Dubai regulator fines private bank for market abuse prevention failures

The Dubai Financial Services Authority (DFSA) recently imposed a fine of $370,000 on a private wealth and asset management bank in Dubai. 

The fine was handed out as a result of the bank's inadequate systems and controls for identifying, assessing, and reporting trading activities exhibiting signs of market abuse.

The bank was scrutinized for its inability to report multiple instances of suspicious trading to the DFSA from 2018 to 2021. Despite identifying trading activities that exhibited characteristics of market abuse, the bank did not promptly report these incidents as required by regulatory guidelines.

The bank had outsourced the responsibility for monitoring and assessing client trading activities. However, the DFSA found that FFA had failed to effectively supervise these outsourced activities. This situation highlights that outsourcing compliance functions do not absolve the bank of its ultimate responsibility to ensure that the systems and controls being used are adequate and compliant with regulatory requirements.

It is important to note the bank cooperated fully with the DFSA's investigation and promptly rectified the identified weaknesses in its systems and controls. This cooperation reflects the bank's commitment to addressing its compliance deficiencies.

Speaking about the recent fine, the DFSA's Chief Executive, Ian Johnston, was clear to make the reminder that the firms themselves are responsible for ensuring that their processes are operating effectively. He said, “Steps must be taken to ensure processes are operating effectively as it is ultimately the Authorised Firm that will be accountable if things go wrong.”

In summary, this case underscores the significance of robust systems and controls in financial institutions for the detection and reporting of market abuse, the importance of cooperation during regulatory investigations, and the ultimate responsibility of authorized firms for ensuring compliance with regulatory obligations. 


How SteelEye Can Help

SteelEye is the first fully integrated trade and communications surveillance solution. We empower financial firms with the data-driven tools and complete insights they need to focus on what matters, all from a single platform. SteelEye's SaaS-based platform captures all of a firm's structured and unstructured data across any asset class, communication type, and system – unifying it under a single lens. Proactive monitoring and intelligent alerts empower firms to effectively detect potential market manipulation and compliance breaches while contextual data from systems that would otherwise not be connected reduces false positives. 

SteelEye's cutting-edge technology enables our clients to boost productivity, lower the total cost of ownership, and gain a competitive edge through data intelligence.


Features:

  • Dynamic, intuitive dashboard transforms comms, trade, and market data into rich information that fosters action

  • Powerful language-based search engine facilitates granular reporting

  • Configurable, automated pattern matching, behavioral signals, and other alerts spotlight early warning signs of abuse

  • Machine learning and real-time back testing reduce false positives

 

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