to operate a Multilateral Trading FacilityG or to maintain a Trade RepositoryG .
                Derived from RM118/2013 [VER15/07-13]

          • AMI 2.2 Application for a Licence

            • AMI 2.2.1

              An applicant who intends to carry on either or both of the Financial ServicesG of Operating an ExchangeG or Operating a Clearing HouseG must apply to the DFSAG for a LicenceG in accordance with the Rules in this section and chapter 3.

              Derived from RM118/2013 [VER15/07-13]

            • AMI 2.2.2

              The DFSAG will only consider an application for a LicenceG to Operate an ExchangeG or Operate a Clearing HouseG from a PersonG :

              (a) who is a Body CorporateG ; and
              (b) who is not an Authorised FirmG or an applicant to be an Authorised FirmG .
              Derived from RM118/2013 [VER15/07-13]

            • AMI 2.2.3

              A PersonG applying for a LicenceG must submit a written application to the DFSAG :

              (a) demonstrating how the applicant intends to satisfy the Licensing RequirementsG specified in Part 3 and any other applicable requirements; and
              (b) with copies of any relevant agreements or other information in relation to the application.
              Derived from RM118/2013' [VER15/07-13]

          • AMI 2.3 Application for an Endorsement

            • AMI 2.3.1

              The following requirements must be met by an applicant for the grant of an endorsement to operate a Multilateral Trading FacilityG :

              (a) it must hold a LicenceG with an authorisation to OperateG an ExchangeG ; and
              (b) it must be able to demonstrate that it can satisfy the requirement in Rule 4.2.1(3).
              Derived from RM118/2013 [VER15/07-13]
              [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

              • AMI 2.3.1 Guidance

                1. Under GEN Rule 2.2.11(c) and GEN Rule 2.2.12, an Authorised Market InstitutionG Licensed to Operate an ExchangeG may obtain an endorsement to carry on the activity of operating a Multilateral Trading FacilityG .
                2. An ExchangeG with an endorsement to operate an MTFG needs to meet, on an on-going basis, the applicable Licensing RequirementsG under Rule 4.2.1(3). Accordingly, when an ExchangeG wishes to obtain such an endorsement, it needs to be able to demonstrate to the DFSAG that it can meet each of the Licensing Requirements with respect to the proposed MTFG . For example, it should demonstrate how the IT systems and human resources available to it would be utilised for the purposes of operating the MTFG .
                [Added] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

            • AMI 2.3.2

              The requirements in App 5 to GEN must be met by an Authorised Market InstitutionG for the grant of an endorsement to act as a Trade RepositoryG .

              Derived from RM118/2013 [VER15/07-13]
              [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

              • AMI 2.3.2 Guidance [Deleted]

                [Deleted] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

            • AMI 2.3.3 [Deleted]

              [Deleted] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

            • AMI 2.3.4 [Deleted]

              [Deleted] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

          • AMI 2.4 Application for a Change of Scope of a Licence

            • AMI 2.4.1

              An Authorised Market InstitutionG applying to change the scope of its LicenceG , or to have a condition or restriction varied or withdrawn, must provide the DFSAG with written details of the proposed changes including an assessment of how it intends to satisfy the Licensing RequirementsG in relation to the new LicenceG scope.

              Derived from RM118/2013 [VER15/07-13]

              • AMI 2.4.1 Guidance

                1. Where an Authorised Market InstitutionG applies to change the scope of its LicenceG , it should provide at least the following information:
                a. particulars of the new activities requiring a variation to the scope of LicenceG , and the date of the proposed commencement of such activities;
                b. a revised business plan as appropriate, describing the basis of, and rationale for, the proposed change;
                c. details of the extent to which existing documentation, procedures, systems and controls will be amended to take into account any additional activities, and how the Authorised Market InstitutionG will be able to comply with any additional regulatory requirements including the applicable Licensing RequirementsG ; and
                d. if the Authorised Market InstitutionG is reducing its activities and it has existing MembersG who may be affected by the cessation of a Financial ServiceG , details of any transitional arrangements.
                2. If an application for a change of scope of LicenceG involves carrying on a new Financial ServiceG , the application will be assessed against all the requirements applicable to the relevant Financial ServiceG .
                Derived from RM118/2013 [VER15/07-13]

        • AMI 3 Authorisation

          • AMI 3.1 Application

            • AMI 3.1.1

              This chapter applies to every PersonG who is an applicant for:

              (a) a LicenceG to be an Authorised Market InstitutionG ;
              (b) an endorsement to:
              (i) maintain an Official List of SecuritiesG ;
              (ii) operate a Multilateral Trading FacilityG ; or
              (iii) act as a Trade RepositoryG ; or
              (c) Key IndividualG status.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 3.1.1 Guidance

                1. This chapter outlines the DFSA'sG authorisation requirements for an Authorised Market InstitutionG and its Key IndividualsG , as well as the process for an Authorised Market InstitutionG to obtain an endorsement on its LicenceG to maintain an Official List of SecuritiesG , operate a Multilateral Trading FacilityG or act as a Trade RepositoryG .
                2. This chapter should be read in conjunction with the RPP SourcebookG , which sets out the DFSA'sG general regulatory policy and processes. See chapter 2 of the RPP sourcebookG .
                Derived from RM118/2013 [VER15/07-13]

          • AMI 3.2 Assessment

            • AMI 3.2.1

              (1) In order to become authorised to carry on one or both of the Financial ServicesG of Operating an ExchangeG or Operating a Clearing HouseG , the applicant must demonstrate to the satisfaction of the DFSAG that it can meet the relevant Licensing RequirementsG specified in chapters 5, 6 and 7, as appropriate to the Financial ServicesG it proposes to carry on, both at the point of the grant of the LicenceG and thereafter on an on-going basis.
              (2) In order to obtain an endorsement on its LicenceG to:
              (a) maintain an Official List of SecuritiesG ;
              (b) operate a Multilateral Trading FacilityG ; or
              (c) act as a Trade RepositoryG ,
              the applicant must demonstrate to the satisfaction of the DFSAG that it can meet the requirements applicable to PersonsG undertaking the relevant activities, both at the point of the grant of the endorsement and thereafter on an on-going basis.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 3.2.1 Guidance

                1. The Licensing RequirementsG are specified in chapters 5, 6 and 7 of Part 3 of this module. These include the general requirements applicable to all Authorised Market InstitutionsG (chapter 5), and the additional requirements applicable to specific types of activities of Authorised Market InstitutionsG (chapters 6 and 7).
                2. Where an Authorised Market InstitutionG (or an applicant for a LicenceG ) seeks to obtain an endorsement on its LicenceG , additional requirements relevant to the type of endorsement need to be satisfied (see, for example, App 5 of GEN for the requirements relating to Trade RepositoriesG ).
                3. Currently, the function of maintaining an Official List of SecuritiesG is performed by the DFSAG . However, the DFSAG has the power, pursuant to Article 29 of the Markets LawG , to grant an Authorised Market InstitutionG an endorsement on its LicenceG permitting it to maintain an Official List of SecuritiesG .
                4. Section 3.6 of the RPP SourcebookG sets out the matters which the DFSAG takes into consideration when making an assessment under Rule 3.2.1.
                Derived from RM118/2013 [VER15/07-13]

            • Inquiries and Information

              • AMI 3.2.2

                In assessing an application for a LicenceG or an endorsement on a LicenceG , the DFSAG may:

                (a) make any enquiries which it considers appropriate, including enquiries independent of the applicant;
                (b) require the applicant to provide additional information;
                (c) require the applicant to have information on how it intends to ensure compliance with a particular requirement;
                (d) require any information provided by the applicant to be verified in any way that the DFSAG specifies; and
                (e) take into account any information which it considers relevant.
                Derived from RM118/2013 [VER15/07-13]

              • AMI 3.2.3

                (1) In assessing an application for a LicenceG , the DFSAG may, by means of written notice, indicate the legal form that the applicant may adopt to enable authorisation to be granted.
                (2) Where the DFSAG thinks it appropriate, it may treat an application made by one legal form or PersonG as having been made by the new legal form or PersonG .
                Derived from RM118/2013 [VER15/07-13]

          • AMI 3.3 Obtaining Key Individual Status

            • AMI 3.3 Guidance

              Under Article 43 of the Regulatory LawG , every Authorised Market InstitutionG must have Key IndividualsG appointed to perform Licensed FunctionsG . Key IndividualsG appointed by an Authorised Market InstitutionG to perform Licensed FunctionsG must be approved by the DFSAG before they are permitted to carry on such functions. This section sets out the matters that will be considered by the DFSAG in approving such Key Individuals. The list of Licensed FunctionG s for an Authorised Market InstitutionG is in section 5.3 of this module.

              Derived from RM118/2013 [VER15/07-13]
              [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

            • AMI 3.3.1

              (1) In regard to an application for approval for an individual to be granted Key IndividualG status, both the Authorised Market InstitutionG and the individual must complete the appropriate form in AFNG .
              (2) An Authorised Market InstitutionG must be satisfied that the individual with respect to whom an application is submitted:
              (a) is competent in his proposed role;
              (b) has kept abreast of relevant market, product, technology, legislative and regulatory developments; and
              (c) is able to apply his knowledge.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 3.3.1 Guidance

                See paragraph 2.2.16(j) and section 2-3 of the RPP sourcebook for the details of the assessment which an Authorised Market InstitutionG is expected to undertake.

                Derived from RM118/2013 [VER15/07-13]

            • AMI 3.3.2 [Deleted]

              [Deleted] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

              • AMI 3.3.2 Guidance [Deleted]

                [Deleted] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

            • Requirements for Key Individuals

              • AMI 3.3.2

                (1) To be authorised as a Key IndividualG an individual must demonstrate that he is fit and proper to perform the Licensed FunctionG .
                (2) In assessing whether an individual is fit and proper to perform a Licensed FunctionG under (1) the DFSAG will consider:
                (a) the individual's integrity;
                (b) the individual's competence and capability;
                (c) the individual's financial soundness;
                (d) the individual's proposed role within the Authorised Market InstitutionG ; and
                (e) any other relevant matters.
                [Added] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

              • AMI 3.3.3

                Without limiting Rule 3.3.2, an individual shall not be considered fit and proper for the the purposes of that Rule if he:

                (a) is bankrupt;
                (b) has been convicted of a serious criminal offence; or
                (c) is incapable, through mental or physical incapacity, of managing his affairs.
                [Added] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

              • AMI 3.3.4

                In assessing whether an individual is fit and proper to be granted Key IndividualG Status to carry out a Licensed FunctionG , the DFSAG may:

                (a) make any enquiries which it considers appropriate, including enquiries independent of the applicant;
                (b) require the Authorised Market InstitutionG or the individual to provide additional information;
                (c) require any information provided by the Authorised Market InstitutionG or the individual to be verified in any way specified by the DFSAG ; and
                (d) take into account any information which it considers appropriate.
                [Added] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

                • AMI 3.3.4 Guidance

                  Section 2.3 of the RPP Sourcebook sets out the matters which the DFSAG takes into consideration when making an assessment referred to in this section.

                  [Added] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

      • Part 3 Licensing Requirements

        • AMI 4 General

          • AMI 4.1 Application

            • AMI 4.1.1

              This chapter applies to a PersonG who is an Authorised Market InstitutionG or an applicant for such a LicenceG .

