Author: kashadmin

Ocorian, a market leader in asset servicing for asset managers, private and corporate clients, has acquired Clarity Consulting Solutions Ltd (“Clarity”), a UAE based regulatory and compliance services provider. This acquisition expands Ocorian’s regulatory and compliance offering in the region, a key area of strategic focus for the organisation.
 
Clarity was founded in 2020 by Natalie Hodgins and Shamshad Khan. The founders together with partner Barry Cotter will join Ocorian and be part of the global regulatory and compliance solutions business which serves clients in London, the US, Channel Islands, Europe, Mauritius, Hong Kong and Singapore.
 
Clarity’s services include support for licence applications, outsourced compliance solutions, bespoke reviews, and remediation support for financial services firms in both the Dubai International Financial Centre and Abu Dhabi Global Market freezones.
 
Coupled with the recently acquired UAE based Fund Servicing license, Ocorian is well equipped to support global and regional asset managers throughout their lifecycle, with a full suite of services and dedicated support from entity establishment and licensing requirements through to full service fund accounting and administration services.
 
Chantal Free, Chief Executive Officer at Ocorian, said: “This acquisition is tremendously exciting for us as we continue to expand our capabilities for asset managers and asset owners across the Middle East. The UAE is an increasingly important market for our clients, who look to us to support them with globally consistent, expert-led and technology-enabled solutions across the world.”
 
She added: “In a region where experience and relationships are hugely important, I know that both Ocorian and Clarity clients will benefit from our significantly expanded offering. We welcome Natalie, Shamshad, Barry and all our new colleagues from Clarity to our multi-disciplinary team which delivers cross border services for asset managers, portfolio companies and high-net-worth families and individuals globally.”
 
Natalie Hodgins, Partner and co-Founder at Clarity remarked: “We are delighted to be joining Ocorian as we know they share our commitment to serving clients as a trusted business partner. We are very proud of the business we have built and the work that our colleagues do.”
 
Shamshad Khan, Partner and co-Founder at Clarity added: “We are confident that our clients will benefit from the expanded scope that we are now able to provide and that it will continue to be business as usual as Natalie, Barry and I will remain fully involved. Our new partnership with Ocorian enables us to accelerate our growth ambitions and brings our clients and our team more opportunities as we access Ocorian’s wider network.”
 
Ocorian continues to build its presence as a global asset servicing business. The acquisition of Clarity follows the acquisition of E78 Fund Solutions in the U.S. in August 2025.
 
Clarity will rebrand to Ocorian later this year.

The ADGM Financial Services Regulatory Authority has released Consultation Paper No. 13 of 2025, outlining an extensive set of proposed enhancements to insurance regulation, climate risk governance and the long-term development of ADGM as a reinsurance centre. This follows the FSRA’s ongoing work to strengthen alignment with international standards issued by the IAIS, BCBS and IOSCO.
 
The proposals apply across Insurers including Captives, Insurance Intermediaries, Insurance Managers, Authorised Persons and Recognised Bodies.
 
1. Strengthening Alignment with IAIS Insurance Core Principles
 
The FSRA sets out targeted updates to improve consistency with the IAIS Principles. These focus particularly on reinsurance risk management and market conduct.
 
Reinsurance and Risk Transfer
 
Key proposals include:
• More detailed requirements for reinsurer selection, including financial strength, expertise and claims performance.
• Enhanced expectations for reinsurance claims reporting, monitoring and oversight.
• Clear obligations for insurers to consider reinsurer or ceding insurer insolvency within their risk management frameworks.
• Strengthened governance expectations for Insurance Special Purpose Vehicles, including collateral management, investment restrictions and confirming that investors cannot seek recourse to the ceding insurer.
 
