Board of Directors

The Legislative Committee assists the Board in discharging its policy-making and legislative functions, including the development of the regulatory framework for financial services conducted in or from the DIFC.

The Committee is responsible for the scrutiny of proposed legislative and Rulebook changes, ensuring proper consultation on such changes and recommending to the Board the final form of changes proposed. The Board has the power to make or amend rules and will propose primary legislation to the President of the DIFC for recommendation for enactment by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai.

During 2022 the Committee members were:

·Charles Flint QC (Chair)

·Julie Dickson

·Sabine Lautenschläger

·Peter Casey*

·Ian Johnston**

·F. Christopher Calabia*** (retired 31 August 2022)

·Muna Dandan***

·Peter Smith***

* External member

** External member until 31 August 2022. Executive member with effect from 1 September 2022

*** Executive member

The role of the committee is to propose to the Board legislation and rules which comply with the DFSA's regulatory approach and meet international standards. The committee's agenda is proposed by the Executive in consultation with the chairman of the committee.

In 2022, the Committee recommended to the Board changes to the DFSA’s regulatory regime across a wide range of subjects. These included:

·the development and introduction of a new regime to facilitate and regulate financial services activities related to Crypto Tokens (including cryptocurrencies and stablecoins) ^#;

·the introduction of a regime for Credit Funds in the DIFC;

·clarifications around funds, including the use of the term ‘fund platform’, and broadening the definition of Eligible Custodians^#;

·amending requirements around reporting of market abuse to ensure this is consistent across all categories of entity^#;

·introduction of specific regulatory reporting forms for providers of money services^#;

·amending the scope and applicability of reporting requirements on capital adequacy for certain types of Firms^#;

·clarification on the timing of submission by branches of the audited financial statements of their parent entity^#; and

·minor changes relating to (i) amendments to DFSA Laws and Rules due to the changes in 2022 to the days of the weekend in the UAE; and (ii) adding Proliferation Financing to the definition of money laundering in the Regulatory Law and AML Module^#.

The Legislative Committee agreed to publication of a number of Consultation Papers in 2022, the proposals in which were subsequently enacted during the year. These are marked in the previous section with ^#.

The Committee also agreed to publish two other consultations in 2022, which covered:

·Regulatory requirements for lower risk firms; and

·Miscellaneous proposals, including changes to reflect the introduction of IFRS17 for insurance firms and to reflect the development of ‘Buy Now Pay Later’ business models.

The DFSA expects to make changes to its regime following the above consultations, by making final rules, during 2023.

The Committee received and considered regular updates on legislative developments at the Federal, Emirate of Dubai and DIFC levels, including the potential impact of proposed and enacted legislation on the DFSA and its activities.

The primary function of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities regarding the financial management of the DFSA, the adequacy of its systems of internal controls, and the quality of its internal risk management process.

Audit Committee members in 2022 were:

·Julie Dickson (Chair)

·The Hon. Apurv Bagri

·Charles Flint QC

·Swee-Lian Teo

During 2022, the Committee considered the external audit report on the 2021 financial statements. The financial statements were assessed as being presented fairly and in accordance with International Public Sector Accounting Standards. The Committee recommended to the Board the transfer of the 2021 surplus to the Reserve of the DFSA.

The Committee also assessed the external auditors’ plan for their review of the financial statements for the year ended 31 December 2022 and completed an annual evaluation of the effectiveness of the external auditors.

A tender process was conducted in respect of the external audit for the 2023 financial statements and a recommendation on the selection of the external auditor was presented to the Board for approval.

The Committee reviewed the draft budget for 2023 and recommended it for approval by the Board. The Committee also considered proposed policy changes and recommended revised policies for approval by the Board.

Throughout the year, the Committee provided oversight of the DFSA’s systems of internal control, including internal financial controls, information security arrangements, the cyber security framework, the business continuity management framework, and the activity of the internal auditor, whilst also reviewing the DFSA’s insurance cover. The Committee maintained oversight of the financial performance of the organisation.