              Derived from RM118/2013 [VER15/07-13]

          • AMI 4.2 Licensing Requirements

            • AMI 4.2.1

              (1) An Authorised Market InstitutionG must have adequate arrangements both at the time a LicenceG is granted and at all times thereafter to meet the applicable Licensing RequirementsG as specified in (2).
              (2) The Licensing RequirementsG are:
              (a) the general requirements specified in chapter 5, which are applicable to all Authorised Market InstitutionsG ;
              (b) the additional requirements specified in chapter 6, which are applicable to an Authorised Market InstitutionG Operating an ExchangeG ; and
              (c) the additional requirements specified in chapter 7, which are applicable to an Authorised Market InstitutionG Operating a Clearing HouseG .
              (3) Where an Authorised Market InstitutionG operates a Multilateral Trading FacilityG pursuant to an endorsement on its LicenceG , the Licensing RequirementsG specified in (2)(a) and (b) apply with respect to the operation of such a facility as if that facility is an ExchangeG .
              Derived from RM118/2013 [VER15/07-13]

          • AMI 4.3 Approval of Material Changes

            • AMI 4.3.1

              (1) An Authorised Market InstitutionG may, subject to (2), only make material changes to its existing arrangements to meet the Licensing RequirementsG where it has obtained the DFSA'sG prior approval to do so in accordance with the requirements in this section.
              (2) In the case of any changes to the Business RulesG of an Authorised Market InstitutionG , such changes must be made in accordance with the requirements in section 5.6.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 4.3.1 Guidance

                1. Existing arrangements to meet the Licensing RequirementsG are those arrangements which an Authorised Market InstitutionG has in place at the time it is initially granted a LicenceG , and includes any subsequent changes made to such arrangements in accordance with the requirements in this Rule.
                2. If an Authorised Market InstitutionG is unsure, it may seek the DFSAG views on whether a proposed change to its existing arrangements constitutes a material change. Such clarification should be sought as soon as possible when it becomes reasonably apparent to the Authorised Market InstitutionG that some changes to its existing arrangements are needed.
                Derived from RM118/2013 [VER15/07-13]

            • AMI 4.3.2

              (1) An Authorised Market InstitutionG proposing to make material changes to its existing arrangements to meet the Licensing RequirementsG must provide to the DFSAG a notice setting out:
              (a) the proposed change;
              (b) the reasons for the proposed change; and
              (c) what impact the proposed change might have on its ability to discharge its Regulatory FunctionsG .
              (2) The notice referred to in (1) must, subject to (3), be submitted to the DFSAG at least 30 days before the proposed change is expected to come into effect.
              (3) The DFSAG may, in circumstances where a material change to existing arrangements is shown on reasonable grounds to be urgently needed, accept an application for approval of such a change on shorter notice than the 30 days referred to in (2).
              Derived from RM118/2013 [VER15/07-13]

            • AMI 4.3.3

              The DFSAG must, upon receipt of a notice referred to in Rule 4.3.2, approve or reject the proposed change as soon as practicable and in any event within 30 days of the receipt of the notice, unless that period has been extended by notification to the applicant.

              Derived from RM118/2013 [VER15/07-13]
              [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

            • AMI 4.3.4

              (1) The procedures in Schedule 3 to the Regulatory LawG apply to a decision of the DFSAG under Rule 4.3.3 to reject a proposed change.
              (2) If the DFSAG decides to exercise its power under Rule 4.3.3 to reject a proposed change, the Authorised Market InstitutionG may refer the matter to the FMTG for review.
              Derived from RM118/2013
              [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14] [VER15/07-13]

              • AMI 4.3.4 Guidance

                1. The period of 30 days will commence from the time the DFSAG has received all the relevant information to assess the application.
                2. An Authorised Market InstitutionG should consider submitting its application for DFSAG approval well in advance of the date on which the proposed change is expected to come into effect, especially in the case of significant material changes to its existing arrangements, to allow the DFSAG sufficient time to consider the application. Such timely submission would generally tend to avoid any extension of time being sought by the DFSAG to assess properly the impact of a proposed change, due to its nature, scale and complexity. Such an extension would be made in consultation with the applicant.
                3. If a proposed material change is not approved by the DFSAG within the 30 day period and the DFSAG has not expressly extended the period beyond 30 days, an Authorised Market InstitutionG may treat the proposed change as being rejected by the DFSAG , and on that basis, may refer the decision to the FMTG .
                4. An Authorised Market InstitutionG may use the results of consultation with its user committees to identify the impact the proposed change would have on its ability to meet the Licensing RequirementsG , including any impact such a change would have on its MembersG and other stakeholders. See GEN App 3 — Guidance No. 9–12 for best practice relating to user committees.
                Derived from RM118/2013 [VER15/07-13]
                [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

          • AMI 4.4 Definition of Regulatory Functions

            • AMI 4.4.1

              Pursuant to Article 23(2)(f)(ii) and (iii) of the Regulatory LawG , the DFSAG prescribes the Regulatory FunctionG s of an Authorised Market InstitutionG as those functions which directly contribute to the satisfaction by the Authorised Market InstitutionG of its Licensing RequirementsG .

              [Added] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

        • AMI 5 General Licensing Requirements Applicable to all Authorised Market Institutions

          • AMI 5.1 Application

            • AMI 5.1.1

              This chapter applies to an Authorised Market InstitutionG and its Key IndividualsG .

              Derived from RM118/2013 [VER15/07-13]

          • AMI 5.2 Organisational Requirements

            • AMI 5.2 Guidance

              Every Authorised Market InstitutionG must comply with the requirements in GEN chapter 5, which relate to the management and systems and controls, which form an essential part of the organisational requirements of an Authorised Market InstitutionG . The requirements set out below augment the organisational requirements applicable to an Authorised Market Institution set out in GEN chapter 5.

              Derived from RM118/2013 [VER15/07-13]

            • Fitness and Propriety

              • AMI 5.2.1

                An Authorised Market InstitutionG must:

                (a) be fit and proper;
                (b) be appropriately constituted; and
                (c) take appropriate measures to:
                (i) satisfy the Licensing RequirementsG ; and
                (ii) perform its Regulatory FunctionsG .
                Derived from RM118/2013 [VER15/07-13]

                • AMI 5.2.1 Guidance

                  See Chapter 5 of GEN and paragraphs 2-2-16 to 2-2-18 of the RPP SourcebookG which set out matters which the DFSAG takes into consideration when making an assessment under Rule 5.2.1.

                  Derived from RM118/2013 [VER15/07-13]

            • Human Resources

              • AMI 5.2.2

                (1) An Authorised Market InstitutionG must have and maintain sufficient human resources to operate and supervise its facilities.
                (2) An Authorised Market InstitutionG must ensure, as far as reasonably practicable, that its EmployeesG are:
                (a) fit and proper;
                (b) appropriately trained for the duties they perform; and
                (c) trained in the requirements of the legislation applicable in the DIFCG .
                (3) An Authorised Market InstitutionG must:
                (a) have appropriate arrangements in place to ensure that its EmployeesG maintain their fitness and propriety; and
                (b) keep records of the assessment process undertaken for each EmployeeG for a minimum of six years from the date on which an individual ceases to be an EmployeeG .
                Derived from RM118/2013 [VER15/07-13]

                • AMI 5.2.2 Guidance

                  1. In assessing whether an Authorised Market Institution'sG systems and controls are adequate to ensure the on-going maintenance of fitness and propriety of its EmployeesG , the DFSAG will take into account:
                  a. the distribution of duties and responsibilities among its Key IndividualsG and the departments of the Authorised Market InstitutionG responsible for performing its Regulatory FunctionsG ;
                  b. the staffing and resources of the departments of the Authorised Market InstitutionG responsible for performing its Regulatory FunctionsG ;
                  c. the arrangements made to enable Key IndividualsG to supervise the departments for which they are responsible;
                  d. the arrangements for supervising the performance of Key IndividualsG and their departments; and
                  e. the arrangements by which the Governing BodyG is able to keep the allocation of responsibilities between, and the appointment, supervision and remuneration of, Key Individuals under review.
                  2. See also GEN Rule 5.3.18 which sets out the requirements relating to the suitability of EmployeesG and section 2.3 of the RPP Sourcebook which sets out in more detail the matters which the DFSAG takes into consideration when making its assessment under GEN Rule 5.3.18 and Rule 5.2.2 above.
                  Derived from RM118/2013 [VER15/07-13]

            • Governance

              • AMI 5.2.3

                (1) An Authorised Market InstitutionG must have:
                (a) a corporate governance framework appropriate to the nature, scale and complexity of its business and structure, which is adequate to promote the sound and prudent management and oversight of the Authorised Market Institution'sG business and to protect the interests of its stakeholders; and
                (b) a remuneration structure and strategies which are well aligned with the long term interests of the Authorised Market InstitutionG , and appropriate to the nature, scale and complexity of its business.
                (2) Without limiting the generality of the requirements in GEN chapter 5, an Authorised Market InstitutionG must ensure that its Governing BodyG has a sufficient number of independent members at all times.
                Derived from RM118/2013 [VER15/07-13]

                • AMI 5.2.3 Guidance

                  1. Detailed corporate governance and remuneration related requirements applicable to an Authorised Market InstitutionG are contained in GEN Rules 5.3.30 and 5.3.31. See the best practice standards relating to corporate governance and remuneration set out under those Rules and App 3 of GEN. These are designed to promote sound governance and remuneration practices whilst providing flexibility for application taking into account the nature, scale and complexity of operations of an Authorised Market InstitutionG .
                  2. The independence criteria for the members of the Governing Body are set out in paragraphs 2.2.16 to 2.2.18 of the RPP sourcebook.
                  Derived from RM118/2013 [VER15/07-13]

          • AMI 5.3 Licensed Functions and Key Individuals

            • Licensed Functions and Key Individuals

              • AMI 5.3.1

                (1) An Authorised Market InstitutionG must, for the purpose of proper discharge of its Regulatory FunctionsG , have at all times individuals appointed to carry out the functions of the:
                (a) Governing BodyG ;
                (b) Senior Executive OfficerG ;
                (c) Finance OfficerG ;
                (d) Compliance OfficerG ;
                (e) Risk OfficerG ;
                (f) Money Laundering Reporting OfficerG ; and
                (g) Internal AuditorG .
                (2) Each of the functions of an Authorised Market InstitutionG specified in (1)(a) to (g) are Licensed FunctionsG for the purposes of Article 43(1) of the Regulatory LawG .
                Derived from RM118/2013 [VER15/07-13]
                [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

              • AMI 5.3.2

                (1) An Authorised Market InstitutionG must not permit a Key IndividualG to carry on any Licensed FunctionG for or on behalf of the Authorised Market InstitutionG unless the particular individual has been assessed by the Authorised Market InstitutionG to be competent to perform the relevant Licensed FunctionG .
                (2) The Licensed FunctionsG specified in Rule 5.3.1 do not include a function performed by a registered insolvency practitioner (subject to the restrictions in Article 88 of the Insolvency Law 2009) if the practitioner is:
                (a) acting as a nominee in relation to a company voluntary arrangement within the meaning of Article 8 of the Insolvency Law 2009;
                (b) appointed as a receiver or administrative receiver within the meaning of Article 14 of the Insolvency Law 2009;
                (c) appointed as a liquidator in relation to a members' voluntary winding up within the meaning of Article 32 of the Insolvency Law 2009;
                (d) appointed as a liquidator in relation to a creditors' voluntary winding up within the meaning of Article 32 of the Insolvency Law 2009; or
                (e) appointed as a liquidator or provisional liquidator in relation to a compulsory winding up within the meanings of Articles 58 and 59 of the Insolvency Law 2009.
                (3) The Licensed FunctionsG specified in Rule 5.3.1 do not include a function performed by an insolvency practitioner in accordance with the applicable requirements equivalent to those specified in (2)(a)–(e) in another jurisdiction.
                (4) The Licensed FunctionsG specified in Rule 5.3.1 do not include a function of an individual appointed to act as a manager of the business of an Authorised Market InstitutionG as directed by the DFSAG under Article 88 of the Regulatory LawG .
                Derived from RM118/2013 [VER15/07-13]
                [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

                • AMI 5.3.2 Guidance

                  1. See section 2.3 of the RPP sourcebook for details of the assessment that the Authorised Market InstitutionG and the DFSAG undertake to assess whether an individual is fit and proper to undertake Key IndividualG functions.
                  2. An Authorised Market InstitutionG may apply for the DFSA'sG in-principle approval of an individual as soon as the individual is identified as a potential appointee to avoid any delays in formalising the appointment. However, an Authorised Market InstitutionG should submit to the DFSAG , as far as reasonably practicable, all the relevant information, including the results of its own assessment, when seeking such in-principle approval.
                  Derived from RM118/2013 [VER15/07-13]

            • Members of the Governing Body

              • AMI 5.3.3

                Every member of the Governing BodyG of an Authorised Market InstitutionG carries on the function of a Key IndividualG .

