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  • Fitness and Propriety Regulation

    C 4/2024 Effective from 31/10/2024

    • Introduction

      The Central Bank is seeking to establish the framework for assessing fitness and propriety of Applicants, Authorized Individuals and Material Risk Takers and other Persons designated by the Central Bank. The Fitness and Propriety Regulation (this Regulation), and the accompanying Fitness and Propriety Standards (the Standards) set out the Central Bank’s minimum requirements for fitness and propriety to ensure that Persons who hold Designated Functions and other key positions within Licensees meet established criteria which support good governance and thereby the protection of depositors, policy holders, other customers and key stakeholders. This Regulation and accompanying Standards must be read in conjunction with the Central Bank Laws and Regulations, including the following, at a minimum:
       
      -Central Bank Circular No. 83/2019 - Corporate Governance Regulation for Banks and accompanying Standards;
      -Central Bank Circular No. 24/2022 - Corporate Governance Regulation for Insurance Companies and accompanying Standards;
      -Central Bank Circular No. 3/2023 – Finance Companies Regulation;
      -Central Bank Circular No. 15/2021 – Retail Payment Services and Card Schemes Regulation;
      -Central Bank Circular No. 6/2020 – Stored Value Facilities Regulation;
      -Central Bank Notice No. CBUAE/BSD/N/2020/2123 - Standard Re. Shari’ah Governance for Islamic Financial Institutions;
      -Central Bank Notice No. CBUAE/BIS/2023/4496 Standard re Shari’ah Governance for Takaful Insurance Companies;
      -Central Bank Notice No. 35/2018 - The Standards for the Regulations Regarding Licensing and Monitoring of Exchange Business;
      -Central Bank of the UAE’s Board of Directors’ Resolution published in the Official Gazette issue No. (740) on 30 November 2022 - Regulation Regarding Takaful Insurance;
      -Insurance Authority Board of Directors Resolution No. 15 of 2013 Concerning Insurance Brokerage Regulations;
      -Insurance Authority Board of Directors Resolution No. 6 of 2010 Concerning Surveyors and Loss Adjusters’ Regulations;
      -Insurance Authority Board Resolution No. 08 of 2011 - Instructions Concerning the Regulation of Insurance Agents Business;
      -Insurance Authority Board Resolution No. 9 of 2011 Concerning the Instructions for Licensing Health Insurance Third Party Administrators and Regulation and Control of their Business;
      -Insurance Authority Board of Directors’ Resolution No. (27) of 2020 Concerning the Instructions for Licensing Insurance Producers;
      -Insurance Authority Board of Directors Decision No. (9) of 2017 Concerning the Regulations on Licensing and Registration of Actuaries and Regulation of their Operations;
      -Board of Directors' Decision No. (12) of 2018 Concerning the Regulation on Licensing and Registration of Insurance Consultants and Organization of their Operations; and
      -Insurance Authority Board of Directors Decision No. (13) of 2018 Instructions Concerning Marketing Insurance Policies through Banks.
       
      In the event of any conflicts between requirements in this Regulation and the aforementioned Regulations or any other Regulations, the requirements herein take precedence.
       
      The Central Bank will use this Regulation and its accompanying Standards as the benchmark for its evaluation of Authorized Individuals, to ensure that their appointment facilitates the sound and prudent management of Licensees. Licensees hold primary responsibility for assuring themselves and the Central Bank, that Authorized Individuals and Material Risk Takers are fit and proper and suitable by, at a minimum, meeting the criteria established herein on the following (where applicable):
       
      -Honesty, integrity and reputation;
      -Competence and capability;
      -Financial conduct;
      -Independence of mind; and
      -Time commitment.
       
      This Regulation and the accompanying Standards are issued pursuant to the powers vested in the Central Bank under the Central Bank Laws and set the minimum principles of fitness and propriety, as far as common elements apply across regulated sectors. The Central Bank may issue additional Regulations in respect of ensuring the suitability of Authorized Individuals, Material Risk Takers and other Persons, as may be required within specific Licensees.
       
      Where this Regulation, or its accompanying Standards, include a requirement to provide information or to take certain measures, or to address certain items listed, the Central Bank may impose requirements, which are additional to those provided for in the relevant Article.
       

