The Dubai Financial Services Authority (DFSA) is the regulator of DIFC financial service firms. It authorizes and supervises entities who like to go for DIFC company formation and carry out financial services activities under the five available licensed categories.

Certain functional appointments have been made mandatory for all firms in DIFC that want to conduct financial services from the DIFC and Compliance and MLRO functions are two of those.

Appointment of Compliance Officer and a Money Laundering Reporting Officer (CO/MLRO) at the time of applying the DFSA is mandatory for all financial firms operating in the centre. Generally, these two functions are combined for small and medium enterprises and hence one individual is normally proposed for the CO/MLRO. It is an implied requirement of DFSA that the applicant for this position must have sufficient knowledge, experience, and seniority to discharge the job responsibilities effectively. Once the license is issued by DFSA, the authority expects the Compliance Officer to be resident in the UAE. Before making any authorization decision, DFSA reviews the core management team, of which the compliance and MLRO officer now becomes a member.

The DFSA allows outsourcing of DIFC compliance support services for certain core functions such as Compliance, MLRO and Finance. However, the DFSA also critically reviews the type of financial service, the projected revenue generation, additional approvals such as dealing with Retail Clients, and the organisation structure before issuing outsourcing approvals.

For investment advisory services firms under Category 4 with a lower level of risks, engaging DIFC compliance support services is normally a simple and easy process.

However, the DFSA does not allow DIFC compliance support services in case of firms conducting high-risk financial activities such as asset management, brokerage or organising credit. An in-house resource must be appointed in such cases. However, in-house compliance functions have their share of limitations and here come the DIFC compliance support services to compensate for the shortcomings.

DIFC authorized firm support services can be of great help to the in-house compliance officer and can provide the officer with all the necessary data-driven tools for conducting the compliance activities smoothly and effectively. Risk intelligence databases e.g., World Check etc. available with the compliance support services can be accessed by CO/MLRO through purpose-based screening platforms for making the burdensome work of assessment, monitoring and reporting of risks a lot easier. The setting of customised alerts for regulatory updates also becomes simple. The support services also manage the compliance officer’s job in his/her absence or when he/she goes on leave.