Market Conduct
 
The FSRA also proposes enhancements to COBS to reflect international expectations for fair customer treatment. These include:
• Ensuring that business is only conducted with appropriately licensed persons.
• Stronger requirements for product design and distribution, including target market assessments, suitability considerations and product understandability.
• A specific obligation to withdraw any information that is not clear, fair or accurate, with reasonable steps taken to notify parties who relied upon it.
• Clearer rules on the distinction between giving advice and not giving advice, along with documentation requirements where advice is provided.
• Stronger expectations for identifying, preventing, managing and disclosing conflicts of interest.
These enhancements are intended to support the continued development of ADGM as a centre for more complex insurance activity.
 
2. Adoption of IFRS 17 for Insurance Contracts
 
The FSRA proposes full implementation of IFRS 17 for insurance reporting within ADGM. This will:
• Replace IFRS 4 as the applicable standard.
• Promote consistency and transparency in the accounting treatment of insurance contracts.
• Require updates to the PIN and CIB Rulebooks to align regulatory obligations with IFRS 17 principles.
This brings ADGM in line with leading international insurance jurisdictions.
 
3. Miscellaneous Enhancements Across the Framework
 
The consultation introduces several practical refinements designed to improve clarity and reduce unnecessary burden. These include:
• Clearer articulation of insurance activity restrictions, particularly regarding risks situated in other financial free zones.
• Automatic treatment of ceding insurers and insurance brokers as Market Counterparties, removing the need for classification checks in reinsurance business.
• Removal of quarterly reporting obligations for Captive Insurers unless otherwise required by the FSRA.
• Streamlining complaints handling through a single online submission channel, replacing email based reporting.
 
4. New Expectations for Climate Related Financial Risk Management
 
The FSRA proposes a proportionate and principles-based approach to the management of climate related financial risks. All Authorised Persons and Recognised Bodies will be required to:
• Assess whether climate related risks are material to their business.
• Manage any material risks in a way that reflects the nature, scale and complexity of the firm.
• Consider climate related risks as part of capital adequacy assessments.
Additional guidance will help firms determine when a climate related risk becomes material and how it can be appropriately managed within existing risk frameworks.
 
5. Establishing ADGM as a Regional Reinsurance Hub
 
The FSRA outlines its long-term intention to position ADGM as a regional centre for reinsurance and eventually home to Internationally Active Insurance Groups. A forthcoming discussion paper will set out proposals covering:
• Capital and solvency requirements
• Group supervision approaches
• Exit and resolution planning
• Public disclosure expectations
This is part of a broader multi-year programme to develop a high-quality regulatory environment for reinsurance operations.
 
Next Steps
 
The consultation remains open until 30 January 2026. Following review of industry feedback, the FSRA will finalise and implement the amendments.
 
How Clarity Can Help
 
Clarity Consulting Solutions supports firms across ADGM and DIFC with interpreting and implementing regulatory change. We work with insurers, intermediaries and broader financial institutions to provide:
• Regulatory gap analysis aligned to the proposed amendments
• Governance and operating model enhancements
• IFRS 17 readiness support
• Integration of climate related risks into risk and capital frameworks
• Conduct of business and product governance improvements
 
Our team combines deep regulatory expertise with practical insight to help firms meet expectations confidently and proportionately.
 
If you would like to discuss how these proposals may affect your business, our team is ready to assist.

The ADGM Financial Services Regulatory Authority (FSRA) has published Consultation Paper No. 12 of 2025, setting out a wide-ranging package of reforms to modernise the funds regulatory regime. The proposals reflect a holistic review of the framework and focus primarily on private funds, with further changes to follow in 2026.

The objective is clear: ensure proportionality, support industry growth, enhance regulatory clarity, and align ADGM with international best practice while maintaining robust investor protections.
 
Below is a structured overview of the key reforms.
 
1. A New Streamlined Framework for Sub-Threshold Fund Managers (STFMs)
 
The FSRA proposes a new category of Fund Manager designed for smaller private fund managers with lower risk profiles. This framework is broadly inspired by international sub-threshold AIFM regimes but adapted for ADGM.
 