    • Objective

      The objective of this Regulation is to implement a framework for ensuring that Authorized Individuals and Material Risk Takers are fit and proper, and suitable to perform their functions within a Licensee. The accompanying Standards supplement this Regulation and elaborate on the framework by setting the minimum criteria and process for assessing the fitness and propriety of Persons prior to appointment and on an ongoing basis, which is expected to ensure the safety and soundness of Licensees and overall stability of the UAE financial sector.

      This Regulation and the accompanying Standards establish the functions and Persons who require Authorisation by the Central Bank prior to their appointment or reappointment to positions within a Licensee. Additionally, all functions, which are required to undergo the Fit and Proper Process, are also established.

      With the implementation of this Regulation and accompanying Standards, the expectation is that Licensees must be able to assure the Central Bank, on a continuous basis, that they are in full compliance with fit and proper requirements.

    • Scope

      This Regulation and the accompanying Standards apply to all Licensed Financial Institutions, Insurance Companies, Takaful Insurance Companies and Insurance-Related Professions (collectively, Licensees). The fit and proper and suitability requirements apply to the Licensee as a whole and the individuals involved in the management and control, as well as those who exercise significant power or discharge significant responsibilities in relation to the activities carried on by the Licensee.

      Licensees established in the UAE with Group relationships, including Subsidiaries, Affiliates, or international branches, must ensure that this Regulation and the accompanying Standards are adhered to on a solo and Group-wide basis. The requirements within this Regulation and the accompanying Standards shall also apply to Persons engaged by a Licensee in cases where a function is outsourced, where applicable.

    • Article (1): Definitions

      The following terms shall have the meaning assigned to them below for the purposes of this Regulation and its accompanying Standards:
       
      1.1Actuary: a Person licensed or authorized by the CBUAE to determine the value and price of the insurance policies, and to assess the technical provisions, accounts and all matters related thereto.
      1.2Affiliate: an entity that, directly or indirectly, controls, is controlled by, or is under common control with another entity. The term control as used herein shall mean the holding, directly or indirectly, of voting rights in another entity, or of the power to direct or cause the direction of the management of another entity. 
      1.3Applicant: a nominee for appointment or reappointment to a Designated Function in a Licensee. The term ‘Applicant’ is captured by Authorized Individual, where relevant.
      1.4Authorisation: the Central Bank’s formal approval or non-objection to the appointment or reappointment of a Person to a function within a Licensee, as determined by the Central Bank. 
      1.5Authorized Individual: any natural Person authorized in accordance with the provisions of the Central Bank Laws, to carry on any of the Designated Functions. In the case of Insurance Companies and Insurance-Related Professionals, the term Authorized Individual includes Senior Employees. 
      1.6Authorized Manager: a natural Person appointed by a foreign Insurance Company to manage its Branch in the State.
      1.7Bank: any Juridical Person licensed in accordance with the provisions of the Central Bank Law, to primarily carry on the activity of taking deposits, and any other Licensed Financial Activities. 
      1.8Board: the board of directors of the Licensee. In the case of branches of foreign Licensees, Board refers to the highest decision making body of the Licensee within the State, for example, the Senior Management committee.
      1.9Branch: a branch of the Insurance Company that carries out insurance activities in the name of the Insurance Company. 
      1.10Central Bank: the Central Bank of the United Arab Emirates (CBUAE). 
      1.11Central Bank Law: the Decretal Federal Law No. (14) of 2018 Regarding the Central Bank & Organisation of Financial Institutions and Activities, as amended. 
      1.12Central Bank Laws: the Central Bank Law and the Insurance Law. 
      1.13Chief Executive Officer: the most senior executive appointed by the Board, and in the case of a Branch, this refers to the Authorized Manager. 
      1.14Collective Suitability: the structure and composition of a Licensees’ Board which allows for full appreciation of the Licensees’ risk profile and business strategy to enable it to exercise effective challenge and oversight of decisions. The assessment of Collective Suitability takes into consideration, inter alia, size and structure, degree of independence and interaction, degree of diversity, and collective, relevant knowledge, skills and experience.
      1.15
      Compliance with Islamic Shari’ah Provisions: refers to compliance with Islamic Shari’ah in accordance with:
       
