The Dubai Financial Services Authority (DFSA) at the end of March imposed its largest fine to date on Deutsche Bank’s branch in the Dubai International Financial Centre (DIFC). The size of the fine, US$10.5 million, may seem modest when compared to the recent £126 million (US$185 million) fine handed to Bank of New York Mellon by the UK regulator, but it is significant in the context of the DIFC, particularly when you appreciate that Deutsche Bank is one of the larger and more important financial institutions in the centre. The fine sends a clear signal that the DFSA is both independent and unafraid of taking on sophisticated and well-resourced opponents.
The fine is also a reminder that a cover-up can often be worse than the initial crime. Sources close to the DFSA have confirmed that the regulator was unlikely to have taken any formal action against Deutsche Bank if the bank had disclosed its initial breach in a timely manner.
As is made clear in the decision notice published on the DFSA website, the bulk of the fine is based on the fact that Deutsche Bank not only failed to cooperate with the DFSA investigation, but also actively misled the DFSA and provided false information to the regulator.
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Stuart Walker is a partner at Afridi & Angell, a UAE-based law ﬁrm with ofﬁces in Abu Dhabi, Dubai, the DIFC and Sharjah.
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