Eligibility
 
• Up to USD 200 million committed capital across all funds managed
• May manage closed-ended Exempt Funds and QIFs (and equivalent foreign funds)
• Not permitted to operate a host-manager model (i.e., no delegation of investment management to sponsors or third parties)
 
Key Features
 
• Streamlined authorisation and reduced governance requirements
• No mandatory Finance Officer or internal audit function
• Base Capital Requirement (BCR): USD 50,000 (with no EBCM)
• Mandatory PII coverage (aligned with VCFM rules)
• Required disclosure to investors that the manager falls under a lighter-touch regime
 
Additional Points
 
• FSRA is seeking feedback on imposing a 100% NAV leverage cap for funds managed by STFMs
• Existing managers may “opt-in” if they meet eligibility
• Firms exceeding the USD 200m threshold would need FSRA approval to transition into the full-scope regime
 
2. Integrating the Venture Capital Fund Manager (VCFM) Regime
 
The FSRA proposes consolidating the existing VCFM regime into the new STFM category.
 
Key Developments
 
• VCFMs become a sub-category of STFM, preserving certain VC-specific flexibilities
• VCFMs would also be subject to the USD 50,000 BCR
• Clarification that the fundraising cap applies across all funds, not per fund
• VCFMs will be required to manage the Master Fund in a master–feeder structure (not only the feeder)
 
This consolidation aims to reduce complexity and ensure consistency across smaller fund manager types.
 
3. A Streamlined Framework for Institutional Fund Managers (IFMs)
 
A new regime is proposed for managers exclusively targeting institutional investors such as sovereign wealth funds and pensions.
 
Eligibility
 
• May manage only QIFs or equivalent foreign funds
• Minimum subscription USD 5 million
• No natural persons may be unitholders
 
Key Features
 
• Streamlined authorisation similar to VCFMs and STFMs
• No mandatory Finance Officer or internal audit function
• Higher of USD 50,000 BCR or 6/52 of annual audited expenditure
• Exempt from PII requirements due to the institutional-only investor base
 
Transition
 
• Existing managers may opt-in; those no longer eligible must transition to full-scope with FSRA approval
 
The FSRA is also seeking feedback on extending the IFM framework to certain investment managers with an FSP for Managing Assets, where they act only for affiliated fund managers and do not hold client assets.
 
4. Facilitating Employee Investment Vehicles (EIVs)
 
To support alignment of interests between fund managers and investors, the FSRA proposes a new framework enabling employees to invest in the funds they manage through an Employee Investment Vehicle.
 
Key Features
 
• EIVs explicitly excluded from the definition of a Fund
• Exempt from minimum subscription thresholds
• Client classification rules in COBS do not apply
• Participation limited to front-office staff directly involved in investment decision-making
• Fund Managers must:
o Provide clear disclosures on risks
o Demonstrate participants possess sufficient financial knowledge
o Obtain written risk acknowledgements
 
If non-eligible employees are admitted, the EIV would immediately lose its exempt status.
 
5. Strengthened Requirements for Foreign Fund Managers (FFMs)
 
The FSRA proposes several measures to increase oversight and establish a stronger nexus between FFMs and the ADGM.
 
Key Enhancements
 
• FFMs may manage closed-ended QIFs only
• Domestic funds must appoint a UAE-resident director (or UAE-resident director of the GP for investment partnerships)
• Mandatory appointment of an ADGM-based Fund Administrator
• Mandatory appointment of an ADGM-licensed Corporate Service Provider
• FFMs must submit to ADGM laws and ADGM Court jurisdiction
• FFMs cannot operate a host-manager model
 
Certain changes will not apply retrospectively to funds launched before the effective date.
 
The FSRA also proposes giving itself discretion to waive the requirement for an Eligible Custodian where impractical or disproportionate—consistent with current practice for authorised managers.
 
6. Feedback on Specialist Fund Categories
 
The FSRA is seeking industry input on the effectiveness and relevance of:
 
• The Private Credit Fund framework
• The eligibility and attestation requirements for Green Funds and Climate Transition Funds
• The framework for private REITs
 
This reflects ADGM’s intention to ensure specialist regimes continue to meet market needs.
 