      a.The provisions stated in Section Six of Book Three of the Commercial Transactions Law,
      b.The provisions contained in the bylaws issued implementing Section Six of Book Three of the Commercial Transactions Law, 
      c.The resolutions, Fatwas, regulations and standards issued or approved by the Higher Shari’ah Authority in relation to businesses and activities of the Licensee ("HSA’s Resolutions"),
      d.The resolutions and Fatwas issued or approved by the Internal Shari’ah Supervision Committee of the respectiveLicensee, in relation to businesses and activities of such Licensee ("ISSC’s Resolutions"), provided that they do not contradict the HSA’s resolutions.
       
      1.16Conflict of Interest: a situation of actual or perceived conflict between the duty and private interests of a Person, which could improperly influence the performance of his/her duties and responsibilities. 
      1.17Continuous Professional Development (CPD): any type of training or learning undertaken by a Person which increases relevant knowledge, understanding and experiences of a subject area or role. 
      1.18Control Functions: the Licensee’s functions that have a responsibility independent from management to provide objective assessment, reporting and/or assurance; this includes the risk management function, the compliance function and the internal audit function. 
      1.19Designated Functions: functions of the Authorized Individual at, or for the benefit of, a Licensee of influential nature on the institution's activities. 
      1.20Fit and Proper Process: the evaluation of a Licensee’s proposed and existing members of the Board and Senior Management, Material Risk Takers and other Persons, as determined by the Central Bank.
      1.21
      Group: a group of entities that includes an entity (the ‘first entity’) and:
       
      a.any Parent of the first entity;
      b.any Subsidiary of the first entity or of any Parent of the first entity; and
      c.any Affiliate
       
      1.22Health Insurance Claims Management Company: a Juridical Person licensed by the CBUAE to carry out health insurance claims management business. 
      1.23Higher Sha’riah Authority: an authority that exercises the mandates and authorities stipulated in Regulations regarding Takaful Insurance and the notices issued by the Central Bank.
      1.24Insurance Agent: a Person licensed or authorized by the CBUAE, and is approved by the Insurance Company and authorized to carry out insurance activities on its own behalf or on behalf of a Branch thereof.
      1.25Insurance Broker: a Juridical Person licensed by the CBUAE and acts as independent intermediary in insurance and reinsurance operations between an insurance or re-insurance applicant on the one side and any Insurance Company on the other side, and receives, in consideration of its efforts, a commission from the Insurance Company with which insurance or reinsurance is concluded.
      1.26Insurance Company: an insurance company established in the State as well as a foreign insurance company licensed to carry out insurance business in the State, either through a Branch or through an Insurance Agent; and a Re-Insurance Company licensed to engage in re-insurance business either in the State or abroad.
      1.27Insurance Consultant: a Person licensed or authorized by the CBUAE to examine insurance requirements for their clients and give advice in respect of the suitable insurance coverage, assistance in preparing insurance requirements and receives their remuneration from their clients.
      1.28Insurance Law: the Federal Decree-Law No. (48) of 2023 Regulating Insurance Activitiesand its Executive Regulations, and anyamendments thereof.
      1.29Insurance-Related Professions: any Person licensed or authorized by the CBUAE to operate as an Insurance Agent, Insurance Broker, Surveyor and Loss Adjuster, Insurance Consultant, Actuary or Health Insurance Claim Manager, or any other profession related to insurance as determined and regulated by a resolution of the Board of Directors of the Central Bank.
      1.30Internal Shari’ah Supervision Committee (ISSC): a body appointed by an Islamic financial institution/ a Takaful Insurance Company, comprised of scholars specialized in Islamic financial transactions, which independently supervises transactions, activities, and products of the Islamic financial institution / the Insurance Company and ensure its Compliance with Islamic Shari’ah Provisions in all its objectives, activities, operations, and code of conduct.
      1.31Islamic Financial Institutions: the Licensed Financial Institutions that conduct all or part of their activities and businesses in accordance with the provisions of Islamic Shari'ah.
      1.32Juridical Person: any person who is not a natural Person.
      1.33Licence: authorisation issued by the Central Bank to conduct the business of a Licensee.
      1.34Licensed Financial Activities: the financial activities subject to Central Bank licensing and supervision, which are specified in Article (65) of the Central Bank Law. 
      1.35Licensed Financial Institutions: Banks and Other Financial Institutions licensed in accordance with the provisions of the Central Bank Law, to carry on a Licensed Financial Activity or more, including those which carry on the whole or a part of their business in Compliance with Islamic Shari`ah Provisions, and are either incorporated inside the State or in other jurisdictions, or have branches, Subsidiaries or Representative Offices inside the State.
      1.36Licensee: a Licensed Financial Institution, an Insurance Company, Takaful Insurance Company or an Insurance-Related Profession, which is subject to the provisions of this Regulation and its accompanying Standards.
      1.37Material Risk Takers: Staff whose work is deemed to have a significant impact on the overall risk profile of the Licensee or the Group.
      1.38Other Financial Institutions: any Juridical Person, other than Banks, licensed, in accordance with the provisions of the Central Bank Law, to carry on a financial activity or more, of the Licensed Financial Activities.
      1.39
      Parent: an entity (the ‘first entity’) which:
       
