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Dubai Financial Services Authority Approves Legislative Amendments regarding whistleblowers
  • Dennis Varghese
  • PETER GRAY

Dubai Financial Services Authority Approves Legislative Amendments regarding whistleblowers

Dubai’s Ruler approved the enactment of DIFC Law No. 1/2022 (“Amended Law”). The amended law will come into force on the 7 of April 2022 and amends the DIFC Law No. 1/2004 (“Existing Law”).

One of the key amendments is the introduction of the term “Regulated Entity.” In Section 3 (Defined Terms) of Schedule 1 of The Amended Law. Regulated Entity refers to any of the following:

(a) an Authorised Person;

(b) a Registered Auditor; or

(c) Designated Non-Financial Business or Professions (DNFBP).

Further, Article 67 of Existing Law has also been amended in a bid to ensure employees are not terminated for complying with their legal obligations.  Article 67(7) of the Existing Law states that a Court may, on the application of an aggrieved person, make an order for relief where the person has been subjected to any such detriment or loss or damage referred to in Article 67(6).

Articles 67(6) and 67(7) have now been replaced under the Amended Law. Article 67(6) provides that, subject to certain conditions, no individual will suffer a loss of employment or any other loss or damage merely by reason of undertaking any act to cause or assist a person to comply with its obligations. Article 67(7) provides that on the request of an aggrieved person, the Court may also make an order for relief in cases where the person has been subjected to any loss of employment or further damages referred to in Article 67(6).

Significant changes have also been made to Article 68 of the Old Law. Prior to the amendment, Article 68 read that a person would not be deemed liable to a proceeding, neither subject to a proceeding, nor in breach of duty because they gave information or produced documents to the DFSA in (a) good faith and (b)with a reasonable belief that the document contained relevant information.

However, under the Amended Law, whistleblower protections offered under Article 68 have been increased. Article 68(A) lists out the conditions that a person disclosing any information must follow and how the disclosure must be reported. In particular, Article 68(A)(4) provides specific protection offered to whistle-blowers by stating the following:

  1. The person will not be subject to any civil or contractual liability for making the disclosure;
  2. No contractual, civil or other remedy shall be enforceable against the person making the disclosure; and
  3. The person shall not be dismissed from current employment or be subject to any action for making such disclosure.

The Amended Law clarifies that the person disclosing the information does not need to identify himself in order to qualify for the whistle-blower protections provided under the Amended Law.

Furthermore, Articles 104(7) and 104(8) have been replaced to include protections for whistle-blowers from loss of employment. Specifically, Article 104(7) states that “No person shall be subjected to loss of employment or any other detriment or loss or damage merely by reason of undertaking any act to cause or assist an Auditor to comply with its obligation.” Article 104(8) has been replaced and now provides that the court may provide relief where the person has been subjected to loss of employment or detriment or loss of damage for disclosing information.

The amendments follow the announcement that the United Arab Emirates has been placed on the money laundering ‘grey list’ by the world’s main anti-money laundering watchdog, Paris-based Financial Action Task Force (FATF). The FATF has stated that the UAE needed to make improvements by strengthening its ability to pursue high-risk money laundering threats and demonstrate a ‘sustained increase’ in effective money laundering investigations and prosecutions.

The UAE government has responded with assurance that the UAE government will be working closely with the FATF to improve the problems areas identified.

Written by

Dennis Varghese – Paralegal

Peter Gray – Partner