{"id":389,"date":"2022-12-15T06:07:51","date_gmt":"2022-12-15T06:07:51","guid":{"rendered":"https:\/\/www.claritysolutions.ae\/?p=389"},"modified":"2022-12-15T06:15:53","modified_gmt":"2022-12-15T06:15:53","slug":"are-you-an-adgm-csp-change-is-in-the-air","status":"publish","type":"post","link":"https:\/\/www.claritysolutions.ae\/are-you-an-adgm-csp-change-is-in-the-air\/","title":{"rendered":"Are you an ADGM CSP? Change is in the air\u2026"},"content":{"rendered":"

The Abu Dhabi Global Market (\u201cADGM\u201d) has issued Consultation Paper 07 in order to gather feedback on its proposals to shake up the Company Service Provider (\u201cCSP\u201d) regime. But what are the changes and what might they mean for your company?<\/p>\n

\"\"<\/p>\n

<\/p>\n

Background<\/b><\/p>\n

ADGM\u2019s CSP framework came into force on 12 April 2021.\u00a0 This framework was designed to ensure that CSPs operated within a robust regulatory regime, one that was in line with international best practice.<\/p>\n

Therefore, to qualify as a licensed CSP, entities must obtain approval from the ADGM Registration Authority<\/b> (\u201cRA\u201d) to undertake the business activity listed as \u201c7025 \u2013 Company Service Provider\u201d.\u00a0 A CSP licence enables these entities to provide the full suite of company services e.g. company formation, registered office address and company filing services.<\/p>\n

The ADGM have recently issued a Consultation Paper (\u201cCP\u201d) on the regime as the RA have concluded that the intended benefits<\/b> of the CSP regime have yet to be fully realised<\/b>.\u00a0 Therefore, this CP forms part of a broader project to consider and propose enhancements to the CSP framework.<\/p>\n

What are the proposals and what might they mean for us?<\/b><\/p>\n

The CP sets out a number of areas on which comment is sought.\u00a0 We have summarised the proposed changes and then analysed what the potential impact to your business might be.\u00a0 Take a look through the table below and see if any of these changes are relevant to your business.\u00a0 If they are, have a think whether you want to submit a comment to the ADGM on their proposals.\u00a0 If you need help formulating a response<\/b>, just drop us a line at hello@claritysolutions.ae<\/a> and let\u2019s have a chat.<\/p>\n

<\/p>\n\n\n\n\n
\n

MANDATORY TRAINING CERTIFICATION FOR CSP STAFF<\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

\n

Proposed Changes<\/span><\/p>\n

\n
    \n
  • Mandatory training certification for CSP staff<\/span><\/li>\n<\/ul>\n<\/div>\n

    \n<\/td>\n

\n

Potential impact on your business<\/span><\/p>\n

\n
    \n
  • An Individual who is a point of contact within the CSP for both customers and the RA should complete all mandatory training. This may result in an increase in operating expenses<\/strong><\/span><\/li>\n<\/ul>\n<\/div>\n

    \n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

    <\/p>\n

     <\/p>\n\n\n\n\n
    \n

    AT LEAST ONE CSP STAFF MEMBER TO BE PHYSICALLY PRESENT IN THE ADGM OFFICE<\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

    \n

    Proposed Changes<\/span><\/p>\n

    \n
      \n
    • At least one CSP client-facing member of staff must be physically present in the CSP\u2019s registered office in the ADGM during ordinary business hours<\/span><\/li>\n
    • The CSP\u2019s office must be open during ordinary business hours <\/span><\/li>\n<\/ul>\n<\/div>\n<\/td>\n
    		\n

    Potential impact on your business<\/span><\/p>\n

    \n
      \n
    • Allocate resources to adhere with this requ<\/span>ir<\/span>ement.<\/span>\u00a0This may result in an increase in operating expenses<\/strong><\/span><\/li>\n<\/ul>\n<\/div>\n