                Derived from RM118/2013 [VER15/07-13]

            • Senior Executive Officer

              • AMI 5.3.4

                The Senior Executive OfficerG function is carried out by an individual who:

                (a) has, either alone or jointly with the other Key IndividualsG , the ultimate responsibility for the day-to-day management, supervision and control of one or more (or all) parts of an Authorised Market Institution'sG Financial ServicesG carried on in or from the DIFCG ; and
                (b) is either a member of the Governing BodyG or a Senior ManagerG of the Authorised Market InstitutionG .
                Derived from RM118/2013 [VER15/07-13]
                [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

            • Finance Officer

              • AMI 5.3.5

                The Finance OfficerG function is carried out by an individual who:

                (a) has the overall responsibility for the Authorised Market Institution'sG compliance with the financial resources requirements in Rule 5.5.4; and
                (b) is either a MemberG of the Governing BodyG or a Senior ManagerG of the Authorised Market InstitutionG .
                Derived from RM118/2013 [VER15/07-13]

            • Compliance Officer

              • AMI 5.3.6

                The Compliance OfficerG function is carried out by an individual who:

                (a) has the overall responsibility for the Authorised Market Institution'sG compliance with the Licensing RequirementsG and other applicable requirements in carrying out Financial ServicesG ; and
                (b) is either a MemberG of the Governing BodyG or a Senior ManagerG of the Authorised Market InstitutionG .
                Derived from RM118/2013 [VER15/07-13]

            • Risk Officer

              • AMI 5.3.7

                The Risk OfficerG function is carried out by an individual who:

                (a) has the overall responsibility for the risk management function in relation to the Financial ServicesG carried on by the Authorised Market InstitutionG ; and
                (b) is a member of the Governing BodyG or a Senior ManagerG of the Authorised Market InstitutionG .
                Derived from RM118/2013 [VER15/07-13]

            • Money Laundering Reporting Officer

              • AMI 5.3.8

                The Money Laundering Reporting OfficerG function is carried out by an individual who:

                (a) has the overall responsibility for the Authorised Market Institution'sG compliance with the requirements in Rule 5.11.2, AMLG and any other relevant anti money laundering legislation applicable in the DIFCG ; and
                (b) is either a member of the Governing BodyG or a Senior ManagerG of the Authorised Market InstitutionG .
                Derived from RM118/2013 [VER15/07-13]

            • Internal Auditor

              • AMI 5.3.9

                The Internal AuditorG function is carried out by an individual who is responsible for the internal audit matters in relation to the Financial ServicesG carried on by the Authorised Market InstitutionG .

                Derived from RM118/2013 [VER15/07-13]

            • Residency of Key Individuals

              • AMI 5.3.10

                The Key IndividualG functions of a Senior Executive OfficerG , Compliance OfficerG and Money Laundering Reporting OfficerG must be carried out by an individual resident in the U.A.E.G

                Derived from RM118/2013 [VER15/07-13]

            • Combining Roles

              • AMI 5.3.11

                (1) To the extent practicable, an Authorised Market InstitutionG must not assign to its Key IndividualsG any commercial functions which conflict with their Key IndividualG functions or which impair, or are likely to impair, their ability to perform the relevant functions.
                (2) Before an Authorised Market InstitutionG assigns to a Key IndividualG any commercial functions, the Authorised Market InstitutionG must:
                (a) form a view on a reasonable basis that the commercial functions to be assigned to any Key IndividualG do not, as far as reasonably practicable, conflict with the relevant Key IndividualG functions or impair his ability to discharge those functions effectively; and
                (b) to the extent there are such conflicts inherent in the relevant functions, there are adequate procedures and controls to mitigate such conflicts.
                (3) The Authorised Market InstitutionG must maintain records of its decisions and procedures as applicable under (2) above.
                Derived from RM118/2013 [VER15/07-13]

                • AMI 5.3.11 Guidance

                  The DFSAG does not expect Key IndividualsG who are PersonsG undertaking control functions such as those relating to risk, compliance and audit to be assigned any functions or roles which are to further the Authorised Market Institution'sG commercial interests or objectives (such as business promotional activities) .

                  Derived from RM118/2013 [VER15/07-13]

          • AMI 5.4 Conflicts of Interests

            • AMI 5.4.1

              Without limiting the generality of the obligations under section 5.2 of GEN, an Authorised Market InstitutionG must take all reasonable steps to ensure that any conflicts of interest, including those:

              (a) between itself and its shareholders, MembersG or other users of its facilities; and
              (b) between its MembersG and other users of its facilities, and, among themselves,

              are promptly identified and then prevented or managed, or disclosed, in a manner that does not adversely affect the sound functioning and operation of the Authorised Market InstitutionG .

              Derived from RM118/2013 [VER15/07-13]

            • AMI 5.4.2

              Without limiting the generality of the requirement in Rule 5.4.1, an Authorised Market InstitutionG must establish and maintain adequate policies and procedures to ensure that its EmployeesG do not undertake personal account transactions in InvestmentsG in a manner that creates or has the potential to create conflicts of interest.

              Derived from RM118/2013 [VER15/07-13]

            • AMI 5.4.3

              An Authorised Market InstitutionG must establish a code of conduct that sets out the expected standards of behaviour for its EmployeesG , including clear procedures for addressing conflicts of interest. Such a code must be:

              (a) binding on EmployeesG ; and
              (b) to the extent appropriate and practicable, made publicly available.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.4.3 Guidance

                1. In assessing whether an Authorised Market Institution'sG policies and procedures are adequate to address conflicts of interests, the DFSAG will consider whether those include:
                a. policies on the use of confidential information received in carrying out its Regulatory FunctionsG to ensure it is only used for proper purposes;
                b. arrangements for transferring decisions or responsibilities to alternates in individual cases;
                c. arrangements made to ensure that individuals who may have a permanent conflict of interest in certain circumstances are excluded from the process of taking decisions (or receiving information) about matters to which the conflict is relevant; and
                d. requirements and procedures included in contracts of employment, staff rules, letters of appointment for members of the Governing BodyG and other Key IndividualsG and other guidance given to individuals on handling conflicts of interest relating to:
                i. the need for prompt disclosure of a conflict of interest to enable others who are not affected by the conflict to assist in deciding how it may need to be addressed;
                ii. the circumstances in which a general disclosure of a conflict of interest in advance may be sufficient;
                iii. the circumstances in which a general advance disclosure may not be adequate;
                iv. the circumstances in which it would be appropriate for a conflicted individual to withdraw from any involvement in the matter concerned, without disclosing the interests; and
                v. the circumstances in which safeguards in addition to disclosure would be required, such as the withdrawal of the individual from the decision-making process or from access to relevant information.
                2. See also the best practice standards relating to corporate governance and remuneration standards set out under in GEN Rules 5.3.30 and 5.3.31 and GEN App 3, which cover conflicts of interest issues that need to be addressed in order to promote sound governance and remuneration practices within an Authorised Market InstitutionG .
                Derived from RM118/2013 [VER15/07-13]

            • Performance of Regulatory Functions

              • AMI 5.4.4

                An Authorised Market InstitutionG must take all reasonable steps to ensure that the performance of its Regulatory FunctionsG is not adversely affected by its commercial interests.

                Derived from RM118/2013 [VER15/07-13]

              • AMI 5.4.5

                For the purposes of the requirement in Rule 5.4.4, an Authorised Market InstitutionG must have adequate systems and controls, including policies and procedures, to ensure that the pursuit of its commercial interests (including its profitability) does not adversely impact on the performance of its Regulatory FunctionsG .

                Derived from RM118/2013 [VER15/07-13]

                • AMI 5.4.5 Guidance

                  An Authorised Market InstitutionG should have systems for identifying, and drawing to the attention of its senior management, situations where its commercial interests conflict, or may potentially conflict, with the proper performance of its Regulatory FunctionsG . This would enable its senior management to take appropriate steps to ensure that such conflicts do not adversely affect the proper performance by the Authorised Market InstitutionG of its Regulatory FunctionsG . In particular, senior management should ensure that adequate human, financial and other resources (both in quantity and quality) are provided for risk management, regulatory, compliance and other similar functions.

                  Derived from RM118/2013 [VER15/07-13]

          • AMI 5.5 Operational Efficiency and Resilience

            • Systems and Controls

              • AMI 5.5.1

                (1) Without limiting the generality of the obligations relating to systems and controls in section 5.3 of GEN, an Authorised Market InstitutionG must ensure that its systems and controls are:
                (a) adequate to ensure that its operations are conducted at all times in accordance with the applicable requirements, including legislation;
                (b) sufficiently flexible and robust to ensure continuity and regularity in the performance of its functions relating to the operation of its facilities; and
                (c) appropriate to the nature, scale and complexity of its operations.
                (2) For the purposes of (1), the systems and controls of an Authorised Market InstitutionG must be adequate to enable it to meet the Licensing RequirementsG on an on-going basis. In particular, they must include adequate arrangements in relation to:
                (a) the assessment and management of all risks;
                (b) financial and technology resources;
                (c) the fitness and propriety of its EmployeesG ;
                (d) the operation of its functions;
                (e) outsourcing;
                (f) the safeguarding and administration of assets belonging to its MembersG and other participants on its facilities;
                (g) the transmission of information to MembersG and other participants on its facilities; and
                (h) the supervision and monitoring of transactions on its facilities.
                (3) An Authorised Market InstitutionG must undertake regular reviews of its systems and controls to ensure that they remain adequate and operate as intended.
                Derived from RM118/2013 [VER15/07-13]

                • AMI 5.5.1 Guidance

                  The systems and controls requirements in Rule 5.5.1 augment the systems and controls requirements in GEN chapter 5.

                  Derived from RM118/2013 [VER15/07-13]

            • AMI 5.5.2 Risk Management

              • AMI 5.5.2 Guidance

                1. An Authorised Market InstitutionG is subject to the risk management requirements in GEN Rules 5.3.55.3.7. Additional risk management requirements are prescribed for Authorised Market InstitutionG Operating a Clearing House in sections 7.2 and 7.3.
                2. The individual appointed pursuant to GEN Rule 5.3.7(1) to advise the Governing BodyG and the senior management of the Authorised Market InstitutionG relating to risks and management of such risks is the Key IndividualG performing the function of the Risk OfficerG pursuant to Rule 5.3.7; Key IndividualsG .
                3. In assessing the adequacy of an Authorised Market Institution'sG systems and controls for identifying, assessing and managing risks, the DFSAG may also have regard to the extent to which such systems and controls enable the Authorised Market InstitutionG to:
                a. identify all the general, operational, legal and market risks wherever they arise in its activities;
                b. measure and control the different types of risk;
                c. allocate responsibility for risk management to persons with appropriate levels of knowledge and expertise; and
                d. provide sufficient and reliable information to Key IndividualsG and, where relevant, the Governing BodyG of the Authorised Market InstitutionG .
                4. As part of assessing the adequacy of risk controls, the DFSAG will also consider how internal and external audits operate in the context of systems and controls. In doing so the following factors may be considered:
                a. the size, composition and terms of reference of any audit committee of the Authorised Market InstitutionG ;
                b. the frequency and scope of external audit;
                c. the provision and scope of internal audit;
                d. the staffing and resources of the Authorised Market Institution'sG internal audit department;
                e. the internal audit department's access to the Authorised Market Institution'sG records and other relevant information; and
                f. the position, responsibilities and reporting lines of the internal audit department and its relationship with other departments of the Authorised Market InstitutionG .
                5. In addition, the DFSAG will also consider the adequacy of the risk management function, in particular:
                a. the access which the individuals performing risk management function have to the Authorised Market Institution'sG records and other relevant information; and
                b. the position, responsibilities and reporting lines of the risk management department and its relationship with other departments of the Authorised Market InstitutionG .
                Derived from RM118/2013 [VER15/07-13]

            • Outsourcing

              • AMI 5.5.3

                (1) Without limiting the generality of the requirements in GEN Rules 5.3.21 and 5.3.22, an Authorised Market InstitutionG must, before entering into any material outsourcing arrangements with a service provider, obtain the DFSA'sG prior approval to do so.
                (2) For avoidance of doubt, the requirement in (1) applies to any outsourcing arrangements which were not in existence at the time the Authorised Market InstitutionG was granted its LicenceG .
                (3) In order to obtain the DFSA'sG prior approval for outsourcing arrangements referred to in (1), an Authorised Market InstitutionG must follow those procedures for obtaining the DFSA'sG prior approval for material changes specified in Rule 4.3.1(1).
                (4) The procedures in Schedule 3 to the Regulatory LawG apply to a decision of the DFSAG under this Rule to refuse to approve an outsourcing arrangement.
                (5) If the DFSAG decides to exercise its power under this Rule to refuse to approve an outsourcing arrangement, the Authorised Market InstitutionG may refer the matter to the FMTG for review.
                Derived from RM118/2013 [VER15/07-13]
                [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