7. Miscellaneous Amendments
 
The consultation also proposes targeted updates to COBS, FUNDS and PRU, including:
• New obligations for MTFs trading units of Professional-Client Funds
(e.g., controls to prevent trading by non-Professional Clients)
 
Next Steps
 
Consultation closes on 30 January 2026. Following industry feedback, the FSRA will finalise the amendments ahead of a second consultation paper in 2026, which will include further changes to the private funds regime and updates to the Public Funds framework.
 
How Clarity Can Help
 
At Clarity, we support firms across ADGM and DIFC in interpreting and implementing regulatory change. Our team advises Fund Managers, Asset Managers and Foreign Fund Managers on:
 
• Gap analysis and implementation planning
• Optimising governance, operating models and fund structures
• Interpreting eligibility for the STFM, IFM or VCFM categories
• Designing compliant EIV arrangements
• Preparing for changes to the FFM and specialist fund regimes
 
We combine technical depth with practical insight to help firms meet regulatory expectations confidently and proportionately.

Strengthening trust across Payment Services, Virtual Assets, and Fiat-Referenced Tokens

The Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) has issued significant updates to its Conduct of Business Rulebook (COBS), effective from 1 January 2026. The revised framework aims to reinforce client asset protection, operational resilience, and regulatory clarity across both traditional and digital financial activities.
 

Enhanced Safeguarding Framework

The amendments introduce stricter requirements for the segregation and record-keeping of Client Money, Relevant Money, and Safe Custody Assets — including Reserve Investments and Fiat-Referenced Tokens (FRTs). Firms will now require prior regulatory non-objection when appointing third-party custodians to hold reserve assets.
 

Strengthened Oversight of Fiat-Referenced Tokens

A new Chapter 19A establishes a comprehensive regime for FRT issuers, mandating monthly independent attestations of reserves, restricting the conduct of additional regulated activities, and prohibiting the issuance of tokens denominated in AED. The FSRA has also set out clearer guidance on how it will determine an “Accepted Fiat-Referenced Token”.
 
Elevation of the Payment Service Provider Regime
 
The revised Chapter 19 aligns ADGM’s Payment Service Provider (PSP) framework with leading global standards. Key provisions address client disclosures, safeguarding of both money and tokens, operational restrictions (including prohibitions on cash handling), and ongoing reporting. PSPs must now segregate Relevant Money and Fiat-Referenced Tokens into dedicated Payment Accounts, ensuring robust end-to-end protection for users.
 
Custody and Virtual Asset Governance
 
The treatment of Virtual Assets and FRTs under the Safe Custody Rules (Chapter 15) has been clarified, introducing weekly reconciliations and enhanced due diligence requirements for custodians. New governance measures on wallet management, transaction traceability, and technology oversight have also been formalised.
 
Greater Transparency and Accountability
 
From enhanced client disclosures to independent attestations, the updated COBS framework underscores the FSRA’s focus on transparency, accountability, and proactive regulatory engagement.
 
At Clarity Solutions, we help firms interpret and implement regulatory developments across ADGM and DIFC, ensuring compliance frameworks remain robust, proportionate, and aligned with supervisory expectations. Our team supports payment service providers, virtual asset firms, and regulated entities through practical advice, tailored implementation planning, and ongoing compliance support.

The Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM) has launched a set of amendments to its Funds Rulebook (FUNDS), ushering in enhanced reporting obligations for funds operating under its jurisdiction.

Formalised Reporting Cycles

The amendments codify discrete reporting timetables for different fund types:

The FSRA retains discretion to alter reporting dates or request supplementary information.

What This Means for Fund Managers

Existing fund managers should assess their readiness against the new requirements.

The amended Rulebook is now live, and firms operating or planning to manage funds under ADGM should carefully evaluate how the changes affect their licensing, operations, and disclosure systems.

Your Next Step With Clarity

Navigating these new requirements does not need to slow you down.

At Clarity, we combine deep regulatory expertise with hands-on experience to help fund managers adapt quickly and confidently.

From assessing your oversight structures to ensuring your reporting and valuation processes meet FSRA standards, we make compliance seamless so you can stay focused on growth.

