Additional Obligations of
Financial Services Entities

Approved Persons are individuals who carry out the Controlled Functions of a Senior Executive Officer, Finance Officer, Compliance Officer, Money Laundering Reporting Officer, and other key Senior Manager for an Authorised Person.

See: GEN 5.3

To appoint a new Approved Person, an APS application form must be submitted to the FSRA through the FSRA Connect Portal together with the supporting documents outlined in the APS form.

See: GPM 2.1

The FSRA expects an Authorised Person to have completed the proper due diligence on the candidate ensuring they are fit and proper to carry out the Controlled Function. This includes assessing the integrity, competence, capability and financial soundness of the candidate in relation to the Controlled Function. The Authorised Person should also verify that the individual will commit sufficient time to the role and has no actual or potential conflicts of interest. Supporting documents should be maintained as evidence of the due diligence process undertaken.

See: GEN 5.6.4 and GPM 2.3

Yes, FSRA approval is required prior to the appointment of an Approved Person.  The FSRA encourages Authorised Persons to submit APS application forms for its review in a timely manner ahead of the intended appointment date. Appointment of an individual to perform a Controlled Function prior to receiving FSRA approval is considered a breach of GEN 5.3.

See: GEN 5.3.1

Yes, an application for the approval of an Approved Person is subject to a fee. An invoice will be issued through the FSRA Connect Portal upon filing the APS form through the portal. The FSRA may levy a supplementary fee where it considers the Approve Person application to be complex and it expects to incur substantial additional costs or expend substantial additional effort in dealing with the application. A receipt will be issued once the payment has been received and can be downloaded through the portal. To avoid delays, an Authorised Person should ensure that this fee is paid promptly to allow the FSRA to start its review of the APS application.

See: FEES 5.1.1(a) and FEES 1.2.4

When reviewing an application for an Approved Person, the FSRA assesses the integrity of the candidate, their competence and capabilities and financial soundness of the candidate relevant to the role. The candidate’s suitability is also assessed in relation to proposed role and the firm’s nature, size, complexity, business model and relevant risks.

As part of the application review, the FSRA may conduct an interview with the candidate to assess their fitness and propriety for the role. Where needed, the FSRA may request the firm to provide its fitness and propriety assessment conducted on the candidate.

Once approved, the details of the Approved Person may be included in the information related to the firm on the FSRA Public Register.

See: GEN 5.2.9

Yes, a firm is required to notify the FSRA through the FSRA Connect Portal within 10 business days of a withdrawal or variation of an Approved Person using the Withdrawal of APS Form (APS 2).

At its discretion, the FSRA may request an exit interview with the departing Approved Person.

See: GEN 5.3.1 (3)

The FSRA expects that firms keep separate the roles that individuals hold in the firm in order to meet the requirements for segregation of duties applicable to the firm. However, where circumstances require, an existing Approved Person may be appointed to assume another Controlled Function, where such appointment is not considered to create a conflict of interest between controlled functions and business functions. An example is where a firm’s Senior Executive Officer (SEO), also serving as a Risk Officer.

Where an Authorised Person submits an application on behalf of an existing Approved Person to carry out an additional Controlled Function, that must be submitted via the FSRA Connect Portal. The FSRA will take into account governance considerations, nature, size complexity, business model and relevant risks of the firm’s business when conducting its assessment. The Authorised Person is expected to ensure that such appointments do not pose actual or potential conflicts of interest, that the candidate for multiple Controlled Function roles is fit and proper for these roles and will devote sufficient time to adequately carry out each role.

See: GEN 3.3.3

Yes, as long as that Approved Person satisfies the fit and proper requirements (as noted above) of the new Controlled Function. This type of request is deemed a variation or change of Approved Persons’s role and an application for Change in Approved Person Status APS3  must be submitted to the FSRA via the FSRA Connect Portal.

See: GEN 5.6.4

Yes, an Authorised Person may outsource Controlled Functions such as the roles of the Compliance Officer, Money Laundering Reporting Officer or Finance Officer where this is considered appropriate by the Authorised Person, and subject to FSRA’s approval, to be suitable considering the nature, size and complexity of its operations in ADGM.

An Authorised Person must inform the Regulator about any material outsourcing arrangements at the time of application and any changes going forward in the future to those arrangements.

