Month: March 2025

The Dubai Financial Services Authority (DFSA) has proposed significant revisions to the appointment, supervision, and regulation of key roles within Authorised Firms. Under the new framework, Compliance Officers, Finance Officers, and Senior Managers will no longer be “Licensed Functions” requiring DFSA approval.

Instead, they will become “Designated Functions,” with firms assuming responsibility for their appointment and oversight. Senior Executive Officers (SEO) and Money Laundering Reporting Officers (MLRO) remain Licensed Functions requiring DFSA approval.

These changes increase firms’ accountability for staff fitness and propriety. The DFSA is seeking industry feedback, with the consultation period closing on 5 May 2025. Firms should assess how the amendments could impact compliance, governance, and senior management oversight.

DFSA Consultation Paper No.165: Key Changes

1. Reclassification of Licensed Functions

Currently, eight Licensed Functions require DFSA approval: SEO, Licensed Director, Licensed Partner, Finance Officer, Compliance Officer, Senior Manager, MLRO, and Responsible Officer.

The proposals shift Compliance Officer, Finance Officer, and Senior Manager functions to Designated Functions, placing the full responsibility for fitness and propriety assessments on firms.

The DFSA is also considering whether a Finance Officer should remain a mandatory function for certain low risk firms.

2. SEO and MLRO Retain DFSA Approval

The SEO and MLRO will remain Licensed Functions due to their critical roles in governance and anti-money laundering. The DFSA will continue vetting these positions to ensure fitness, propriety, and competence.

3. New Notification and Accountability Framework

While DFSA approval will no longer be required for Designated Functions, firms will be required to:

• Notify the DFSA within seven days of appointing or removing a Designated Individual.
• Attest that fitness and propriety has been assessed in accordance with the relevant criteria.
• Perform periodic reviews and submit annual attestations confirming ongoing fitness and propriety.

4. Expanded Definition of “Relevant Individuals”

The proposals introduce three personnel categories:

1. Authorised Individuals – Roles requiring DFSA approval (SEO, MLRO, etc.).
2. Designated Individuals – Firm-appointed roles (Compliance Officer, Finance Officer, Senior Manager).
3. Relevant Employees – Staff involved in financial services activities but not classified under the first two categories.

Principles 1-4 of the of the Principles for Authorised Individuals (to be renamed as ‘Conduct Principles’ with some minor amendments) are proposed to be applied to all Relevant Individuals, except those carrying out ancillary roles.

5. Role Combination Restrictions

While the DFSA will not directly approve Designated Functions, the proposed rules still limit role combinations. For instance, the SEO cannot simultaneously hold the Compliance Officer or Finance Officer role. Firms must ensure role separations to maintain governance integrity and avoid conflicts of interest.

Next Steps for Firms

The DFSA has invited public comments until 5 May 2025. Firms should assess the impact of these proposals on their organisational structure, reporting lines, and compliance frameworks. Following the consultation, the DFSA will finalise the rules and set an implementation period for compliance adjustments.

Subject to any changes that arise following the consultation process, the DFSA will proceed to make changes to the DFSA Rulebook and would intend to publish these in July 2025. The amended rules will then come into force on 1 September 2025. As of this date, existing Compliance Officer, Finance Officer and Senior Manager functions will automatically transition to Designated Functions and Designated Individuals, unless the DFSA is notified of any changes.

How Clarity Can Help

Clarity offers expert guidance on DFSA regulatory changes, assisting firms in navigating governance realignments and strengthening compliance frameworks. Firms facing role reassignment or requiring enhanced fitness and propriety processes can benefit from tailored support.

For expert assistance in adapting to these changes, contact Clarity today.

DIFC and Lloyd’s Collaboration Signals Growth Prospects for UAE Insurance Sector

The Dubai International Financial Centre (DIFC) Academy and Lloyd’s Academy recently announced an expanded partnership, underscoring the growing importance of the insurance and reinsurance market in the Middle East—and revealing fresh opportunities for businesses seeking a foothold in one of the world’s most dynamic financial hubs.

Over the past decade, the DIFC Academy has served as a comprehensive learning hub, offering a broad range of professional development and higher-education courses in partnership with top-ranked institutions.

Meanwhile, the Lloyd’s Academy stands as an industry-leading commercial education platform designed to help risk professionals deepen expertise, forge stronger networks, and harness the solutions of the Lloyd’s market.

This collaboration comes at a time of remarkable growth for the UAE’s insurance industry. According to the UAE Central Bank’s September 2024 Economic Report, gross written premiums rose 31.2% year-on-year in H1 2024 to AED 35.7 billion (source: Central Bank of the UAE, September 2024). S&P Global Ratings projects a further 15-20% expansion by 2024, propelled by robust economic conditions, infrastructure projects, and pricing adjustments in key segments such as medical and motor insurance.