                • AMI 5.5.3 Guidance

                  1. The requirements in GEN Rules 5.3.22 and 5.3.23 set out the requirements applicable when an Authorised Market InstitutionG outsources its functions and activities.
                  2. In assessing the adequacy of an Authorised Market Institution'sG systems and controls for identifying, assessing, and managing risks arising from functions which are outsourced, the DFSAG will have regard to:
                  a. due diligence procedures for selecting service providers and monitoring the performance of the relevant functions by them;
                  b. whether the Authorised Market InstitutionG has in place legally binding contracts with its service providers;
                  c. the business continuity and disaster recovery arrangements of the Authorised Market Institution'sG service provider;
                  d. whether the security and confidentiality of information provided to the service provider of the Authorised Market InstitutionG is guaranteed in accordance with the applicable legislation;
                  e. the concentration of outsourcing functions with one or more service providers;
                  f. the agreed procedures for terminating the outsourcing arrangements; and
                  g. whether the access to books and records of the service providers is granted to the Authorised Market InstitutionG and the DFSAG , including rights of inspection.
                  3. If an Authorised Market InstitutionG wishes to make any material changes to its outsourcing arrangements which were in existence at the time of the grant of its LicenceG , or any subsequent outsourcing arrangements made in accordance with the requirements in Rule 5.5.3, such changes require the DFSA'sG prior written approval pursuant to Rule 4.3.1(1).
                  Derived from RM118/2013 [VER15/07-13]

            • Financial Resources

              • AMI 5.5.4

                (1) An Authorised Market InstitutionG must, subject to (3) and (4), have and maintain at all times:
                (a) the minimum financial resource requirement in (2); and
                (b) additional financial resources of a type acceptable to the DFSAG which are adequate in relation to the nature, size and complexity of its business to ensure that there is no significant risk that liabilities cannot be met as they fall due.
                (2) The minimum financial resource requirement referred to in (1)(a) is:
                (a) an amount equal to one half of the estimated gross operating costs of the Authorised Market InstitutionG for the next twelvemonth period; or
                (b) such other capital amount as may be specified by the DFSAG .
                (3) The assets held by an Authorised Market InstitutionG for the purposes of meeting the financial resources requirements in (1):
                (a) must be of high quality and sufficiently liquid in order to allow the Authorised Market InstitutionG to meet its current and projected operating expenses under a range of adverse scenarios, including in adverse market conditions; and
                (b) must be held, where it comprises cash, by an entity which is a BankG , or a financial institution authorised and supervised by a Financial Services RegulatorG acceptable to the DFSAG with respect to the activity of deposit taking.
                (4) An Authorised Market InstitutionG must have systems and controls to enable it to determine and monitor whether its financial resources are sufficient for the purposes of the requirement in (1). For this purpose, the systems and controls of an Authorised Market InstitutionG must address the following factors, with any other factors that are relevant and appropriate to its operations model:
                (a) the nature, scale, and complexity of the activities and risks associated with its operations;
                (b) the operational, counterparty, market and settlement risks to which it is exposed;
                (c) the amount, composition and legal position of its available financial resources; and
                (d) its ability to access additional financial resources if required.
                (5) An Authorised Market InstitutionG must monitor and manage the concentration of credit and liquidity exposures to commercial banks and clearing MembersG .
                (6) The procedures in Schedule 3 to the Regulatory LawG apply to a decision of the DFSAG under (2)(b) to specify a capital amount after a LicenceG has been granted.
                (7) If the DFSAG decides to exercise its power under (2)(b) to specify a capital amount after a LicenceG has been granted, the Authorised Market InstitutionG may refer the matter to the FMTG for review.
                Derived from RM118/2013 [VER15/07-13]
                [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

                • AMI 5.5.4 Guidance

                  1. The minimum financial resource requirement under Rule 5.5.4(1) is designed to ensure that an Authorised Market InstitutionG not only has sufficient financial resources to meet its liabilities as they fall due, but also to allow, if circumstances require, for the orderly wind-down of the Authorised Market InstitutionG 's business, while still allowing the institution to meet the applicable requirements, including conditions on its LicenceG .
                  2. The systems and controls should enable the Authorised Market InstitutionG to assess whether the financial resources required for it to conduct its affairs are in place at all times. Such assessments should be made periodically or after any significant change or event, whether internal or external, that would have an impact on the operations of the Authorised Market InstitutionG . These assessments are necessary to demonstrate to the DFSAG that the Licensing RequirementsG are being satisfied on an on-going basis.
                  3. In determining whether to set a minimum capital amount pursuant to Rule 5.5.4(2)(b), the DFSAG will take into account the risks that the Authorised Market InstitutionG poses to the DIFCG market and the products which are, or are intended to be, traded, cleared or settled.
                  Derived from RM118/2013 [VER15/07-13]

            • Technology Resources

              • AMI 5.5.5

                (1) An Authorised Market InstitutionG must have sufficient technology resources to operate, maintain and supervise its facilities.
                (2) The Authorised Market InstitutionG must be able to satisfy the DFSAG that its technology resources are established and maintained in such a way as to ensure that they are secure and maintain the confidentiality of the data they contain.
                (3) An Authorised Market InstitutionG must ensure that its MembersG and other participants on its facilities have sufficient technology resources which are compatible with its own.
                (4) For the purposes of meeting the requirement in (1), an Authorised Market InstitutionG must have adequate procedures and arrangements for the evaluation, selection and on-going monitoring of information technology systems. Such procedures and arrangements must, at a minimum, provide for:
                (a) problem management and system change;
                (b) testing information technology systems before live operations in accordance with the requirements in Rule 5.5.6;
                (c) monitoring and reporting on system performance, availability and integrity; and
                (d) adequate measures to ensure:
                (i) the information technology systems are resilient and not prone to failure;
                (ii). business continuity in the event that an information technology system fails;
                (iii) protection of the information technology systems from damage, tampering, misuse or unauthorised access; and
                (iv) the integrity of data forming part of, or being processed through, information technology systems.
                (5) An Authorised Market InstitutionG must meet the applicable requirements in App 1 for the purposes of:
                (a) testing the adequacy and effectiveness of its own information technology systems; and
                (b) assessing the adequacy and effectiveness of information technology systems of its MembersG .
                Derived from RM118/2013 [VER15/07-13]

                • AMI 5.5.5 Guidance

                  1. In assessing an Authorised Market InstitutionG 's systems and controls used to operate and carry on its functions, the DFSAG recognises that an Authorised Market InstitutionG is likely to have significant reliance on its information technology systems. In assessing the adequacy of these systems, the DFSAG will consider:
                  a. the organisation, management and resources of the information technology department of the Authorised Market InstitutionG ;
                  b. the arrangements for controlling and documenting the design, development, implementation and use of technology systems; and
                  c. the performance, capacity and reliability of information technology systems.
                  2. In particular, when assessing whether an Authorised Market InstitutionG has adequate information technology resourcing, the DFSAG will consider:
                  a. whether its systems have sufficient electronic capacity to accommodate reasonably foreseeable volumes of messaging and orders, and
                  b. whether such systems are adequately scalable in emergency conditions that might threaten the orderly and proper operations of its facility.
                  Derived from RM118/2013 [VER15/07-13]

            • Regular Review of Systems and Controls

              • AMI 5.5.6

                (1) An Authorised Market InstitutionG must undertake regular review and updates of its information technology systems and controls as appropriate to the nature, scale and complexity of its operations.
                (2) For the purposes of (1), an Authorised Market InstitutionG must adopt well defined and clearly documented development and testing methodologies which are in line with internationally accepted testing standards.
                Derived from RM118/2013 [VER15/07-13]

                • AMI 5.5.6 Guidance

                  Through the use of such testing methodologies, the Authorised Market InstitutionG should be able to ensure, amongst other things, that:

                  a. its systems and controls are compatible with its operations and functions;
                  b. compliance and risk management controls embedded in its system operate as intended (for example, by generating error reports automatically); and
                  c. it can continue to work effectively in stressed market conditions.
                  Derived from RM118/2013 [VER15/07-13]

          • AMI 5.6 Business Rules

            • Content of Business Rules

              • AMI 5.6.1

                (1) An Authorised Market InstitutionG must establish and maintain Business RulesG in accordance with the requirements in this section. Such rules must include:
                (a) criteria governing the admission of MembersG and any other PersonsG to whom access to its facilities is provided;
                (b) criteria governing the admission of Investments to trading, or clearing and settlement, as appropriate to its facilities;
                (c) Default RulesG ; and
                (d) any other matters necessary for the proper functioning of the Authorised Market InstitutionG and the facilities operated by it.
                (2) An Authorised Market Institution'sG Business RulesG must:
                (a) be based on objective criteria and non-discriminatory;
                (b) be clear and fair;
                (c) set out the Members' and other participants' obligations:
                (i) arising from the Authorised Market Institution'sG constitution and other administrative arrangements;
                (ii) when undertaking transactions on its facilities; and
                (iii) relating to professional standards that must be imposed on staff and agents of the MembersG and other participants when undertaking transactions on its facilities;
                (d) be legally binding and enforceable against the MembersG and other participants;
                (e) be made publicly available free of charge;
                (f) contain provisions for the resolution of Members'G and other participants' disputes and an appeal process from the decisions of the Authorised Market InstitutionG ; and
                (g) contain disciplinary proceedings, including any sanctions that may be imposed by the Authorised Market InstitutionG against its MembersG and other participants.
                Derived from RM118/2013 [VER15/07-13]

                • AMI 5.6.1 Guidance

                  1. The DFSAG assesses, at the point of grant of a LicenceG to an Authorised Market InstitutionG , the adequacy of its Business RulesG and its systems and controls to ensure effective monitoring of compliance with such rules. Thereafter, any amendment to the Business RuleG s can only be made in accordance with the requirements set out in Rules 5.6.4 to 5.6.7 in this section.
                  2. Persons other than MembersG may have access to an Authorised Market InstitutionG 's facilities. See Rule 6.9.1(1)(a)(ii).
                  Derived from RM118/2013 [VER15/07-13]

            • Default Rules

              • AMI 5.6.2

                An Authorised Market InstitutionG must have Default RulesG which, in the event of a MemberG or other participant on its facilities being, or appearing to be, unable to meet its obligations in respect of one or more contracts, enable action to be taken in respect of unsettled market contracts to which the MemberG or that other participant is a party.

                Derived from RM118/2013 [VER15/07-13]

                • AMI 5.6.2 Guidance

                  The DFSAG requires all Authorised Market InstitutionG to have Default RulesG under Article 28 of the Markets Law. Default RulesG allow an Authorised Market InstitutionG to close-out open positions by discharging the appropriate rights and liabilities of transactions which a MemberG or any other PersonG granted access to its facilities cannot, or may not be able to, fulfil.

                  Derived from RM118/2013 [VER15/07-13]

            • Monitoring Compliance with Business Rules

              • AMI 5.6.3

                An Authorised Market InstitutionG must have adequate compliance procedures in place to ensure that:

                (a) its Business RulesG are monitored and enforced;
                (b) any complaints relating to its operations or regarding MembersG and other participants on its facilities are promptly investigated;
                (c) where appropriate, disciplinary action resulting in financial and other types of penalties can be taken;
                (d) appeal procedures are in place; and
                (e) referrals can be made to the DFSAG in appropriate circumstances.
                Derived from RM118/2013 [VER15/07-13]

                • AMI 5.6.3 Guidance

                  1. In determining whether an Authorised Market InstitutionG can effectively monitor its Business RulesG , the DFSAG will consider:
                  a. the oversight of activity conducted on its facilities;
                  b. the range of powers it retains over MembersG and other PersonsG granted access to its facilities, which should include the ability to modify, revoke or suspend access; and
                  c. the disciplinary procedures which have been established to take disciplinary action, including a fair and clear policy on any financial penalties which may be imposed, and the appeal processes.
                  2. In determining whether an Authorised Market InstitutionG can effectively oversee the activities conducted on its facilities, the DFSAG will consider how non-compliance is identified and how the significance of any non-compliance is assessed.
                  Derived from RM118/2013 [VER15/07-13]

            • Amendments to Business Rules

              • AMI 5.6.4

                (1) An Authorised Market InstitutionG may only adopt new Business RulesG or make any amendments to existing Business RulesG in accordance with the requirements in Rules 5.6.5, 5.6.6 and 5.6.7.
                (2) A reference to an amendment in Rules 5.6.5, 5.6.6 and 5.6.7 includes the introduction of a new Business RuleG or a change to an existing Business RuleG or a proposal to do so.
                Derived from RM118/2013 [VER15/07-13]