      \n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

      <\/p>\n

       <\/p>\n\n\n\n\n
      \n

      AUDITED ACCOUNTS\u00a0<\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

      \n

      Proposed Changes<\/span><\/p>\n

      \n
        \n
      • CSPs must file annual audited accounts with the RA<\/span><\/li>\n<\/ul>\n<\/div>\n

        \n<\/td>\n

      		\n

      Potential impact on your business<\/span><\/p>\n

      \n
        \n
      • You will have to conduct an audit annually, therefore increasing operating expenses<\/strong><\/span><\/li>\n<\/ul>\n<\/div>\n

        \n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

        <\/p>\n

         <\/p>\n\n\n\n\n
        \n

        MLRO AND COMPLIANCE OFFICER<\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

        \n

        Proposed Changes<\/span><\/p>\n

        \n
          \n
        • CSPs must have an MRLO and a Compliance Officer (\u201cCO\u201d) either as a full-time employee or outsourced to a recognised provider<\/span><\/li>\n
        • The MRLO and CO must be independent from any other statutory role of the company<\/span><\/li>\n<\/ul>\n<\/div>\n

          \n<\/td>\n

        		\n

        Potential impact on your business<\/span><\/p>\n

        \n
          \n
        • Appointment of a full-time or outsourced resource. This will likely result in an increase in operating expenses<\/strong><\/span><\/li>\n
        • Individual performing MLRO and CO roles cannot be the UBO, Director or member of management of the CSP<\/strong><\/span><\/li>\n<\/ul>\n<\/div>\n

          \n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

          <\/p>\n

           <\/p>\n\n\n\n\n
          \n

          MINIMUM REGULATORY CAPITAL<\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

          \n

          Proposed Changes<\/span><\/p>\n

          \n
            \n
          • Minimum capital requirement of USD50,000 to be maintained at all times<\/span><\/li>\n<\/ul>\n<\/div>\n

            \n<\/td>\n

          		\n

          Potential impact on your business<\/span><\/p>\n

          \n
            \n
          • You will have to find or reallocate USD50,000<\/span><\/li>\n
          • Daily capital adequacy<\/span><\/strong>\u00a0checks will be required to ensure sufficient capital remains in place at all times<\/span><\/li>\n<\/ul>\n<\/div>\n

            \n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

            <\/p>\n

             <\/p>\n\n\n\n\n
            \n

            PROFESSIONAL INDEMNITY (\u201cPI\u201d) INSURANCE\u00a0<\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

            \n

            Proposed Changes<\/span><\/p>\n

            \n
              \n
            • Introduction of minimum PI coverage relative to your revenue. \u00a0For a single claim, it will be the higher of three times your turnover for the last accounting year, or USD 1.5M. For aggregate claims in one year, it will be the higher of three times your turnover for the last accounting year, or USD 2M<\/span><\/li>\n<\/ul>\n<\/div>\n

              \n<\/td>\n

            		\n

            Potential impact on your business<\/span><\/p>\n

            \n
              \n
            • Likely increase in operating expenses<\/strong><\/span><\/li>\n<\/ul>\n<\/div>\n

              \n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

              <\/p>\n

               <\/p>\n\n\n\n\n
              \n

              ANNUAL CSP RETURNS\u00a0<\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

              \n

              Proposed Changes<\/span><\/p>\n

              \n
                \n
              • Annual return which covers the preceding calendar year period to be filed in April. Details required include:<\/span><\/li>\n<\/ul>\n
                \n
                  \n
                • services offered and fees charged;\u00a0<\/span><\/li>\n
                • list of all firms for whom you are acting as a CSP<\/span><\/li>\n
                • current directors, partners and management<\/span><\/li>\n
                • employees and where they work<\/span><\/li>\n
                • complaints register<\/span><\/li>\n
                • confirmation statement that relevant staff have met the new training requirements<\/span><\/li>\n<\/ul>\n<\/div>\n<\/div>\n<\/td>\n
              		\n