As part of the 2022 audit plan, the internal auditor delivered assurance to the Committee in relation to corporate governance, finance processes and fraud risk management. The internal auditor also reported to the Committee on a third-party assessment of the DFSA’s cyber risk management of web-based applications used by Authorised Firms to submit files and data to the DFSA.

The Committee also reviewed its terms of reference and, following various recommendations made by the Committee, revised terms of reference were approved by the Board.

The primary function of the Risk Committee is to assist the Board in identifying and assessing external and internal risks, which could affect the DFSA’s ability to meet its regulatory objectives and/or could impact negatively on the DFSA’s reputation. The Committee also assists the Board in considering risk mitigation measures and monitoring their implementation.

Risk Committee members in 2022 were:

·Swee Lian Teo (Chair)

·Julie Dickson

·Sabine Lautenschläger

·Abdullah Sharafi (with effect 1 January 2022)

·Ian Johnston** (with effect 1 September 2022)

·F. Christopher Calabia** (retired 31 August 2022)

** Ex Officio Member

During 2022, the Risk Committee held three meetings, during which it carried out the following regular activities:

·discussed current macro level and global issues and considered the extent to which those issues might impact on the DFSA or the development of the DIFC;

·reviewed and updated ongoing efforts by the DFSA to mitigate the main organisational risks that it faces, as set out in the Risk Inventory, covering mitigating actions already in hand or planned, the level of residual risk the DFSA was exposed to, and whether supplemental measures should be adopted in relation to risks;

·considered the risk profile of DFSA divisions and the organisation, as part of the ongoing Risk Control Self-Assessment process. Divisional risk mitigation plans were considered and challenged, where appropriate, by the Risk Committee to review and test that risks were being effectively managed across the organisation in a timely manner; and

·reviewed and updated the DFSA’s Risk Tolerance Statement, with support from the Executive. The Risk Tolerance Statement is used to guide the Executive in their business planning and day-to-day decision-making.

The Committee also approved further updates to the DFSA Risk Management Framework regarding the management of third-party/vendor risk and the management of fraud-related risks within the DFSA.

During 2022 the Committee also reviewed its terms of reference and, following various recommendations made by the Committee, revised terms of reference were approved by the Board.

The primary function of the Governance and Nominations Committee is to assist the Board to fulfil its supervisory responsibilities in respect of the operations of the Board, to make recommendations to the Board about new Board members, and to develop a succession program for the DFSA. The Committee also develops and

recommends to the Board a set of governance principles.

Governance and Nominations Committee members in 2022 were:

·Sabine Lautenschlaeger (Chair)

·The Hon Apurv Bagri

·Charles Flint QC

·Ian Johnston * (with effect from 1st September 2022)

·F. Christopher Calabia * (retired 31st August 2022)

* Executive member

During 2022, the Committee conducted an assessment of the composition of the Board and its various Committees. It considered the skills and experience of Board members, as well as the DFSA’s future requirements and the DIFC’s strategic objectives.

The Committee oversaw the process of searching for a Non-Executive Director to join the Board. With the assistance of an international search firm, the Committee considered several potential candidates before making a recommendation to the Board for the appointment of Rupert Keeley.

The Committee also considered additional appointments to the Legislative Committee.

The Committee oversaw a review of the DFSA’s hospitality policy and recommended certain revisions which were approved by the Board.

The Committee also conducted a review of the members of the Financial Markets Tribunal and made recommendations to the Board in that regard which were approved.

The Committee considered a report by the Chief Executive on senior management staffing matters.

During 2022, the Committee reviewed its terms of reference and, following various recommendations made by the Committee, revised terms of reference were approved by the Board.

The Remuneration Committee has oversight of the human resources policies of the DFSA, including those dealing with remuneration and it assists the Board to discharge its responsibilities relating to the DFSA’s human resources.