Where an Authorised Person is seeking to appoint an outsourced Approved Person it needs to ensure that the candidate is fit and proper for the role, that sufficient time will be available to carry out the necessary function(s) and that the role is fulfilled in a satisfactory manner ensuring compliance with the Authorised Firm’s regulatory obligations. As such the performance of the outsourced Approved Person should be periodically assessed and monitored by the firm.

As with all outsourcing arrangements, an Authorised Person, its senior management and governing body remain responsible and accountable that such Controlled Functions are carried out effectively and efficiently and in accordance with all regulatory requirements.

The appointment and subsequent assessment process for an outsourced Approved Person should not differ from the assessment of a full time in house Approved Person. Further, the firm is required to submit the outsourcing contract between itself and the service provider to the FSRA.

See: GEN 3.3.31 and 3.3.32, and PRU 6.8

Yes, the FSRA will consider such applications on a case-by-case basis and such appointments are ordinarily limited to Independent Directors, Compliance Officers, Money Laundering Reporting Officers and Finance Officers, where multiple appointments may arise within a Group structure or across related entities or on outsourcing basis.  The Authorised Person is required to assess whether there are any actual or potential conflicts of interest as a result of the candidate having multiple appointments and how they will be managed or mitigated.

The FSRA expects that the capacity and time commitment of the candidate has been appropriately assessed by the firm and that they can meet all of their requirements to perform those Controlled Functions.  The FSRA will also take into account, amongst other factors, the nature, size, complexity, business model and relevant risks of the firm, the governance set-up, as well as the track record of the candidate.

The FSRA requires that an outsourced Compliance Officer, Money Laundering Reporting Officer or Finance Officer providing services to more than one Authorised Person or other firm must dedicate sufficient hours to each Authorised Person, taking into account the nature, size and complexity of the activities of those Authorised Persons. These will be determined on a case by case basis and the onus is on the Authorised Person to demonstrate that the proposed allocated hours are sufficient to ensure the proper execution of the function. FSRA also expects that the allocated hours are reviewed and increased as an Authorised Person business develops and if there is an increase in number of customers and or volume of its business.

In the case of multiple appointments, Approved Persons are accountable to carry out their responsibilities fully and effectively after their approval by the FSRA across all Authorised Persons where they are appointed to perform the role of a Controlled Function. This will be reviewed by the FSRA through its on-going monitoring of the Authorised Person.

See: GEN 5.3.10

In exceptional circumstances, the FSRA may allow an Authorised Person to appoint an individual to provide temporary cover for a Controlled function.  The person appointed to cover a Controlled Function for a temporary period must still be fit and proper as per the assessment conducted by the firm. Notification of temporary cover should be made to FSRA Supervision prior to that person undertaking the role, in writing as early as possible supported with the passport copy and curriculum vitae of the individual. The FSRA expects such an appointee to abide by the Principles for Approved Persons as well as any other applicable regulatory obligations.

The duration of temporary cover is ordinarily limited to a period not exceeding 12 weeks in any consecutive 12 months. This provision is intended to allow any temporary or unforeseen departure or absence of an Approved Person to be addressed and provide sufficient time to the firm to bridge the gap between a departing Approved Person and the appointment of a new permanent Approved Person.

A firm may not appoint an individual to carry out the Functions of Licensed Director or Licensed Partner on a temporary basis.

See: GEN 8.6

A Change of Control for an Authorised Person means a change in its ownership, fully or partially, that leads to a change in the Controllers of an Authorised Person. A Controller is also a Person who is able to exercise significant influence over the management of the Authorised Person as a result of Holding Shares or being able to exercise voting rights in the Authorised Person or a Holding Company of that Authorised Person or having a current exercisable right to acquire such Shares or voting rights.

All Changes in Control for Domestic Firms are subject to prior FSRA approval and may arise due to the partial or full introduction of new shareholders or the transfer of shares between existing shareholders of a firm. 

Branches of overseas firms are required to file notifications with the FSRA in respect of any Change of Control which may arise out of such a change of their parent entity or head office.

See: GEN 8.8

To seek FSRA’s approval or notify for a Change of Control an Authorised Person should make a timely submission of the Change of Control Form via the FSRA Connect Portal. A fee is applicable for each Change of Control application. The FSRA may levy a supplementary fee where it considers the Change of Control application to be complex and it expects to incur substantial additional costs or expend substantial additional time and effort in dealing with the application.