If you are managing or planning to launch a fund in ADGM, now is the time to act.

Get in touch with Clarity today and let us help you turn regulation into a competitive advantage.

The Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) has finalised a series of amendments to its Prudential Rulebook (PRU), marking a strategic recalibration of capital and liquidity requirements for lower-risk financial institutions operating in the jurisdiction.

In a move that balances supervisory rigour with proportionality, the updated framework introduces more nuanced requirements for firms such as fund managers, investment advisers, custody providers, and other regulated entities that do not pose systemic risk. While the changes streamline certain obligations, they also set clearer expectations around capital adequacy, liquidity management, and internal risk assessment—particularly for firms handling client assets or digital instruments like fiat-referenced tokens.

Crucially, the revised PRU introduces recalibrated capital thresholds based on business activity and risk category. Category 3C and Category 4 firms, typically comprising asset managers, custodians, arrangers, and advisory firms, will now fall under new capital and liquidity obligations that reflect both the size and nature of their operations. Firms issuing fiat-referenced tokens, for example, face significantly higher minimum capital requirements under the updated rules.

The FSRA has also embedded liquidity safeguards, requiring applicable firms to maintain a buffer of unencumbered, high-quality liquid assets. These rules are designed to ensure that firms can meet liabilities as they fall due, even under stress scenarios.

At the same time, the amendments strengthen the regulator’s supervisory toolkit. The revised rules mandate internal assessments of capital adequacy and risk exposure (IRAP and ICAAP) for most domestic firms, depending on their regulatory category. These internal reviews will feed into the FSRA’s broader Supervisory Review and Evaluation Process (SREP), enabling the regulator to impose firm-specific capital requirements where warranted.

Taken together, the amendments reinforce the FSRA’s commitment to a risk-sensitive, forward-looking approach. This approach seeks to avoid regulatory overreach while safeguarding the integrity of ADGM’s financial ecosystem.

The updated Rulebook is now in effect. Firms operating in ADGM should assess the implications for their current Financial Services Permissions, capital position, and reporting obligations.

You can view the FSRA’s announcement and access the full amended Rulebook here:
ADGM FSRA announcement and Rulebook amendments

Need help understanding how the new PRU rules affect your firm?

Clarity works with regulated firms across ADGM to navigate supervisory change with confidence. Whether you need support understanding you capital resource requirements or preparing internal assessments (IRAP/ICAAP), our team is here to help.

Get in touch for a confidential discussion on how we can support your compliance and strategic planning.

The ADGM Registration Authority (RA) has issued two new reports setting out the results of its 2024 supervisory reviews into Designated Non-Financial Businesses and Professions (DNFBPs). The message is unmistakable: firms in this category, ranging from legal and accountancy practices to real estate agencies, CSPs and dealers in high-value goods, must raise the bar on anti-money laundering (AML) compliance, or face the consequences.

Drawing on a mix of thematic and onsite inspections, the RA has identified recurring weaknesses in how DNFBPs assess risk, report suspicions, and manage compliance frameworks. And while many firms appear to tick the right boxes on paper, the reviews suggest that too many still fall short in implementation and oversight.

From paperwork to practice

The thematic review, published in June 2024, examined how firms approach their Business Risk Assessments (BRAs), suspicious activity reporting, and AML training. Although the majority of DNFBPs had policies in place, the RA found widespread shortcomings in how those policies were applied.

In particular, many firms failed to distinguish clearly between different types of financial crime risk (money laundering, terrorist financing, and proliferation financing) despite this being a core requirement under ADGM rules. Others used off-the-shelf documentation that bore little relevance to the firm’s actual operations or client base. And in too many cases, the findings of the BRA were never communicated to staff, leaving front-line employees unaware of the risks they were meant to manage.

Suspicious activity reporting also came under scrutiny. While most firms had procedures in place to file Suspicious Activity Reports (SARs) with the UAE Financial Intelligence Unit via the goAML portal, the RA identified a disconnect between policy and practice. Some firms required senior management sign-off before filing a SAR, undermining the independence of the MLRO, while others failed to maintain accurate contact records or adequately explain how suspicions were identified.