            • Public Consultation

              • AMI 5.6.5

                (1) An Authorised Market InstitutionG must, subject to Rule 5.6.6, before making any amendment to its Business RulesG , undertake public consultation on the proposed amendment in accordance with the requirements in this Rule.
                (2) For the purposes of (1), an Authorised Market InstitutionG must:
                (a) publish a consultation paper setting out:
                (i) the text of both the proposed amendment and the Business RulesG that are to be amended;
                (ii) the reasons for proposing the amendment; and
                (iii) a reasonable consultation period, which must not be less than 30 days from the date of publication, within which MembersG and other stakeholders may provide comments; and
                (b) lodge with the DFSAG the consultation paper referred to in (a) no later than the time at which it is released for public comment.
                (3) The DFSAG may, where it considers on reasonable grounds that it is appropriate to do so, require the Authorised Market InstitutionG to extend its proposed period of public consultation specified in the consultation paper. An Authorised Market InstitutionG must comply with such a requirement.
                (4) An Authorised Market InstitutionG must:
                (a) facilitate, as appropriate, informal discussions on the proposed amendment with MembersG and other stakeholders including any appropriate representative bodies of such PersonsG ;
                (b) consider the impact the proposed amendment has on the interests of its MembersG and other stakeholders;
                (c) have proper regard to any public comments received.
                (5) Following public consultation, an Authorised Market InstitutionG must, before the date on which the proposed amendment comes into effect, lodge with the DFSAG :
                (a) a summary of any public comments received, and how any issues raised by those comments have been addressed; and
                (b) any changes made to the initial proposals as a result of the public comments, and if no changes have been made, a statement to that effect.
                Derived from RM118/2013 [VER15/07-13]

            • Dispensation of Public Consultation

              • AMI 5.6.6

                (1) The DFSAG may, on written application by an Authorised Market InstitutionG , dispense with the requirement in Rule 5.6.5 for public consultation where:
                (a) any delay resulting from public consultation is likely to be detrimental to the interests of the DIFCG markets; or
                (b) either the proposed amendment:
                (i) is purely administrative or immaterial; or
                (ii) the Authorised Market InstitutionG can demonstrate to the satisfaction of the DFSAG that it had taken into account the views and interests of its MembersG and other stakeholders as appropriate in developing the proposed amendment; and
                (c) the Authorised Market InstitutionG complies with the requirements in (2) or (3) as applicable.
                (2) An Authorised Market InstitutionG which seeks to dispense with public consultation on the ground referred to in (1)(a) must lodge with the DFSAG a statement setting out:
                (a) the text of both the proposed amendment and the Business RulesG that are to be amended:
                (b) the reasons for proposing the amendment;
                (c) the grounds on which it believes that a delay resulting from public consultation is likely to be detrimental to the DIFCG markets; and
                (d) whether any rights or obligations of any MembersG of the Authorised Market InstitutionG or other participants on its facilities are to be materially adversely affected by the proposed amendment, and if so, what measures are proposed to address such concerns.
                (3) An Authorised Market InstitutionG which seeks to dispense with public consultation on the ground referred to in (1)(b) must lodge with the DFSAG a statement setting out:
                (a) the text of both the proposed amendment and the Business RulesG that are to be amended; and
                (b) either:
                (i) the reasons it believes that the proposed amendment is purely administrative or immaterial; or.
                (ii) that it had taken into account the views and interests of its MembersG and other stakeholders as appropriate in developing the proposed amendment.
                Derived from RM118/2013 [VER15/07-13]

                • AMI 5.6.6 Guidance

                  For the purposes of demonstrating to the DFSAG that the Authorised Market InstitutionG had taken into account the views and interests of its MembersG and other relevant stakeholders, an Authorised Market InstitutionG may rely on the input provided by its user committees where the user committees meet best practice set out in GEN App3, Guidance No. 9–12.

                  Derived from RM118/2013 [VER15/07-13]

            • DFSA Approval

              • AMI 5.6.7

                (1) An Authorised Market InstitutionG must seek the DFSA'sG approval of any proposed amendment to the Business RulesG before the rules are to come into effect.
                (2) The DFSAG will approve the proposed amendment to the Business RulesG unless it has reasonable grounds to believe that the proposed amendment is reasonably likely to be detrimental to the interests of the DIFCG markets.
                (3) Where the DFSAG has any concerns about the proposed amendment, it may:
                (a) either reject the proposed amendment or request the Authorised Market InstitutionG to withdraw the proposed amendments; or
                (b) require the Authorised Market InstitutionG to make appropriate changes to the proposed amendment, with or without public consultation.
                (4) The DFSAG must give to the Authorised Market InstitutionG reasons for its decisions under (3)(a) or (b) as applicable.
                (5) An Authorised Market InstitutionG must, as soon as practicable after receiving the DFSAG approval, notify the MembersG and the public of the amendment to its Business RulesG and the date on which the amendment becomes effective.
                (6) If the DFSAG decides to exercise its power under (3)(a) or (b), the Authorised Market InstitutionG may refer the matter to the FMTG for review.
                Derived from RM118/2013 [VER15/07-13]
                [Amended] DFSA RM133/2014 (Made 21st August 2014). [VER16/06-14]

                • AMI 5.6.7 Guidance

                  1. The DFSAG does not formally approve the proposed amendments at the point of release of the proposed amendment for public consultation; instead that approval occurs at the end of the public consultation period because the DFSAG can properly take into account any public comments and changes resulting from public comments only at the end of the public consultation period.
                  2. However, the DFSAG may, upon receipt of the proposed amendment, request an extension of the public consultation period if it considers on reasonable grounds that such an extension is appropriate. The circumstances in which the DFSAG may require an extended period of public consultation beyond 30 days include where the proposed amendment is likely to have a significant adverse impact on the Members'G rights and obligations or the interests of other participants in the DIFCG markets. An Authorised Market InstitutionG may rely on the results of soft consultation with Members and other stakeholders, or with any user committees it has established, to demonstrate that the proposed amendment does not warrant public consultation.
                  3. Generally, the DFSAG expects to have a quick turnaround time in granting formal approval where no public comments have been received on public consultation or the proposed amendment are not extensive.
                  Derived from RM118/2013 [VER15/07-13]

          • AMI 5.7 Access to Facilities

            • Member Criteria

              • AMI 5.7.1

                (1) An Authorised Market InstitutionG must not grant access to its facilities to a PersonG except in accordance with the requirements in this module and its Business RulesG .
                (2) A PersonG who has been granted access to the facilities of an Authorised Market InstitutionG pursuant to its Business RulesG is a MemberG of the Authorised Market InstitutionG , except where otherwise provided.
                Derived from RM118/2013 [VER15/07-13]

                • AMI 5.7.1 Guidance

                  1. Generally only PersonsG admitted as MembersG in accordance with the Business RulesG will have access to the facilities of an Authorised Market InstitutionG .
                  2. However, in certain circumstances, an Authorised Market InstitutionG may permit access to its facilities to PersonsG other than MembersG (see Rules 5.7.3). Such access would generally be provided through a MemberG and subject to adequate controls put into place by the Member.
                  Derived from RM118/2013 [VER15/07-13]

                • AMI 5.7.2

                  (1) An Authorised Market InstitutionG may only, subject to (2) and (3), admit as a MemberG a PersonG which is:
                  (a) an Authorised PersonG ;
                  (b) a PersonG who is admitted to the list of Recognised PersonsG pursuant to Article 37 of the Markets Law 2012; or
                  (c) a PersonG who meets the criteria in GEN Rule 2.3.2(2).
                  (2) An Authorised Market InstitutionG must not admit as a MemberG a PersonG referred to in (1)(c) unless such PersonG :
                  (a) agrees in writing to submit unconditionally to the jurisdiction of the DFSAG in relation to any matters which arise out of or which relate to its use of the facilities of the Authorised Market InstitutionG ;
                  (b) agrees in writing to submit unconditionally to the jurisdiction of the DIFCG Courts in relation to any proceedings in the DIFCG , which arise out of or relate to its use of the facilities of the Authorised Market InstitutionG ;
                  (c) agrees in writing to subject itself to the DIFCG laws and the jurisdiction of the DIFCG Courts in relation to its use of the facilities of the Authorised Market InstitutionG ; and
                  (d) appoints and maintains at all times, an agent for service of process in the DIFCG and requires such agent to accept its appointment for service of process.
                  (3) Prior to admitting a PersonG referred to in (1) as a MemberG , an Authorised Market InstitutionG must undertake due diligence to ensure that such a PersonG :
                  (a) is of sufficient good repute;
                  (b) has a sufficient level of competence and experience, including appropriate standards of conduct for its staff who will be permitted to use its order entry system; and
                  (c) has organisational arrangements, including financial and technological resources, which are no less than those of an Authorised FirmG carrying out similar Financial ServicesG .
                  Derived from RM118/2013 [VER15/07-13]

                  • AMI 5.7.2 Guidance

                    1. A PersonG who can be admitted under the criterion in Rule 5.7.2(1)(c) (i.e. a PersonG referred to in GEN Rule 2.3.2(2)) is a PersonG undertaking Commodity DerivativeG transactions on the relevant Authorised Market InstitutionG only on its own behalf or on behalf of a wholly owned holding company or subsidiary of such company.
                    2. In assessing the membership criteria used by an Authorised Market InstitutionG to permit access to its facilities, the DFSAG will consider:
                    a. whether the Business RulesG can be enforced contractually against MembersG ;
                    b. whether the criteria are objective and applied in a non-discriminatory manner; and
                    c. the financial resource requirements for those not authorised by the DFSAG .
                    3. Pursuant to Rule 5.7.2(3)(c), an Authorised Market InstitutionG is required to assess the adequacy of the organisational arrangements of a candidate to become a MemberG , if it is not an Authorised FirmG , against the organisational requirements that would apply to such a PersonG had it been an Authorised FirmG undertaking similar activities. For example, a PersonG which is not an Authorised FirmG should have organisational resources that are equivalent to a firm LicensedG to carry on the Financial ServiceG of Dealing as AgentG and/or Dealing as PrincipalG .
                    Derived from RM118/2013 [VER15/07-13]

            • Direct Electronic Access

              • AMI 5.7.3

                (1) An Authorised Market InstitutionG may only permit a MemberG to provide its clients Direct Electronic AccessG to the Authorised Market Institution'sG trading facilities where:
                (a) the clients meet the suitability criteria established by the MemberG in order to meet the requirements in (2):
                (b) the MemberG retains responsibility for the orders and trades executed by the clients who are using Direct Electronic AccessG ; and
                (c) the MemberG has adequate mechanisms to prevent the clients placing or executing orders using Direct Electronic AccessG in a manner that would result in the MemberG exceeding its position or margin limits.
                (2) An Authorised Market InstitutionG which permits its MembersG to allow their clients to have Direct Electronic AccessG to its trading facilities must:
                (a) set appropriate standards regarding risk controls and thresholds on trading through Direct Electronic AccessG ;
                (b) be able to identify orders and trades made through Direct Electronic AccessG ; and
                (c) if necessary, be able to stop orders or trades made by a client using Direct Electronic AccessG provided by the MemberG without affecting the other orders or trades made or executed by that MemberG .
                (3) For the purposes of this Rule and elsewhere in the RulebookG , Direct Electronic AccessG means any arrangement, such as the use of the Member'sG trading code, through which a MemberG or the clients of that MemberG are able to transmit orders relating to InvestmentsG directly to the facility provided by the Authorised Market InstitutionG .
                (4) For avoidance of doubt, a PersonG who is permitted to have Direct Electronic AccessG to an Authorised Market InstitutionG 's facilities through a MemberG is not, by virtue of such permission, a MemberG of the Authorised Market InstitutionG .
                Derived from RM118/2013 [VER15/07-13]

                • AMI 5.7.3 Guidance

                  In assessing the adequacy of the criteria used by an Authorised Market InstitutionG to permit its MembersG to allow their clients to have Direct Electronic AccessG to Authorised Market InstitutionG 's facilities, the DFSAG will consider:

                  a. whether such criteria include contractually binding arrangements between the MemberG and the clients;
                  b. whether such clients are subject to adequate training, competence and experience requirements and checks;
                  c. how electronic access is approved and secured and the measures taken to prevent or resolve problems which would arise from the failure of such access;
                  d. the rules and guidance governing the Person'sG , procedures, controls and security arrangements for inputting instructions into the system;
                  e. the rules and guidance governing facilities offered to Person'sG permitted for inputting instructions into the system and restrictions placed on the use of those systems;
                  f. the rules and practices to detect, identify and halt or remove instructions breaching any relevant instructions;
                  g. the quality and completeness of the audit trail of any transaction processed through an electronic connection system; and
                  h the procedures to determine whether to suspend trading by those systems or access to them by or through individual MembersG .
                  Derived from RM118/2013 [VER15/07-13]

