Dubai Financial Services Authority introduces whistleblowing regime

The new measure aims to provide better legal protection for persons who report regulatory concerns, deter wrongdoing, and promote better compliance

The move by the Dubai Financial Services Authority seeks to improve the whistleblowing culture and increase transparency. Sarah Dea / The National

The Dubai Financial Services Authority has launched a regulatory regime for whistleblowing that applies to all DFSA-regulated entities operating in or from the Dubai International Financial Centre.

The regime is the first of its kind to be introduced by a financial service regulator in the UAE and provides enhanced legal protection for persons who report misconduct internally within DFSA-regulated entities or externally to their auditor, the DFSA or a law enforcement agency, the authority said in a statement on Thursday.

The move aims to improve the whistleblowing culture and increase transparency regarding how regulatory concerns are assessed and handled, and if appropriate escalated, the statement said.

A DFSA-regulated entity must put in place measures that protect the identity of the whistleblower and protect them from retribution.

“Whistleblowers form a key part of a firm’s ability to detect, identify and escalate issues of misconduct, and the required whistleblower policies and procedures play an important role in encouraging appropriate disclosures," DFSA chief executive F. Christopher Calabia, said.

"We expect all regulated entities to be ready to discuss and demonstrate the application of their policies and procedures when engaging with the DFSA.”

The DFSA held public consultations on whistleblowing measures last year that led to the aforementioned measures being adopted on April 7 after they were proposed in a consultation paper in July 2021.

Changes have been made to the Regulatory Law 2004.

The legal protection provided to people at regulated entities who report suspected misconduct internally within an entity or externally to their auditor, will only apply where the disclosure of information relates to a reasonable suspicion that the regulated entity, an officer or employee of it or an affiliate of an authorised person, has or may have breached the law or any other legislation administered by the DFSA.

Protection also applies if there is a reasonable suspicion of engagement in money laundering, fraud or any other financial crime, and where the disclosure is made in good faith.

All DFSA-regulated entities will need to put in place appropriate and effective policies and procedures that facilitate the reporting and assessment of regulatory concerns. These will need to be reviewed periodically.

Policies and procedures must cover internal arrangements to allow for the disclosure of regulatory concerns; adequate procedures to deal with, assess and escalate whistleblower reports within an entity and, where appropriate, to the DFSA or any other relevant authority.

Policies and measures must also protect the identity and confidentiality of the whistleblower; protect the whistleblower from a negative fallout.

Entities will need to put in place procedures to provide feedback to the whistleblower, where appropriate; and measures setting out how the entity will manage any conflicts of interest and the fair treatment of any person accused of committing a breach by a whistleblower.

Concerns can be reported directly to [e-mail] and will be treated confidentially.

The DFSA said it would respond to a report within 28 working days. After an initial assessment of the report, the regulator would seek further information if required.

The DFSA will not provide any legal advice or guidance as part of the process.