The Dubai Financial Services Authority (DFSA) has fined a private bank $370,000 for having inadequate systems and controls to identify, assess and report trading which exhibited suspicions of market abuse.
FFA Private Bank (Dubai) Limited was put under the spotlight for failing to report several instances of suspicious trading between 2018 and 2021 to the DFSA.
DFSA said it had imposed a prohibition on FFA on 18 May 2021, from receiving, arranging, or executing orders from or on behalf of certain clients.
The prohibition was lifted on 15 July 2021 after FFA was able to demonstrate that it had addressed weaknesses in its systems and controls, DFSA said.
“This action concludes the DFSA’s investigation into these failings. The DFSA would highlight that FFA fully cooperated with the DFSA’s investigation, and promptly addressed the weaknesses in their systems and controls,” the authority said in a statement on Thursday.
Instances of trading by two clients during the period that had the characteristics of market abuse were identified and should have resulted in a report being made to the DFSA.
FFA had a flawed approach to assessing such trading, even though it was flagged by systems as suspicious, the authority said.
“FFA outsourced responsibility for the monitoring and assessment of client trading, however FFA failed to effectively supervise these activities,” a statement said.
“Outsourcing these activities did not absolve FFA of its responsibility for ensuring that the systems and controls being used were adequate and met FFA’s regulatory obligations.”
DFSA chief executive Ian Johnston said: “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 Authorised Firm that will be accountable if things go wrong.”
FFA Private Bank is operating from within the DIFC since 2006. It offers private wealth and asset management services as well as capital markets and investment banking products. FFA Private Bank is a wholly owned subsidiary of Lebanon's FFA.
(Reporting by Imogen Lillywhite; editing by Seban Scaria)