      a.holds a majority of the voting rights in another entity (the ‘second entity’);
      b.is a shareholder of the second entity and has the right to appoint or remove a majority of the board of directors or managers of the second entity; or
      c.is a shareholder of the second entity and controls alone, pursuant to an agreement with other shareholders, a majority of the voting rights in the second entity. 
       Or; 
      d.if the second entity is a subsidiary of another entity which is itself a subsidiary of the first entity
       
      1.40Person: a natural Person.
      1.41Regulations: any resolution, regulation, circular, rule, standard or notice issued by the Central Bank or any resolution issued by the Higher Sha’riah Authority.
      1.42Representative Offices: an office licensed in accordance with the provisions of the Central Bank Law, to carry on representation of a financial institution incorporated in other jurisdictions.
      1.43Senior Employee: any Person who occupies an executive position equivalent to the duties of a Director-General, Authorized Manager or the deputy or assistant of either one, or any department director, internal audit director or Branch manager.
      1.44Senior Management: the executive management of the Licensee responsible and accountable to the Board for the sound and prudent day-to-day management of the Licensee, generally including, but not limited to, the Chief Executive Officer, chief financial officer, chief risk officer, heads of the compliance and internal audit functions.
      1.45Staff: all the Persons working for a Licensee including the members of Senior Management, except for the members of its Board.
      1.46State: the United Arab Emirates (UAE).
      1.47
      Subsidiary: an entity (the ‘first entity’) is a subsidiary of another entity (the ‘second entity’) if the second entity:
       
      a.holds a majority of the voting rights in the first entity;
      b.is a shareholder of the first entity and has the right to appoint or remove a majority of the board of directors or managers of the first entity;
      c.is a shareholder of the first entity and controls alone, pursuant to an agreement with other shareholders, a majority of the voting rights in the first entity
       Or
      d.if the first entity is a subsidiary of another entity which is itself a subsidiary of the second entity.
       
      1.48Surveyor and Loss Adjuster: a Person licensed or authorized by the CBUAE to inspect and assess the damage incurred in the subject of insurance.
      1.49Takaful Insurance: A collective contractual scheme intended to achieve solidarity and cooperation among a group of contributors to address certain risks, where each one pays an amount of money called “contribution” to be deposited in a Takaful insurance fund, through which compensation is to be paid to eligible persons when a risk is sustained.
      1.50Takaful Insurance Company: an Insurance Company, which is incorporated and practices its business in accordance with the provisions of the Central Bank Laws and Regulations, and whose carried out businesses and activities are in Compliance with the Islamic Shari’ah Provisions.
       