              Potential impact on your business<\/span><\/p>\n

              \n
                \n
              • New annual regulatory filing\u00a0<\/strong>to be completed and submitted to RA annually in April<\/strong>. <\/span><\/li>\n<\/ul>\n<\/div>\n

                \n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

                <\/p>\n

                 <\/p>\n\n\n\n\n
                \n

                CLARIFYING THE APPLIED PRINCIPLES<\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

                \n

                Proposed Changes<\/span><\/p>\n

                \n
                  \n
                • Regulatory principles to be followed by CSPs such as integrity, due skill, care and diligence, confidentiality, transparency and conflicts of interest<\/span><\/li>\n<\/ul>\n<\/div>\n

                  \n<\/td>\n

                		\n

                Potential impact on your business<\/span><\/p>\n

                \n
                  \n
                • Ensure adherence to these principles at all times and\u00a0<\/span><\/li>\n
                • update your\u00a0Compliance manual\u00a0<\/strong>to document these principles<\/span><\/li>\n
                • Communicate these changes to\u00a0all employees<\/strong>. <\/span><\/li>\n<\/ul>\n<\/div>\n

                  \n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

                  <\/p>\n

                   <\/p>\n\n\n\n\n
                  \n

                  EXEMPT SPVs AND FOUNDATIONS<\/span><\/b><\/p>\n<\/td>\n<\/tr>\n

                  \n

                  Proposed Changes<\/span><\/p>\n

                  \n
                    \n
                  • Expansion of the exemption to appoint a CSP<\/strong> which is currently afforded to SPV subsidiary undertakings to also cover parent undertakings (i.e. holding companies)<\/span><\/li>\n
                  • An SPV or Foundation to be able to file a strike off application directly with the RA, thereby avoiding the need for a CSP to perform this function<\/span>\u00a0<\/span><\/li>\n<\/ul>\n<\/div>\n

                    \n<\/td>\n

                  		\n

                  Potential impact on your business<\/span><\/p>\n

                  \n
                    \n
                  • Potential loss of business\u00a0<\/span><\/strong>as these entities would be able to action their own requirements directly with the RA<\/span><\/li>\n<\/ul>\n<\/div>\n

                    \n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

                    The Abu Dhabi Global Market (\u201cADGM\u201d) has issued Consultation Paper 07 in order to gather feedback on its proposals to shake up the Company Service Provider (\u201cCSP\u201d) regime. But what are the changes and what might they mean for your company?<\/p>\n","protected":false},"author":3,"featured_media":390,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[1],"tags":[],"table_tags":[],"acf":[],"_links":{"self":[{"href":"https:\/\/www.claritysolutions.ae\/wp-json\/wp\/v2\/posts\/389"}],"collection":[{"href":"https:\/\/www.claritysolutions.ae\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.claritysolutions.ae\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.claritysolutions.ae\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.claritysolutions.ae\/wp-json\/wp\/v2\/comments?post=389"}],"version-history":[{"count":1,"href":"https:\/\/www.claritysolutions.ae\/wp-json\/wp\/v2\/posts\/389\/revisions"}],"predecessor-version":[{"id":583,"href":"https:\/\/www.claritysolutions.ae\/wp-json\/wp\/v2\/posts\/389\/revisions\/583"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.claritysolutions.ae\/wp-json\/wp\/v2\/media\/390"}],"wp:attachment":[{"href":"https:\/\/www.claritysolutions.ae\/wp-json\/wp\/v2\/media?parent=389"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.claritysolutions.ae\/wp-json\/wp\/v2\/categories?post=389"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.claritysolutions.ae\/wp-json\/wp\/v2\/tags?post=389"},{"taxonomy":"table_tags","embeddable":true,"href":"https:\/\/www.claritysolutions.ae\/wp-json\/wp\/v2\/table_tags?post=389"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}