In brief
Following consultation and industry feedback, the Dubai Financial Services Authority (DFSA) published finalised amendments to its rules governing Licensed Functions, Authorised Individuals, and broader staff conduct requirements in December 2025.
With these rules taking effect on 1 July 2026, firms face a narrowing window to ensure compliance. Adherence to updated regulatory expectations will likely require modifications to existing governance arrangements, performance oversight mechanisms, record-keeping protocols, as well as to staff training programs.
In more detail
Background
In its initial 2025 consultation, the DFSA proposed significant changes to its framework for regulated roles (i.e., Licensed Functions), and the individuals performing them (i.e., Authorised Individuals).
Notably, the proposals included removing prior DFSA authorisation requirements for Compliance Officers, Finance Officers, and Senior Managers. Instead, these roles would become “Designated Functions” managed through an internal, firm-level assessment and oversight framework, similar to the “certified roles” concept under the UK Senior Managers and Certification Regime.
While these initial proposals were intended to recalibrate the balance between direct DFSA oversight and firm‑level accountability, the DFSA’s December 2025 feedback statement confirmed that the more far-reaching proposals would not proceed. Consequently, the updated rules represent a more measured evolution to the DFSA’s existing Authorised Individuals regime and conduct rules, rather than a shift to incorporating a certification‑style model.
Key takeaways
One of the most notable takeaways from the DFSA’s feedback statement is that it will not proceed with the proposals to establish Designated Functions and Designated Individuals. As such, Compliance Officers, Finance Officers, and Senior Managers will continue to require prior DFSA approval to carry on these Licensed Functions.
There are, however, a number of updates to the DFSA’s rules of which firms should be aware, including the following:
1. Extension of conduct principles to employees
Current DFSA rules in force require Authorised Individuals to meet prescribed conduct standards (“Conduct Principles”). These include requirements to act with due skill, care and diligence, observe high standards of integrity and fair dealing, and deal with the DFSA in an open and cooperative manner.
In a move that aligns its rules with approaches taken in other jurisdictions (such as the UK), the DFSA has extended certain Conduct Principles to all employees of DFSA-authorised firms broadly involved in financial services activities or the management of the firm (excluding those carrying on ancillary roles such as drivers, secretaries, or audiovisual technicians).
Given this significant expansion of staff subject to the Conduct Principles, firms should provide appropriate staff training to ensure that newly captured employees understand what these Conduct Principles mean for them in the context of their day to-day responsibilities.
2. Annual assessment of Authorised Individual fitness and propriety
Firms are currently under a general obligation to ensure that their employees, including Authorised Individuals, are fit and proper, and must maintain systems and controls in order to ensure (and demonstrate) compliance with this requirement. The DFSA have amended their rules to make clear that an Authorised Individual’s fitness and propriety must be checked and confirmed at least once a year, with records of this annual attestation being kept and made readily available to the DFSA upon request.
3. Criteria for fit and proper assessments of Authorised Individuals
In addition to emphasizing the importance of a firm’s role in assessing Authorised Individual’s fitness and propriety, the DFSA used its feedback statement to reaffirm and clarify the key considerations relevant to such assessments.
One area of particular focus is where individuals perform Licensed Functions for more than one firm. In this context, the DFSA have reaffirmed its expectation that all firms, regardless of size, take an active role in making sure that any individual they appoint who performs a Licensed Function for more than one firm has sufficient time, capacity, knowledge, and resources to carry out their Licensed Functions effectively. In practice, the DFSA have noted that this will include considering, both at the point of authorisation and on an ongoing basis:
- The number of other firms to which the individual provides services, the nature of those roles, and any risk that overlapping commitments could impair the individual’s performance of the Licensed Function;
- Whether any other appointments or responsibilities could affect the individual’s ability to carry out their role for the firm to the required standard; and
- Whether the individual has relevant experience and expertise of the firm’s business model and sector and holds appropriate qualifications
These expectations, which are addressed in the DFSA’s updated rules, will be of relevance to a significant number of DFSA authorised firms. In a recent thematic review, the DFSA identified that 58% of the firms surveyed outsourced their compliance arrangements to consultants or Group compliance teams, arrangements under which individuals commonly perform Licensed Functions for more than one firm.
More broadly, the DFSA’s updated rules and policy materials also provide further detail on the factors firms should take into account when assessing fitness and propriety. With the exception of a limited refinement to the guidance on financial soundness (where a potentially onerous requirement, to assess whether an individual is able to meet his or her debts as they fall due, has been recast as a consideration of any “material indications” of a poor credit score or an inability to appropriately manage personal finances), these factors are consistent with the existing guidance set out in the DFSA’s Regulatory Policy and Process Sourcebook, and should therefore be familiar to authorised firms.
Deadline for compliance and next steps
As noted above, the DFSA’s updated rules will take effect on 1 July 2026. Where they have not already done so, Authorised Firms should ensure that they are in a position to comply with the updated requirements by that date.
In addition to any updates required to a firm’s governance and oversight arrangements, the DFSA have made clear that relevant employees should receive appropriate training on the Conduct Principles ahead of this implementation date. Firms should also be prepared for increased scrutiny of their fitness and propriety assessments during the course of 2026, and take steps to ensure that their assessment frameworks, documentation, and ongoing monitoring processes are robust and consistently applied.
How we can help
Our team is well placed to support DFSA‑authorised firms in assessing the impact of the DFSA’s updated rules and their readiness for the 1 July 2026 compliance deadline. We regularly assist firms with reviewing governance and oversight arrangements, and with the design, preparation and delivery of tailored training to support regulatory compliance.
We would be happy to discuss how these changes may apply to your business and to assist with any steps required to prepare for implementation.