DFSA – Fixed Penalty Notice Regime

      On 5 April, the DFSA published a Dear SEO Letter. The purpose of this letter was to inform all Senior Executive Officers of Authorised Firms, Principal Representatives of Representative Offices; Audit Principles of Registered Auditors; and Designated Non-Financial Business or Professions that the DFSA’s new Fixed Penalty Notice (‘FPN’) regime will come into force on 15 April 2024.

      Changes have been made to the Regulatory Law 2004 (“the Law”) which allow the DFSA to issue FPNs if it has reasons to believe that a person has contravened a prescribed provisions without having to follow the decision-making procedures set out in schedule 3 of the Law.

      The DFSA will be administering the FPN Regime as follows:

      • Once the DFSA reasonably believes that a firm has breached a prescribed provision, the DFSA may issue a FPN to the firm.
      • If the firm pays the amount stated in the FPN within the payment period (i.e. 14 days from the date of receipt) and the alleged contravention is no longer ongoing, no fine or censure may be imposed on the firm for that contravention.
      • By paying the penalty, the firm is taken to have committed the contravention.
      • If the firm fails to comply with the FPN, the DFSA may impose a fine or censure under Articles 90(2)(a) or (b) of the Law for the alleged contravention.
      • There is no statutory limit on the amount of a fine the DFSA can impose under Article 90(2)(a). When determining the amount of a fine, the DFSA will consider all facts and circumstances.
      • The penalty payable will increase with each additional contravention in any single calendar year. The first contravention will incur a penalty of $2,500. The second contravention a penalty of $7,500 and the third or any subsequent contravention will incur a penalty of $15,000 (see GEN Rule 14.1)
      • Where a firm commits more than three contraventions in any given calendar year, the DFSA may deem it as an indication of poor governance and management, or lapses in systems and controls. This may be addressed using the DFSA’s supervisory or enforcement powers under Article 90(2).

      As specified in GEN Chapter 14 on Fixed Penalty Notices in GEN 14.1.1, the following Rules are subject to a Fixed Penalty Notice:

      (a) AMI Rules 8.2.9(1), 9.6.1, 9.6.3 and 9.6.4;
      (b) AML Rule 14.5.1;
      (c) AUD Rule 4.8.1;
      (d) CIR Rules 9.4.2(1), 9.6.2 and 15.1.10(1);
      (e) COB Rules 14.5.1(2)(b) and 15.8.1(2)(b);
      (f) GEN Rules 8.6.2 and 11.8.12(1);
      (g) PIB Rules 2.3.8(1), 2.3.8(2), 6.13.7, 6.13.8, 10.3.2(3) and 10.4.2(3);
      (h) PIN Rules 6.5.1, 6.5.5, 6.5.7, 6.6.2(1), 7.2.3(1), 7.3.5, 8.5.2, 8.5.3 and 9.4.10; and
      (i) REC Rule 3.5.1

      The Dear SEO Letter can be found here.

      How does this impact your firm?

      It is highly important that firms are aware of the FPN Regime.  A late payment can lead to fines and censure which would be kept on the firm’s record. Continued contraventions can have serious consequences with the DFSA utilising their supervisory or enforcement powers.

      How Waystone Compliance Solutions can help you

      Waystone is well-positioned to support you in maintaining compliance with all regulatory requirements, providing you with the support that your in-house compliance resources need or alternatively educate and train your in-house compliance team on the regulatory requirements. For information on how Waystone can help you, please find more information on our website here.

      For more information please reach out to your usual Waystone Compliance Solutions representative or contact us below.

      Contact us

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