The Dubai Financial Services Authority (DFSA) has recently imposed a fine of AED1,373,122 ($370,000) on FFA Private Bank, a Dubai-based firm, citing inadequate systems to identify, assess, and report trading activities that indicated suspicions of market abuse. This penalty was issued in response to violations recorded between February 2018 and March 2021.
The regulatory action was a result of the prohibition initially imposed by the authority in 2021, which was later lifted following the FFA’s demonstration of addressing the identified weaknesses within its systems.
The identified system weaknesses led to the firm’s failure in taking appropriate measures against suspicious trading, posing a significant risk that could have facilitated market abuse.
Ian Johnston, the Chief Executive of the DFSA, emphasized the critical role of Authorized Firms in safeguarding the integrity of financial markets. He highlighted that the FFA’s inability to establish effective mechanisms to identify potentially suspicious trading by its clients had facilitated trading with characteristics resembling market abuse for an extended period.
The authority outlined FFA’s approach to assessing suspicious trading as “flawed,” citing the firm’s outsourcing of client trading assessment responsibilities without adequate supervision of these activities.
“This case serves as a reminder that firms cannot rely blindly on those to whom they delegate responsibility for the performance of key compliance activities. Steps must be taken to ensure processes are operating effectively as it is ultimately the Authorized Firm that will be accountable if things go wrong,” Johnston added.
The DFSA’s enforcement actions reinforce the regulatory imperative of maintaining robust systems within financial institutions to detect and address any potential market abuses effectively.