          • AMI 5.8 Admission of Investments to Trading or Clearing

            • Investment Criteria

              • AMI 5.8.1

                (1) An Authorised Market InstitutionG must have clear and objective criteria ("investment criteria") included in its Business RulesG according to which InvestmentsG can be admitted to trading, or traded, on its facilities, or cleared and settled on its facilities, or both, as relevant to its operations. The investment criteria must include the requirements in (2) and (3) as relevant.
                (2) An Authorised Market InstitutionG must ensure that InvestmentsG are admitted to trading or traded on an ExchangeG it operates only if:
                (a) in the case of SecuritiesG , the SecuritiesG are admitted to the Official List of SecuritiesG ; and
                (b) in the case of DerivativeG contracts, the contracts meet the contract design specifications in Rule 6.3.2.
                (3) An Authorised Market InstitutionG must ensure that InvestmentsG are traded on an MTFG it operates only if:
                (a) in the case of SecuritiesG , the SecuritiesG are admitted to trading on a Regulated ExchangeG in a jurisdiction acceptable to the DFSAG ; and
                (b) in the case of DerivativeG contracts, the contracts meet the contract design specifications in Rule 6.3.2.
                (4) Where an Authorised Market InstitutionG admits to trading or clearing or trades on its facilities InvestmentsG the value of which is determined by reference to an underlying benchmark or index provided by a Price Information ProviderG , it must only do so in accordance with the requirements in App 2.
                Derived from RM118/2013 [VER15/07-13]
                [Amended] DFSA RM170/2016 (Made 10th February 2016). [VER17/04-16]

                • AMI 5.8.1 Guidance

                  1. Investment criteria are only one aspect of requirements applicable to an Authorised Market InstitutionG when trading or clearing and settling InvestmentsG on its facilities. There are other requirements applicable to such activities, which are contained in this module.
                  2. Any SecuritiesG that are admitted to the Official List of SecuritiesG maintained by the DFSAG meet the requirement in Rule 5.8.1(2)(a).
                  Derived from RM118/2013 [VER15/07-13]
                  [Amended] DFSA RM170/2016 (Made 10th February 2016). [VER17/04-16]

          • AMI 5.9 Integrity and Transparency

            • Integrity and Fair Dealing

              • AMI 5.9.1

                An Authorised Market InstitutionG must be able and willing to:

                (a) promote and maintain high standards of integrity and fair dealing in the carrying on of business on or through its facilities; and
                (b) co-operate with the DFSAG or other appropriate regulatory authorities with regard to regulatory matters when required.
                Derived from RM118/2013 [VER15/07-13]

                • AMI 5.9.1 Guidance

                  1. In determining whether an Authorised Market InstitutionG is able and willing to promote high standards of integrity and fair dealing, the DFSAG will consider:
                  a. the extent to which an Authorised Market InstitutionG seeks to promote and encourage such standards through its rules, policies, procedures and practices;
                  b. the extent to which MembersG are required to, and do, adhere to such standards; and
                  c. any other Rules and principles which apply to the carrying on of business on or through its facilities.
                  2. In assessing the ability and willingness of an Authorised Market InstitutionG to cooperate with the DFSAG and other regulatory authorities, the DFSAG will consider:
                  a. the agreements in place, including those between MembersG and other participants granted access to the facilities and the relevant Authorised Market InstitutionG , for sharing information, such as information regarding large open positions; and
                  b. how diligently the Authorised Market InstitutionG responds to enquiries from the DFSAG or other regulatory authorities.
                  Derived from RM118/2013 [VER15/07-13]

            • Transparency

              • AMI 5.9.2

                (1) An Authorised Market InstitutionG must have clear and comprehensive policies and procedures for providing sufficient information to enable MembersG and other participants on its facilities to have an accurate understanding of the risks, fees, and other material costs of using its facilities.
                (2) An Authorised Market InstitutionG must make the policies and procedures referred to in (1) publicly available.
                Derived from RM118/2013 [VER15/07-13]

                • AMI 5.9.2 Guidance

                  In assessing whether an Authorised Market InstitutionG has adequate policies and procedures for disclosing sufficient information to enable its Members and other participants to fully understand the risks, fees and other material costs in using its facilities, the DFSAG will consider whether such information:

                  a. includes explanatory material relating to the system's design and operations, to the rights and obligations of MembersG and other participants, and to any risks in participating in such facilities;
                  b. includes its fees at the level of individual services it offers as well as its policies on any available discounts;
                  c. is provided in a clear and easy to understand manner and is accurate, up-to-date, and readily available to all current and prospective MembersG and other participants on its facilities; and
                  d. is made public, through placing such information on its website and other appropriate means.
                  Derived from RM118/2013 [VER15/07-13]

            • Transaction Recording

              • AMI 5.9.3

                Without limiting the requirements in GEN Rules 5.3.24 to 5.3.27, an Authorised Market InstitutionG must ensure that satisfactory arrangements are made for:

                (a) recording the activities and transactions, including orders and order audit trails, effected on or through its facilities;
                (b) maintaining the activity and transaction records for at least 6 years from the date of the transaction or order entry;
                (c) providing the DFSAG with these records in a timely manner if required by the DFSAG ; and
                (d) due observance of the applicable data protection and associated requirements.
                Derived from RM118/2013 [VER15/07-13]

                • AMI 5.9.3 Guidance

                  1. The type of information that requires recording will vary according to the activity and type of transactions conducted on or through the facilities of the Authorised Market InstitutionG .
                  2. In general, for an Authorised Market InstitutionG Licensed to Operate an ExchangeG , the type of information which should be recorded will include:
                  a. the name of the relevant InvestmentG and the price, quantity and date of the transaction, including the order audit trail (i.e. orders entered into the system and subsequently amended or cancelled);
                  b. the order type, time of instruction and expiry date;
                  c. the identities and, where appropriate, the roles of the counterparties to the transaction;
                  d. the facilities on which the transaction was effected and is to be cleared and settled; and
                  e. the date and manner of settlement of the transaction.
                  3. In general, for an Authorised Market InstitutionG LicensedG to Operate a Clearing HouseG , the type of information which should be recorded will include:
                  a. the name of the relevant InvestmentG and the price, quantity and date of the transaction;
                  b. the identities and, where appropriate, the roles of the counterparties to the transaction;
                  c. the facilities on which the transaction was effected and is to be cleared;
                  d. where applicable, the time novation takes place; and
                  e. the date and manner of settlement of the transaction.
                  4. In addition to the DFSAG requirements in this module and in GEN, the requirements in the Data Protection Law 2007, DIFC Law No 1 of 2007, apply to an Authorised Market InstitutionG . Therefore, in complying with the DFSAG requirements relating to record keeping, an Authorised Market InstitutionG should consider its obligations under the Data Protection Law 2007.
                  Derived from RM118/2013 [VER15/07-13]

          • AMI 5.10 Safeguarding and Administration of Assets

            • AMI 5.10.1

              An Authorised Market InstitutionG must ensure that, where its obligations include making provision for the safeguarding and administration of assets belonging to MembersG and other participants on its facilities:

              (a) satisfactory arrangements ("safe custody arrangements") are made for that purpose in accordance with Rules 5.10.2 and 5.10.3; and
              (b) are provided on clear terms of agreement between the MembersG and other participants on the facility and the Authorised Market InstitutionG .
              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.10.1 Guidance

                1. In determining whether an Authorised Market InstitutionG has satisfactory arrangements for safeguarding and administering assets, the DFSAG will consider:
                a. the terms of the agreement under which safe custody arrangements are made and whether they adequately provide for the matters specified in Rule 5.10.2;
                b. the level of protection provided to MembersG and other participants on its facilities against the risk of theft, fraud, defalcation or other types of loss through such arrangements; and
                c. the degree of monitoring the Authorised Market InstitutionG would be undertaking relating to custodians, and if relevant, sub-custodians.
                2. At the point of granting a LicenceG to an Authorised Market InstitutionG , the DFSAG assesses the adequacy of an applicant's safe custody arrangements. Any subsequent changes to the safe custody arrangements that have been in place at the time of granting the LicenceG , where they are material changes, would require the DFSA'sG prior approval in accordance with the requirements in Rule 4.3.2.
                Derived from RM118/2013 [VER15/07-13]

            • AMI 5.10.2

              An Authorised Market InstitutionG must ensure that the safe custody arrangements, at a minimum, provide for:

              (a) the segregation of assets belonging to every MemberG and other participant on its facilities from the assets belonging to the Authorised Market InstitutionG and the other MembersG and participants on its facilities;
              (b) the prompt access by the Authorised Market InstitutionG to the assets held under the safe custody arrangements;
              (c) the use or transfer of asset belonging to the MembersG and other participants on its facilities to be made only in accordance with the instructions of the relevant owners of those assets or in accordance with the terms of the agreement referred to in Rule 5.10.1(b) and any applicable legislation;
              (d) the reconciliation at appropriate intervals and frequency between the assets and accounts held under the safe custody arrangements; and
              (e) accurate records relating to the assets held under the safe custody arrangements to be kept, including:
              (i) the identity of the legal and beneficial owners of the relevant assets, and where appropriate, any PersonsG who have charges over, or other interests in, those assets;
              (ii) records of any additions, reductions and transfers in each individual account of assets; and
              (iii) the identity of the assets owned by (or where appropriate on behalf of) different PersonsG , including, where appropriate, the assets owned by MembersG and other participants on its facilities.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.10.2 Guidance

                In assessing whether an Authorised Market InstitutionG 's safe custody arrangements meet the requirements in Rule 5.10.2, the DFSAG would particularly look at:

                a. the frequency with which statements of the holdings are provided to the MembersG and other participants on its facilities whose assets are held under the safe custody arrangements;
                b. the records of the assets held and the identity of the beneficial and legal owners and any other persons with rights over such assets, and whether the Authorised Market InstitutionG maintains a register of charges over Investments traded or cleared on its facility;
                c. the records of any instructions given in relation to those assets;
                d. the records of the carrying out of those instructions;
                e. the records of any movements in those assets (or any corporate actions or other events in relation to those assets); and
                f. how the Authorised Market InstitutionG reconciles its records of assets held with the records of any custodian or sub-custodian used to hold those assets, and with the record of beneficial or legal ownership of those assets.
                Derived from RM118/2013 [VER15/07-13]

            • AMI 5.10.3

              An Authorised Market InstitutionG must not appoint any PersonG as a third party custodian unless that PersonG :

              (a) is appropriately authorised under its LicenceG or subject to regulation and supervision by a Financial Services RegulatorG acceptable to the DFSAG for the activity of deposit taking or providing custody and depository services; and
              (b) is prohibited from appointing sub-custodians except where the subcustodians meet the requirements in (a).
              Derived from RM118/2013 [VER15/07-13]

              • AMI 5.10.3 Guidance

                1. An Authorised Market InstitutionG should undertake due diligence to ensure, in the case of any custodians or sub-custodians which are not regulated by the DFSAG , that they are appropriately licensed and supervised for the activity of deposit taking or custody and depository services by a Financial Services RegulatorG in their home jurisdiction.
                2. In order to meet the requirements relating to sub-custody arrangements, an Authorised Market InstitutionG should include clear provisions in the contract with its appointed custodians whether or not sub-custodians may be appointed and if so, the procedures for appointing the sub-custodians, in accordance with the requirements in Rule 5.10.3(b). There should also be contractual requirements for advance notification to the Authorised Market InstitutionG of any changes to the sub-custodians.
                3. If an Authorised Market InstitutionG proposes to make new custody arrangements or make any material changes to its existing custody arrangements, such changes trigger the prior DFSAG approval requirements in Rule 4.3.2. This requirement would be triggered, for example, if the appointed custodians at the time of the grant of the LicenceG had not used sub-custodians but subsequently propose to do so.
                Derived from RM118/2013 [VER15/07-13]

          • AMI 5.11 Promotion and Maintenance of Standards

            • Orderly conduct on facilities

              • AMI 5.11.1

                An Authorised Market InstitutionG must have an effective market surveillance program to:

                (a) ensure that business conducted on or through its facilities is conducted in an orderly manner and in accordance with the applicable Business RulesG and other applicable requirements so as to afford proper protection to investors; and
                (b) monitor for conduct which may amount to Market AbuseG , financial crime or money laundering.
                Derived from RM118/2013 [VER15/07-13]