Authorised Firms are advised to obtain such approval, where applicable, prior to filing any changes with the Registration Authority. An Authorised Person should note that notifications and/or applications to the ADGM Registration Authority under Companies Regulations 2020 need to be complied with separately from the FSRA’s submissions.

Failure to make timely notifications to the FSRA and/or ADGM Registration Authority separately may result in administrative penalties being levied by these authorities.

See: GEN 8.8, FEES 1.2.4 and 6.1.1, and Companies Regulations 2020

The FSRA will review the background, history and principal activities of the firm’s proposed Controller. If the Controller is a corporate entity, the FSRA will review its full ownership structure, including ultimate beneficial owners, controllers and key individuals.

Due diligence will cover the proposed Controller’s reputation, experience, financial strength and sources of wealth and funds. The FSRA will also consider close links when reviewing Change of Control applications  

The FSRA will review a Change of Control application within a maximum period of three months. The quality and completeness of the application, the complexity of the new ownership structure, the degree of influence and the size of the holding the new Controller is proposed to hold in the firm are all factors that will determine the processing time of a Change of Control application.

See: GEN 8.8.6

An Authorised Person may seek to vary its Financial Services Permission in several ways from the original licence it was granted on being authorised via seeking:

• the addition of a new Regulated Activity;
• an endorsement to serve Retail Clients;
• an endorsement to offer Regulated Activities in relation to Virtual Assets or Financial Instruments not approved during the original authorisation process; or
• an approval to operate an Islamic Finance window, via offering Regulated Activities in accordance with Sharia Law.

A variation request may also be submitted by an Authorised Person for the removal of a regulated activity, restriction or condition that exists as part of its Financial Services Permission, with that being subject to approval by the FSRA.

See: Section 32 of The Financial Services and Markets Regulations 2015(FSMR)

Prior to engaging the FSRA, an Authorised Person is encouraged to obtain the necessary legal and compliance advice on the matter. The Authorised Person is also expected to conduct an internal assessment to understand how a licence variation may affect its resources, governance, systems, risk profile, and operations. This assessment should also address how the Authorised Person’s existing systems and controls and approach to operational resilience will need to be modified and what resources will be required for that.

Only then should the Authorised Person inform its supervisor which additional Regulated Activities and/or endorsements it is proposing to apply for, the business rationale for seeking such a variation and how it plans to meet the additional regulatory requirements which may be applicable and address operational considerations arising from the variation.

See: GPM 2.10

An Authorised Person must notify the FSRA of its decision to voluntarily withdrawal its Financial Services Permission (FSP). The Authorised Person is required to complete and submit the FSP Withdrawal Form, available via the FSRA Connect Portal.

The Authorised Person must also demonstrate that appropriate arrangements have been made for its existing customers, including obtaining any necessary consents and ensuring the following, where applicable.

• Customer deposits and assets have been returned or transferred
• Any required run-off or business transfer has been properly managed
• Fund Managers must provide evidence that the fund vehicle has been wind-down in an orderly manner and evidence of dissolution must be provided
• All other conditions imposed by the FSRA are met

The FSRA may also request additional information, including written confirmation that the firm has ceased conducting Regulated Activities.

See: GPM 2.9

The FSRA has powers to waive and modify rules in the Rulebooks it publishes and thereby grant relief, where it is deemed appropriate, from the requirements imposed by those rules. These powers do not extend to regulations such as the Financial Services and Markets Regulations 2015.

• A Waiver of a specific rule will grant relief from the entire obligation contained in that rule.
• A Modification may either modify the way in which an Authorised Person must comply with an obligation set out in a specific rule or provide relief from part of the obligations in a rule.

See: Section 9 and 10 of FSMR, GEN 8.2 and GPM 4

The FSRA encourages an Authorised Person seeking a Waiver or a Modification to firstly have a discussion with their supervisor, setting out the rationale for the request, prior to the submission of a formal request.

Following such discussions, the firm will be required to submit a formal request for a Waiver or Modification using the Waivers and Modifications Application (WM-A) Form, Form with the rule to be waived or the precise formulation of the modified rule, to its supervisor or the Pooled Supervision team by email, as appropriate. In the application, the firm is expected to clearly set out the detailed reasons for requesting a Waiver or Modification, the requested period, explain the perceived adverse impact the rule has on the Authorised Person as it stands, and identify any risks associated with the relief being sought and how the Authorised Person plans to mitigate such risks. Moreover, where the FSRA has previously granted a similar Waiver or Modification, i.e. a precedent, which is published on the FSRA website, the Authorised Person should refer to any such precedent(s) in support of its application.