Onsite assessments reinforce concerns

These issues were echoed in a second report detailing the results of 32 onsite inspections carried out across the DNFBP sector. The most common failings included:

• inadequate enhanced due diligence for high-risk customers, particularly in verifying source of funds and wealth;

• failure to assess TFS risks within the BRA;

• outdated AML and TFS controls that hadn’t been reviewed or tested for effectiveness;

• weak ongoing monitoring and poor client screening post-onboarding;

• failure to obtain certified copies of ID documents; and

• ineffective succession planning for MLROs.

Although many firms demonstrated a willingness to engage with the process, undertaking risk assessments, updating policies, and launching training programmes, the RA emphasised that compliance must be embedded, not just documented.

A harder line

The tone of both reports is more direct than in previous years. The RA is signalling that supervisory tolerance is narrowing. DNFBPs found to be non-compliant may be subject to follow-up inspections, enforcement action, or even license suspension. With ADGM aligning closely to national AML strategy and FATF priorities, firms that fail to meet expectations risk reputational as well as regulatory damage.

For firms operating in or through ADGM, the takeaway is clear: risk-based compliance is no longer optional, and a superficial approach is unlikely to survive regulatory scrutiny. These reports provide not only a window into the RA’s expectations but also a practical roadmap for remediation.

Where to find more information

Firms can read the full findings and recommendations directly on the ADGM webpage, where the thematic and onsite review reports are now available.

Need help closing the gaps?

At Clarity, we help DNFBPs go beyond box-ticking.

Whether you need to overhaul your BRA, stress test your AML/TFS controls, or prepare for an ADGM inspection, we offer practical, sector-specific support.

Get in touch to discuss a health check or tailored remediation plan.

The Dubai Financial Services Authority (DFSA) has unveiled a comprehensive update to its Client Assets regime, signalling a significant evolution in how authorised firms must manage, report on, and protect client money, investments, and crypto tokens within the Dubai International Financial Centre (DIFC). The new rules will come into effect on 1 January 2026, following consultation through CP160 and the associated Feedback Statement.

Published last week, the DFSA’s updated regime and accompanying Frequently Asked Questions (FAQ) highlight a series of structural and supervisory shifts aimed at improving investor protection, clarifying responsibilities for auditors and firms, and preparing the industry for crisis scenarios.

Key Reforms

At the heart of the overhaul are four core updates:

• Clarified obligations for firms that control but do not hold client assets, reducing ambiguity in the regulatory perimeter.

• Exclusion of Fund Property (including investments and crypto tokens) from the Client Assets regime, where those assets form part of a fund’s portfolio.

• Introduction of a Client Asset Crisis Preparedness Pack, mandating firms to maintain essential information to facilitate asset return in the event of insolvency or disruption.

• New auditing responsibilities, requiring more specific reporting across client money, investments, and crypto token custody.

The revised framework comes amid a growing regional push to elevate financial infrastructure standards and align with global best practice. While most firms are expected to operate on a calendar-year basis, the DFSA has acknowledged transitional complexity for firms with non-calendar financial years, with dual reporting potentially required during the crossover period.

FAQs: What the Industry Needs to Know

The DFSA’s 24-question FAQ document, published alongside the online summary, offers detailed guidance for firms and auditors preparing for implementation. Key areas covered include:

• Timeline & Transitional Guidance: Confirmation that the current rules remain in effect until 31 December 2025, with dual compliance issues addressed for non-calendar-year firms.

• Audit and Reporting Requirements: Firms must submit Client Assets Auditor’s Reports — including separate reports for client money, safe custody of investments, and crypto tokens — within four months of their financial year-end. A further summary of non-compliance findings must follow within 30 days.

• Third-Party Agent (TPA) Assessments: Emphasis is placed on due diligence, creditworthiness evaluation, and diversification considerations when entrusting TPAs with client assets.

• Client Disclosure Rules: Firms must disclose insolvency regimes and depositor preference frameworks applicable in TPA jurisdictions.