                • AMI 5.11.1 Guidance

                  1. To satisfy the DFSAG that Rule 5.11.1(a) is met, an Authorised Market InstitutionG should have rules and procedures in place for:
                  a. preventing and detecting the use of its facilities for abusive, improper or fraudulent purposes; and
                  b. preventing the improper, reckless or negligent use of its facilities.
                  2. In determining whether an Authorised Market InstitutionG is ensuring that business conducted on its facilities is conducted in an orderly manner, the DFSAG will consider:
                  a. arrangements for pre and post trade transparency, taking into account the nature and liquidity of the Investments traded; and
                  b. the need to provide anonymity for trading participants.
                  3. An Authorised Market InstitutionG Operating an ExchangeG will also have appropriate procedures allowing it to influence trading conditions, impose a trading halt promptly when required, and to support or encourage liquidity when necessary to maintain an orderly market. The DFSAG will consider the transparency of such procedures and the fairness of their application and potential application.
                  4. In addition, MembersG who are Authorised Firms should be able to satisfy any other legal obligations they may have, including those to ClientsG that may exist under COBG .
                  5. AMLG module contains AML obligations of an Authorised Market InstitutionG .
                  Derived from RM118/2013 [VER15/07-13]

            • Prevention of Market Abuse, Money Laundering and Financial Crime

              • AMI 5.11.2

                (1) Without limiting the generality of Rule 5.11.1, an Authorised Market InstitutionG must:
                (a) operate appropriate measures to identify, deter and prevent Market AbuseG , money laundering and financial crime on and through the Authorised Market Institution'sG facilities; and
                (b) report promptly to the DFSAG any Market AbuseG , money laundering and financial crime, as required.
                (2) For the purposes of (1)(a), an Authorised Market InstitutionG must:
                (a) include in its Business RulesG a regime to prevent Market AbuseG , money laundering and financial crime that meets the requirements in (3), which is applicable to its Members; and
                (b) implement adequate measures to ensure that its MembersG comply with that regime.
                (3) The regime referred to in (2)(a) must, at a minimum, include rules and procedures in relation to:
                (a) compliance arrangements to prevent Market AbuseG , money laundering and financial crime;
                (b) transaction monitoring;
                (c) risk assessment; and
                (d) training.
                Derived from RM118/2013 [VER15/07-13]
                [Amended] RM193/2016 (Made 7th December 2016). [VER18/02-17]

                • AMI 5.11.2 Guidance

                  1. Abusive, improper and fraudulent purposes include:
                  a. trades intended to create a false appearance of trading activity;
                  b trades which one party does not intend to close out or settle;
                  c. conduct which is likely to result in disorderly trading in the market; and
                  d. any contravention of the provisions in Part 6: Prevention of Market AbuseG in the Markets LawG .
                  2. An Authorised Market InstitutionG must have an effective surveillance system in place for:
                  a. the coordinated surveillance of all activity on or through its facilities and activity in related Investments conducted elsewhere; and
                  b. communicating information about Market AbuseG and financial crime to the DFSAG or appropriate regulatory authorities.
                  Derived from RM118/2013 [VER15/07-13]
                  [Amended] RM193/2016 (Made 7th December 2016). [VER18/02-17]

              • AMI 5.11.3

                (1) An Authorised Market InstitutionG must:
                (a) before accepting a prospective MemberG , ensure that the applicant has in place adequate arrangements including systems and controls to comply with the Authorised Market InstitutionG 's regime for preventing Market AbuseG , money laundering and financial crime referred to in Rule 5.11.2(2)(a);
                (b) monitor and regularly review compliance by its MembersG with that regime; and
                (c) take appropriate measures to ensure that its MembersG rectify any contraventions without delay.
                (2) An Authorised Market InstitutionG must promptly notify the DFSAG of any:
                (a) material breach of its regime by a MemberG ; and
                (b) circumstances in which a MemberG will not or cannot rectify a breach of its regime.
                Derived from RM118/2013 [VER15/07-13]

                • AMI 5.11.3 Guidance

                  1. An Authorised Market InstitutionG is subject to the requirements in the DFSA'sG AMLG module. MembersG of an Authorised Market InstitutionG which are Authorised FirmsG are also subject, by virtue of being Authorised FirmsG , to the requirements in the DFSA'sG AMLG module.
                  2. In determining whether an Authorised Market InstitutionG 's measures are adequate and appropriate to reduce the extent to which its facilities can be used for Market AbuseG , money laundering and financial crime, the DFSAG will consider:
                  a. whether the Authorised Market InstitutionG has appropriate staff, surveillance systems, resources and procedures for this purpose;
                  b. the monitoring conducted for possible patterns of normal, abnormal or improper use of those facilities;
                  c. how promptly and accurately information is communicated about Market AbuseG , financial crime and money laundering to the DFSAG and other appropriate organisations; and
                  d. how the Authorised Market InstitutionG co-operates with relevant bodies in the prevention, investigation and pursuit of Market AbuseG , money laundering and financial crime.
                  3. An Authorised Market InstitutionG shall have regard to Part 8 of the Markets Law in relation to Market AbuseG and the relevant provisions of the Regulatory LawG . Examples of practices that amount to market manipulation (which is one form of Market AbuseG ) in an automated trading environment that should be identified and prevented by an Authorised Market InstitutionG to promote Proper MarketsG include the following:
                  a. entering small orders in order to ascertain the level of hidden orders, particularly used to assess what is resting on a dark platform, known as Ping OrdersG ;
                  b. entering large numbers of orders and/or cancellations/updates to orders to create uncertainty for other market participants, slowing down their process and to camouflage its own strategy, known as Quote StuffingG ;
                  c. entry of orders or a series of orders intended to start or exacerbate a trend, and to encourage other participants to accelerate or extend the trend in order to create an opportunity to unwind/open a position at a favourable price, known as Moment IgnitionG ; and
                  d. submitting multiple orders often away from one side of the order book with the intention of executing a trade on the other side of the order book, where once that trade has taken place, the manipulative orders will be removed, known as Layering and SpoofingG .
                  Derived from RM118/2013 [VER15/07-13]

          • AMI 5.12 Miscellaneous Requirements

            • Whistleblowing

              • AMI 5.12.1

                An Authorised Market InstitutionG must have appropriate procedures and protections for enabling EmployeesG to disclose any information to the DFSAG or to other appropriate bodies involved in the prevention of Market AbuseG , money laundering or other financial crime or any other breaches of relevant legislation.

                Derived from RM118/2013 [VER15/07-13]

                • AMI 5.12.1 Guidance

                  An Authorised Market Institution'sG policies and procedures should enable EmployeesG to make protected disclosures, in good faith, of information which, in the reasonable belief of the EmployeeG making the disclosure, tends to show that one or more of the following has been, is being, or is likely to be, committed:

                  a. a criminal offence;
                  b. a failure to comply with any legal obligation;
                  c. a miscarriage of justice;
                  d. the putting of the health and safety of any individual in danger; or
                  e. a deliberate concealment relating to any of (a) to (d),

                  irrespective of whether the relevant conduct or failure occurred, occurs or would occur.

                  Derived from RM118/2013 [VER15/07-13]

            • Handling of Complaints

              • AMI 5.12.2

                (1) An Authorised Market InstitutionG must have effective arrangements in place for the investigation and resolution of complaints made against it.
                (2) An Authorised Market InstitutionG must establish and maintain a register of complaints made against it and their resolution. Records of the complaints must be maintained for a minimum of six years.
                Derived from RM118/2013 [VER15/07-13]

                • AMI 5.12.2 Guidance

                  1. Procedures should be in place to acknowledge a complaint promptly, for making an objective consideration of the complaint and for a timely response to be sent to the complainant. The response should inform the complainant that, if he is not satisfied with the response, he should contact the DFSAG .
                  2. Complaints should be fairly and impartially investigated by a person not involved in the conduct about which the complaint has been made. At the conclusion of the investigation, a report should be prepared and provided to the relevant Key IndividualsG .
                  Derived from RM118/2013 [VER15/07-13]

        • AMI 6 Additional Licensing Requirements for Operating an Exchange

          • AMI 6.1 Application

            • AMI 6.1.1

              (1) This chapter applies to an Authorised Market InstitutionG Operating an ExchangeG or an applicant for such a Licence.
              (2) In this chapter, a reference to an "ExchangeG " is a reference to a PersonG referred to in (1).
              Derived from RM118/2013 [VER15/07-13]

          • AMI 6.2 Proper Markets

            • AMI 6.2.1

              (1) An ExchangeG must have rules and procedures for fair, orderly and efficient operation of trading of Investments on its facilities. For this purpose, an ExchangeG must ensure that only Investments in which there is a Proper MarketG are traded on its facilities.
              (2) For a Proper MarketG to exist in Investments:
              (a) DerivativesG traded on its facilities must meet the contract design specifications in Rule 6.3.2;
              (b) relevant market information must be made available to PersonsG engaged in dealing on an equitable basis, including pre-trade and post-trade disclosure of orders, in accordance with the requirements in section 6.4.
              (c) there must be adequate mechanisms to discontinue, suspend or remove from trading on its facilities any Investments in circumstances where the requirements relating to Proper MarketsG are not met;
              (d) there must be in place controls to prevent volatility in the markets that is not the result of market forces, in accordance with the requirements in section 6.5;
              (e) error trades must be managed, in accordance with the requirements in section 6.6;
              (f) short selling and position concentration must be monitored and managed, in accordance with the requirements in section 6.7;
              (g) there must be a fair and non-discretionary algorithm operating in respect of the matching of orders on its facilities;
              (h) there must be in place adequate controls, to monitor and manage any foreign ownership restrictions applying to Investments traded on its facilities, in accordance with the requirements in section 6.8; and
              (i) any liquidity incentive schemes must be offered only in accordance with the requirements in section 6.9.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 6.2.1 Guidance

                Rules and procedures referred to in Rule 6.2.1(2) should generally form part of the Business Rules of an Authorised Market InstitutionG (see the content of Business RulesG in Rule 5.6.1).

                Derived from RM118/2013 [VER15/07-13]

          • AMI 6.3 Specifications Relating to Design and Trading of Derivatives

            • AMI 6.3.1

              (1) An ExchangeG which trades DerivativeG contracts on its facilities must:
              (a) have clear and transparent rules and procedures for the trading of DerivativeG contracts, which are made publicly available; and
              (b) ensure that the trading in DerivativeG contracts on its facilities is undertaken in a fair, orderly and efficient manner.
              (2) The rules and procedures must promote transparency by ensuring that there is sufficient information made available to the markets relating to the terms and conditions of the DerivativeG contracts traded on its facilities. Such information must include, where relevant, information relating to delivery and pricing of DerivativeG contracts.
              Derived from RM118/2013 [VER15/07-13]

            • Contract Design Specifications

              • AMI 6.3.2

                (1) An ExchangeG must ensure that the DerivativeG contracts traded on its facilities:
                (a) have a design that enables the orderly pricing and effective settlement of the obligations arising under the contract; and
                (b) where they are Commodity DerivativeG contracts which require physical delivery, have terms and conditions which:
                (i) promote price discovery of the underlying commodity;
                (ii) ensure, to the extent possible, that there is a correlation to the operation of the physical market in the underlying commodity;
                (iii) include contract delivery specifications which address matters specified in App 3; and
                (iv) provide for legally enforceable settlement and delivery procedures.
                (2) For the purposes of meeting the requirement in (1)(a), an ExchangeG must include in its Business RulesG contract design specifications relating to DerivativeG contracts traded on its facilities which, at a minimum, include:
                (a) minimum price fluctuations (price ticks);
                (b) maximum price fluctuations (daily price limits), if any;
                (c) last trading day;
                (d) settlement or delivery procedures as applicable;
                (e) trading months;
                (f) position limits, if any;
                (g) reportable levels; and
                (h) trading hours.
                Derived from RM118/2013 [VER15/07-13]

            • On-going Review

              • AMI 6.3.3

                An Exchange must:

                (a) establish and implement clear procedures relating to the development and review of contract design for DerivativeG contracts traded on its facilities;
                (b) have adequate process through which the views of potential users of DerivativeG contracts can be taken into account when developing and reviewing contract design for DerivativeG contracts;
                (c) have adequate powers which enable it to eliminate contractual terms which produce, or are likely to produce, manipulative or disorderly conditions in the markets generally, or in relation to the particular class or type of DerivativeG contracts; and
                (d) have adequate mechanisms to monitor and evaluate whether the settlement and delivery procedures reflect the underlying physical market and promote reliable pricing relationship between the two markets.
                Derived from RM118/2013 [VER15/07-13]