An Authorised Person may withdraw its application at any time up until notification of a decision by the FSRA has been communicated to it. In doing so, the Authorised Person should give reasons for the withdrawal of the application.

See: Section 9 and 10 of FSMR, GEN 8.2 and GPM 4

The FSRA will generally grant relief where: (a) it has formed the opinion that there is a net regulatory benefit in the specific circumstances of the Authorised Person and is still aligned with the objectives of the FSRA; or (b) the regulatory detriment is minimal as the relief sought does not conflict with the policy intent of the rule and the Authorised Person has demonstrated that the associated risks would be adequately mitigated if relief was granted. 

Where a Waiver or Modification is granted the FSRA may impose such conditions as it may see fit and also that the relevant waiver or modification may be available for only a specified period of time, after which time it will cease to apply. These requirements being contained in the Waivers and Modification Notice (WM-N) Form issued to the Authorised Person.  Should the FSRA decide not to grant relief via a Waiver or Modification it will give a reason(s) for the decision.

See: Section 9 and 10 of FSMR, GEN 8.2 and GPM 4

An Authorised Person is required to submit annual and semi-annual regulatory reports via the FSRA Connect Portal, in accordance with the list of Regulatory Reporting Requirements available of the FSRA website.

Other prudential returns on a monthly and quarterly basis must be submitted via the Electronic Prudential Reporting System (EPRS). A list of reports to be submitted via EPRS, according to each Authorised Person’s prudential category and whether it is an ADGM-incorporated entity/Domestic Firm or a Branch, can be accessed on the FSRA website via the EPRS Table. 

See: PRU 2.3

These reports may be required after a specific trigger event occurs that affects the Authorised Person. Examples of such trigger events are a change in appointed auditors, a change in the firm’s share capital structure or a breach of a regulatory requirement, as identified by the firm.

Authorised Persons that are assigned a dedicated supervisor are required to submit such reports to that supervisor via email.  Authorised Persons that are supervised by the Pooled Supervision Team are required to submit their reports to the pooled supervision email address.

Upon the issuance of a Financial Services Permission, the FSRA Authorisation team will send a notification with instructions on how an Authorised Person may request access to FSRA Connect and the Electronic Prudential Reporting System (EPRS).  Following such a request the FSRA will set up a profile for the Authorised Person on those systems and will grant access to both systems.

In order to comply with its regulatory reporting requirements, the Authorised Person should ensure that all information regarding it, the access required, the Approved Person associated with it and the regulatory reports it is required to submit are reflected on the systems fully and accurately.

The FSRA has published the FSRA Connect user manual which can be accessed on the ADGM website in order for the firm to familiarise itself with the use of the FSRA Connect Portal.  The ADGM website also has comprehensive guidance to the EPRS system with user manuals, a Rulebook mapping, a short introductory video and frequently asked questions on the EPRS that can be accessed on the ADGM website.

Due dates for the submission of regulatory reports may be seen via the Regulatory Reporting Requirements for both FSRA Connect and EPRS. Individuals within the Authorised Person with access to FSRA Connect and EPRS will receive automated reminders prior to the reporting dates. Authorised Persons are expected to make timely submissions of regulatory reports in order to avoid supervisory or regulatory action and/or the imposition of late/non-submission fees by the FSRA.

See: FEES 1.2.7

Where a firm wishes to request an extension to the submission deadline of a regulatory report, a request must be made to the relevant supervisor or the pooled supervision team email with the rationale for requesting such an extension. Alongside this, a request for that extension must be made by the firm in the EPRS system, which needs to be approved by the FSRA. The FSRA Connect Portal also allows firms to submit their regulatory returns after the due date. However, it should be noted that the Portal will reflect the status of these reports as ‘overdue’ and still be subject to late submission penalties that may be due.

See: FEES 1.2.7

Each firm will be notified at licensing stage whether it is assigned a dedicated FSRA Supervisor, including the name and contact details of its FSRA Supervisor (primary and secondary) or whether it is has been assigned to the Pooled Supervision team with the contact details. Any subsequent change to this supervisory approach will be notified to the Authorised Person as and when it occurs.

The FSRA requires the Capital Resources of an Authorised Person are kept with a bank in the UAE.