Remuneration Committee members in 2022 were:

·Abdullah Sharafi

·The Hon. Apurv Bagri

·Swee Lian Teo

·Andrew Spindler (retired 31 March 2022)

During 2022, the Committee discussed staffing requirements and made recommendations to the Board in this regard for the 2023 budget. The Committee also provided updates to the Board on numerous HR-related issues, including market conditions vis-à-vis salary movement, cost of living and inflation.

The Committee reviewed progress and development of all employees with a particular focus on the career progression of UAE Nationals.

The Committee considered various amendments to human resources policies and made recommendations to the Board in that regard.

During 2022, the Committee also considered the staff engagement report and recommended policies to further enhance staff engagement.

The Committee also reviewed its terms of reference and, following various recommendations made by the Committee, revised terms of reference were approved by the Board.

The Financial Markets Tribunal (FMT) is a tribunal created under the Regulatory Law 2004 to hear and determine any reference, that is, to review a decision of the DFSA, where DIFC legislation provides that a matter may be referred to the FMT for review.

The FMT also has jurisdiction to hear and determine any regulatory proceeding, where DIFC legislation provides that such a proceeding may be commenced before the FMT.

A decision of the FMT may, with permission from the FMT or DIFC Court, be appealed to the DIFC Court on a point of law.

The FMT’s members are appointed by the DFSA Board of Directors, but it is operationally independent of the Board and the DFSA Executive.

FMT members in 2022 were:

·His Honour David Mackie CBE KC (President)*

·Ali Malek KC*

·Bankim Thanki KC*

·Jeremy Gauntlett KC*

·Patrick Storey*

·Ali Al Aidarous*

·Ali Al Hashimi*

In 2022, the FMT considered references of seven DFSA decisions. In one matter, a decision was issued for a case heard at the end of 2021, and six matters referred to the FMT during 2021 were due to be heard during 2022.

Of these, two matters were withdrawn following settlement, one matter was withdrawn without settlement, one matter was decided on the papers without the hearing originally scheduled and one matter was decided after a full hearing that was held remotely in September 2022.

The FMT decision in December 2021 in interlocutory applications concerning privacy of proceedings and publication of DFSA decisions in respect of two of these matters was upheld by the DIFC Courts on appeal, following a remote hearing in June 2022.

The FMT’s decisions in the various matters considered in 2022 are published on the FMT section of the DFSA’s website. One case is ongoing and due to be considered at a full hearing scheduled to take place later in March 2023.

The Emirati Working Group is a vehicle through which the Board seeks to promote the development of UAE National employees, and through which it oversees the TRL Programme, which has been designed to assist the professional growth and career development of young UAE Nationals.

Emirati Working Group Committee Members in 2022 were:

·Abdullah Sharafi (Chair)

·Swee Lian Teo

·Ian Johnston *

·Waleed Saeed Al Awadhi*

·Arif Sayed*

·Eric Salomons* (TRL Programme Dean) retired 30 June 2022

·Tania McCaskie* (TRL Programme Dean) with effect from 1 July 2022

* Executive member

During 2022 the Emirati Working Group received reports on the development of UAE National staff through ‘on the job’ experience and training. The Emirati Working Group also received reports and advised on the DFSA’s talent management initiatives including the Taqadum stakeholder engagement initiative and staff secondments.

The EWG Chair periodically engaged with UAE Nationals throughout the year to discuss their career development and oversaw a plan for greater involvement of UAE Nationals in local and international stakeholder engagement.

In September 2022, the DFSA accepted its 12^th intake of Emirati graduates to the TRL Programme. The TRL Programme Dean and TRL Programme Manager instigated substantial changes to the structure and delivery of the programme which will be implemented during the two-year programme term. These changes are designed to advance further the knowledge and skills of young UAE Nationals whilst also meeting the DFSA’s evolving talent needs.