                • AMI 6.3.3 Guidance

                  1. When assessing whether an Exchange'sG rules and procedures are adequate, the DFSAG will consider, among other things:
                  a. the criteria adopted by the ExchangeG for DerivativeG contracts to be traded on its facilities;
                  b. what powers the ExchangeG has in order to eliminate manipulative or disorderly conduct, including powers to vary, remove or rescind conditions of any DerivativeG contracts already traded where these are found to cause manipulative or disorderly conditions; and
                  c. what mechanisms are established by the ExchangeG to monitor and review market activities relating to DerivativeG contracts traded on its facilities.
                  2. When designing and reviewing the design of Commodity DerivativeG contracts, an ExchangeG should consider the following physical market characteristics, including differences within a commodity market with regard to the commodity in question:
                  a. size and structure of the physical market;
                  b. commodity characteristics (such as grade, quality, weight, class, growth, origin, source etc.);
                  c. historical patterns of production, consumption and supply, including seasonality, growth, market concentration in the production chain, domestic or international export focus and logistics;
                  d. extent of distribution or dispersal of production and consumption of the underlying physical commodity among producers, merchants and consumers;
                  e. accepted market practice at the physical commodity market in question, including loading tolerances and delivery of alternative supply under the contract terms;
                  f. adequacy, nature and availability of supply of the underlying physical commodity, including an estimate of the deliverable supplies for the delivery month specified in the relevant commodity contract;
                  g. movement or flow of the underlying physical commodity;
                  h. the liquidity of the underlying physical market;
                  i. the spot market pricing system including transparency, availability, reliability and frequency of cash pricing;
                  j. price volatility; and
                  k. the existence of price controls, embargoes, export restrictions or other regulation or controls affecting the price or supply of the underlying physical commodity.
                  Derived from RM118/2013 [VER15/07-13]

          • AMI 6.4 Transparency and Disclosure

            • AMI 6.4.1

              An ExchangeG must have adequate arrangements for providing to the markets adequate information about Investments traded on its facilities, and its trading activities, for the purposes of promoting:

              (a) pre-trade transparency; and
              (b) post-trade transparency.
              Derived from RM118/2013 [VER15/07-13]

            • Pre-trade Transparency

              • AMI 6.4.2

                (1) An ExchangeG must disclose the information specified in (2) relating to trading of Investments on its facilities in the manner specified in (3).
                (2) The information required to be disclosed pursuant to (1) is:
                (a) the current bid and offer prices and volume;
                (b) the depth of trading interest shown at the prices and volumes advertised through its systems for the InvestmentsG ; and
                (c) any other information relating to InvestmentsG which would promote transparency relating to trading.
                (3) The information referred to in (2) must be made available to the public on a continuous basis during normal trading.
                Derived from RM118/2013 [VER15/07-13]

                • AMI 6.4.2 Guidance

                  1. When making disclosure, an ExchangeG should adopt a technical mechanism by which the public can differentiate between transactions that have been transacted in the central order book and transactions that have been reported to the ExchangeG as off-order book transactions. Any transactions that have been cancelled pursuant to its rules should also be identifiable.
                  2. The reference to trading interest in Rule 6.4.2(2)(b) includes any actionable indications of interests. Actionable interests are messages from one MemberG to another in a trading system about available trading interest that contains all necessary information to agree on a trade.
                  3. An ExchangeG should use adequate mechanisms so that pre-trade information is available to the public in an easy to access and uninterrupted manner at least during business hours. An ExchangeG may charge a reasonable fee for the information which it makes available to the public.
                  4. An ExchangeG will be able to withhold pre-trade disclosure only if it has obtained a waiver or modification to Rule 6.4.2. An ExchangeG may seek a waiver or modification from the disclosure requirement in Rule 6.4.2(1) in relation to certain transaction orders where:
                  a. the order size is pre-determined and exceeds a pre-set and published threshold level; and
                  b. the details of the exemption are included in its Business RulesG .
                  5. In assessing whether an exemption from pre-trade disclosure should be allowed, the DFSAG will take into account factors such as:
                  a. the level of order threshold compared with normal market size for the InvestmentG ;
                  b. the impact such an exemption would have on price discovery, fragmentation, fairness and overall market quality;
                  c. whether there is sufficient transparency relating to trades executed without pre-trade disclosure as a result of dark orders whether or not they are entered in transparent markets;
                  d. whether the ExchangeG supports transparent orders by giving priority to transparent orders over dark orders, for example, by executing such orders at the same price as transparent orders; and
                  e. whether there is adequate disclosure of details relating to dark orders available to MembersG and other participants on the facilities of the ExchangeG to enable them to understand the manner in which their orders will be handled and executed on those facilities.
                  6. Dark orders are orders executed on execution platforms without pre-trade transparency.
                  Derived from RM118/2013 [VER15/07-13]

            • Post-trade Transparency

              • AMI 6.4.3

                (1) An ExchangeG must disclose the post-trade information specified in (2) relating to trading of Investments on its facilities in the manner specified in (3).
                (2) The post-trade information required to be disclosed pursuant to (1) is the price, volume and time of the transactions executed in respect of the InvestmentsG traded on its facilities.
                (3) The information referred to in (2) must be:
                (a) made available in real-time on reasonable commercial terms and on a non-discriminatory basis; and
                (b) made available, as soon as practicable thereafter, to the public.
                Derived from RM118/2013 [VER15/07-13]

                • AMI 6.4.3 Guidance

                  An ExchangeG should use appropriate mechanisms to enable post-trade information to be made available to the public in an easy to access and uninterrupted manner at least during business hours. An ExchangeG may charge a reasonable fee for the information which it makes available to the public.

                  Derived from RM118/2013 [VER15/07-13]

          • AMI 6.5 Volatility Controls

            • AMI 6.5.1

              (1) An ExchangeG must have in place effective systems, controls and procedures to ensure that its trading systems:
              (a) are resilient;
              (b) have adequate capacity to deal with peak orders and message volumes; and
              (c) are able to operate in an orderly manner under conditions of market stress.
              (2) Without limiting the generality of its obligations arising under (1) or any other Rule, an Exchange'sG rules, systems, controls and procedures must enable it to:
              (a) reject orders that exceed its pre-determined volume and price thresholds, or that are clearly erroneous;
              (b) temporarily halt trading of InvestmentsG traded on its facility if there is a significant price movement in relation to those InvestmentsG on its facility or a related market during a short period; and
              (c) where appropriate, cancel, vary or correct any transaction.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 6.5.1 Guidance

                An ExchangeG should test its trading systems to ensure that they are resilient and capable of operating orderly trading under conditions of market stress and other contingencies.

                Derived from RM118/2013 [VER15/07-13]

            • AMI 6.5.2

              (1) An ExchangeG must have adequate arrangements, including technology, which:
              (a) are capable of preventing capacity limits relating to messaging being breached;
              (b) require its MembersG to apply pre-trade controls to their clients; and
              (c) permit only its MembersG to modify the parameters of any pre-trade controls.
              (2) An ExchangeG must make publicly available the details of arrangements it has in place in order to meet the requirement in (1).
              Derived from RM118/2013 [VER15/07-13]

              • AMI 6.5.2 Guidance

                1. In order to meet the requirements in Rule 6.5.2(1), an ExchangeG may, within its arrangements:
                a. include a mechanism for "throttling" orders to prevent breaches of its capacity;
                b. prohibit "naked" or "unfiltered" access to its facilities by Members'G clients where the client orders do not pass through pre-trade controls; and
                c. include requirements for MembersG to have appropriate pre-trade controls on the orders of their clients, which include in-built and automatic rejection of orders outside of certain pre-set parameters.
                2. Pre-trade controls which an Authorised Market InstitutionG requires from its MembersG should contain:
                a. price or size parameters: MembersG should be able to automatically block or cancel orders that do not meet the set price or size parameters either or both on an order-by-order basis or over a specified period of time;
                b. controls around permission to trade: MembersG should be able to block or cancel orders immediately as soon as they are made aware that trade permissions of a trader have been breached;
                c. effective risk management: MembersG should be able to block or cancel orders automatically where the trades pose risks that compromise the Member's own risk management thresholds. Such controls should be applied as necessary and appropriate to exposures to individual clients or financial instruments or groups of clients or financial instruments, exposures of individual traders, trading desks or the MemberG as a whole;
                d. reporting obligations: MembersG should be obliged to notify the ExchangeG about significant risks that may affect fair and orderly trading and major incidents as soon as they become aware of such risks or incidents;
                e. overriding of pre-trade controls: MembersG should have procedures and arrangements for dealing with orders which have been automatically blocked by the Member'sG pre-trade controls but which the MemberG may re-submit. Such procedures and arrangements should serve to alert compliance and risk management staff of the MemberG that controls have been overridden and require their approval for the overriding of these controls;
                f. training on order entry procedures: MembersG should ensure that employees using the order entry system have adequate training on order entry procedures before they are allowed to use Members'G order entry systems;
                g. monitoring and accessibility of knowledgeable and mandated staff: MembersG should monitor their orders to the ExchangeG in as close to real time as possible, including from a cross-market perspective, for potential signs of disorderly trading. Such monitoring should be conducted by Member'sG staff who understand its trading flow. They should be accessible to the ExchangeG and have necessary authority to take necessary and appropriate remedial action. MembersG should ensure that compliance staff are able to follow closely the Member'sG electronic trading activity so that they can quickly respond to and correct any failures or regulatory infractions that may take place; and
                h. control of messaging traffic: MembersG should have control of messaging traffic to the ExchangeG particularly to ensure any messaging limits imposed by the ExchangeG on the Members are not exceeded. Messaging limits are limits imposed by an ExchangeG on its MembersG for the transmission of orders such as buy or sell to ensure that the Exchange'sG capacity to deal with such orders is not exceeded.
                Derived from RM118/2013 [VER15/07-13]

          • AMI 6.6 Error Trade Policy

            • AMI 6.6.1

              (1) An ExchangeG must be able to cancel, amend or correct any Error TradesG .
              (2) An Error TradeG is the execution of an order resulting from:
              (a) an erroneous order entry;
              (b) malfunctioning of the system of a MemberG or of the Authorised Market InstitutionG ; or
              (c) a combination of (a) and (b).
              (3) For the purposes of (1), an Exchange'sG Business RulesG must include a comprehensive Error TradeG policy which sets out clearly the extent to which transactions can be cancelled by the ExchangeG at its sole discretion, at the request of a MemberG or by mutual consent of the MembersG involved.
              (4) An ExchangeG must have adequate systems and controls to:
              (a) prevent or minimise Error TradesG ;
              (b) promptly identify and rectify Error TradesG where they occur; and
              (c) identify whether Error TradesG are related to disorderly market activity.
              Derived from RM118/2013 [VER15/07-13]

              • AMI 6.6.1 Guidance

                When assessing whether an ExchangeG has an appropriate and adequate Error TradeG policy, the DFSAG will consider whether the rules and procedures included in the Business RulesG :

                a. are adequate and, where prevention is not possible, minimise the impact of Error TradesG ;
                b. are sufficiently flexible in the design to address varying scenarios;
                c. establish a predictable and timely process for dealing with Error TradesG , including measures specifically designed to detect and identify Error TradeG messages to market users;
                d. promote transparency to market users with regard to any cancellation decisions involving material transactions resulting from the invocation of the Error TradeG policy;
                e. include adequate surveillance conducted in the markets to detect Error TradesG ;
                f. promote predictability, fairness and consistency of actions taken under the Error TradeG policy; and
                g. enable sharing of information with other markets, when possible, concerning the cancellation of trades.
                Derived from RM118/2013 [VER15/07-13]

          • AMI 6.7 Short Selling and Position Management

            • AMI 6.7.1

              (1) An ExchangeG must have in place effective systems, controls and procedures to monitor and manage:
              (a) Short SellingG in SecuritiesG ; and
              (b) risks arising from position concentrations.
              (2) For the purposes of (1), an ExchangeG must have adequate powers over its MembersG to address risks to an orderly functioning of its facilities arising from unsettled positions in Investments.
              (3) Short SellingG for the purposes of this Rule constitutes the sale of a SecurityG by a PersonG who does not own the SecurityG at the point of entering into the contract to sell.
              Derived from