“The UAE insurance market is demonstrating robust growth, reflecting strong economic fundamentals and evolving regulatory frameworks,” says Phil Story, Chairman, DIFC Insurance Association. Many observers argue there has never been a better time for insurers to enter the region.

DIFC Academy and Lloyd’s Academy plan to organise events, bootcamps, and on-demand learning sessions to equip local professionals with cutting-edge skills, while also attracting global talent. This initiative reinforces the DIFC’s role in shaping a future-ready insurance workforce.
 
A Catalyst for Growth
 
Located at the crossroads of East and West, the DIFC is home to over 125 insurance-related firms across conventional and Islamic (takaful) segments. These firms benefit from a robust legal and regulatory environment governed by the Dubai Financial Services Authority (DFSA), renowned for its advanced oversight. Coupled with relatively flexible capital requirements and risk-based models, the DIFC has cultivated a climate conducive to long-term innovation.

Underlying these regulatory advantages is a demographic and economic reality: while mandatory health insurance and large-scale projects drive growing premiums, many parts of the Middle East remain under-insured, presenting vast untapped potential.

With rising gross written premiums, supportive regulations, and increasing multinational investment, the stage is set for established insurers and newcomers alike. As the UAE diversifies its economy, the insurance sector will play a pivotal role in mitigating risks tied to digital transformation and infrastructure growth.

Ultimately, the DIFC-Lloyd’s collaboration spotlights the scale of opportunities available to insurers ready to adapt and innovate. For those with the vision and expertise to seize this moment, the UAE—and the DIFC in particular—remains a compelling destination in a rapidly expanding global insurance landscape.
 
A Booming Sector with Global Reach
 
For business leaders weighing expansion, the numbers speak for themselves. Insurance penetration in the region remains lower than global benchmarks, while trillions of dollars in upcoming GCC infrastructure projects demand diverse risk solutions, from liability cover to cyber insurance.

Thanks to its strategic location and cross-border regulatory framework, the DIFC is an attractive base for underwriters targeting markets in Africa, South Asia, and beyond. According to DIFC data, the Centre itself boasts over USD 2 billion in gross written premiums annually, underscoring its growing influence as a global reinsurance hub.
 
How to Set Up an Insurance Entity in the DIFC
 
1. Financial Services Licence
Insurers must secure DFSA authorisation to “Effect and Carry Out Contracts of Insurance” while intermediaries, underwriting agents and cover holders are licensed under “Insurance Intermediation” or “Insurance Management.”
 
2. Capital Requirements
The capital requirements for Intermediaries and underwriting agents with an insurance monies endorsement will be the higher of the Base Capital Requirement (“BCR”) and Expenditure Based Capital Minimum. For those without an insurance monies endorsement, the capital requirements would be equivalent to the BCR (currently USD 30,000). Insurers adhere to a risk-based capital regime reflecting portfolio complexity.
 
3. Streamlined Registration
After filing an application with the DFSA and obtaining in-principle approval, applicants must complete incorporation and other requirements (office setup, visas, bank accounts). Once conditions are met, a DFSA licence is granted, and operations can commence.

Specialist consultancies like Clarity guide businesses through each step, ensuring a seamless path to licensing.
 
Accelerate Your DIFC Licensing with Clarity
 
Meet our Dedicated Insurance Consulting Team
 
Clarity sets itself apart as one of a very few compliance consultancy firms within the DIFC with a dedicated team of insurance experts. This specialist unit focuses on guiding insurance businesses through the DFSA’s unique regulatory requirements. Drawing on deep market knowledge and a proven track record, Clarity’s dedicated insurance professionals streamline the path to market entry while ensuring ongoing adherence to evolving regulations.

Ready to establish or expand your insurance business in the DIFC?
 
Clarity offers the following:

• -Specialised Focus: We excel in regulatory support and compliance, tailoring services to your unique industry needs.
• -Regulatory Expertise: Strong ties with and knowledge of the DIFC and DFSA’s legal and regulatory framework keep you ahead of evolving requirements.
• -Comprehensive Services: From Compliance Officer/MLRO/Risk Officer/Finance Officer outsourcing solutions to Compliance/AML support, regulatory reviews or Compliance/AML related training, we help streamline your operations for long-term growth.

Save time, reduce complexity, and maximise your chances of a successful licence application. Contact us today to discover how Clarity can help you launch your DIFC insurance firm swiftly and seamlessly.