• Reconciliation & Recordkeeping: Monthly reconciliations are the baseline, with more frequent checks expected depending on transaction volume and risk. Firms must also maintain robust TPA assessment records.

• Client Asset Crisis Preparedness Pack: A central innovation of the new regime, the Pack must be maintained by firms that hold or provide custody of client assets, but not by those that merely control them. It must be kept up to date within five business days of any material change and may be integrated into existing business continuity plans.

• Fund Management Exemptions: The rules explicitly exempt firms engaged solely in delegated fund management from holding a Client Assets endorsement, provided they do not also offer wealth management services.

Sector Response and Outlook

While the DFSA has committed to running outreach sessions ahead of implementation, firms are being urged to conduct gap analyses and update internal systems and controls without delay. Registered Auditors are similarly expected to revise their audit methodologies in line with the new scope and structure.

With its phased rollout and technical clarifications, the new Client Assets regime is positioned to provide greater certainty and security across the DIFC ecosystem, particularly as the market expands its exposure to crypto assets, cross-border custody, and outsourced operations.

The full FAQ and further details can be accessed via the DFSA’s website.

Need help preparing for the DFSA’s revised Client Assets regime?

At Clarity, we work with authorised firms and auditors to ensure full readiness ahead of the 1 January 2026 deadline. Whether you need help conducting a gap analysis, updating audit processes, reviewing your client disclosures, we’re here to support you.

Get in touch today to discuss how we can help you meet the new requirements with confidence.

The Dubai Financial Services Authority (DFSA) has published a wide-ranging report spotlighting the escalating risks posed by artificial intelligence (AI), cyber threats, and quantum computing within global financial markets. The report draws on insights from the DFSA’s inaugural Cyber and AI Risk Regulatory College, convened in May 2025, and marks a call to action for greater international collaboration in navigating emerging technologies.

Attended by 70 senior officials from 18 financial authorities worldwide, the event facilitated candid discussion on how supervisory bodies can stay ahead of increasingly complex digital threats. The resulting report offers both a reflection on current vulnerabilities and a roadmap for regulatory evolution.

Mounting Cyber Threats and Supply Chain Weaknesses

The report underscores a rising volume and sophistication of cyberattacks, particularly through digital supply chains and third-party service providers. As financial institutions become more reliant on technology partners, regulators are urged to heighten scrutiny of interconnected risk exposures, especially in cross-border contexts.

The DFSA advocates proactive threat intelligence sharing and enhanced due diligence across the financial services ecosystem—both within and between jurisdictions.

AI: Opportunity Meets Accountability

Artificial intelligence, a cornerstone of modern financial innovation, is also identified as a significant regulatory blind spot. The report highlights concerns over explainability, model bias, data governance, and dependency on opaque third-party AI vendors.

In response, the DFSA calls for robust supervisory frameworks that can hold firms accountable for how AI is developed, deployed, and monitored—ensuring human oversight remains central even as automation advances.

Preparing for the Quantum Leap

One of the report’s more forward-looking themes is the risk posed by quantum computing. With current encryption standards potentially obsolete in the face of quantum breakthroughs, the DFSA stresses the urgency of transitioning to post-quantum cryptography (PQC). Financial institutions are advised to begin risk assessments and scenario planning now, well ahead of any mainstream quantum deployment.

Global Dialogue and the DFSA’s Role

Crucially, the report positions collaboration—not competition—as the cornerstone of digital risk regulation. It champions collective action via supervisory colleges, international forums, and knowledge exchange platforms.

For its part, the DFSA will continue investing in its Threat Intelligence Platform, enhancing AI risk capabilities, and supporting innovation hubs within the Dubai International Financial Centre (DIFC).

A Wake-Up Call

The DFSA’s publication is both a technical assessment and a strategic signal. At a time when regulatory frameworks often trail behind technological change, this report reinforces the need for agile supervision grounded in global cooperation. It also cements Dubai’s ambition to be not just a hub for financial innovation—but a thought leader in how it is governed.