    • Article (2): Fit and Proper Conditions

      2.1Persons being proposed to hold or who hold certain specified positions in Licensees must be authorised by the Central Bank to hold those positions and must demonstrate that they are fit and proper. The list of positions subject to the Central Bank’s Authorisation regime varies according to the Licence/s held by the Licensee, but generally cover members of the Board and Senior Management, including the heads of Control Functions. The current, non-exhaustive list of positions subject to Central Bank Authorisation is presented in Attachment 1 to the accompanying Standards.
      2.2Licensees must ensure that Authorized Individuals and Material Risk Takers meet fit and proper criteria established in this Regulation and the accompanying Standards and continue to do so for the duration of their tenure in a Designated Function or as a Material Risk Taker in a Licensee.
      2.3Authorised Individuals and Material Risk Takers must undergo the Fit and Proper Process. In the case of Authorized Individuals, Licensees must obtain Authorisation from the Central Bank prior to their appointment or reappointment to Designated Functions.
      2.4The Fit and Proper Process must take into account the role that the Person is expected to undertake within the Licensee. Therefore, a Person assessed as suitable for a particular position within a Licensee may not automatically and solely on that basis, be considered suitable for another position with different responsibilities, or for a similar role within a different Licensee.
      2.5Applicants must not participate in any decision-making or policy-making activities related to the proposed Designated Function prior to receiving the Authorisation of the Central Bank for their appointment.
      2.6There must be full and accurate disclosure by Authorized Individuals and Licensees when communicating information to the Central Bank in relation to the Fit and Proper Process
       

    • Article (3): Central Bank Powers

      3.1Prior to providing its Authorisation for the appointment of a Person to a Designated Function, the Central Bank may conduct its own assessments, interviews and background, security and other detailed checks, to confirm the accuracy, completeness and relevance of the information and documentation provided by the Person and/or the Licensee.
      3.2The Central Bank may request information about a Person from other Persons, Juridical Persons or authorities within or outside of the State to inform its decision on Authorisation.
      3.3The Central Bank may prescribe the forms which need to be completed and the supporting documentation to be provided in support of an application for Authorisation.
      3.4Where the Central Bank provides Authorisation for the appointment of an Authorised Individual, the Central Bank may impose specific conditions and/or restrictions to the Authorisation.
      3.5The Central Bank may require, at its sole discretion and on a case by case basis that the shareholders, directors and/or senior management of the Parent, Subsidiaries or Affiliates of a Licensee, be subject to the Fit and Proper Process.
      3.6The Central Bank may, in certain circumstances, modify specific requirements set within this Regulation and its accompanying Standards, with regard to a particular case.
      3.7The Central Bank may, at any time, remove or revoke the appointment of any Person, if that Person is found to be not fit and proper or does not fulfil the requirements of suitability for the position which they hold; or where the Central Bank, determines that the Person’s appointment poses significant risk to the safety and soundness of the Licensee.
       

    • Article (4): Responsibilities of the Licensee

      4.1Branches of foreign Licensees must establish local governance structures, such as a Senior Management committee or equivalent, that fulfil the responsibilities of a Board required by this Regulation and the accompanying Standards. The local management structure of the branch must take steps as are necessary to help the branch meet its own fitness and propriety responsibilities in line with this Regulation and its accompanying Standards. It is the responsibility of the local management structures to ensure that local legal and regulatory requirements are implemented and, where appropriate, make adjustments where the Group requirements conflict with a provision of this Regulation or the accompanying Standards.
      4.2Licensees must ensure that all Staff are suitable for the positions that they occupy, including Staff who provide advice and/or make recommendations to customers, who must be suitably qualified and competent in undertaking their roles. The Central Bank may issue additional Regulations on suitability, in this regard.
      4.3Licensees must take responsibility for assessing the fitness and propriety of Persons who hold positions which are subject to these assessments. Licensees must inform the Central Bank of the outcome of all assessments related to fitness and propriety of Authorized Individuals, including the assessment of Collective Suitability of the Board and collective skills, competence and experience of the Senior Management team and other decision-making bodies necessary to operate the business in a prudent and effective manner.
      4.4Licensees must ensure that the Senior Management team is collectively competent, giving due regard to the risk profile, business strategy and internal control framework. Collective competence refers to the need for a range of educational qualifications and experience. Licensees that conduct all or part of their activities and businesses in Compliance with Islamic Shari’ah Provisions, must take into consideration the collective competence of the ISSC members particularly in terms of relevant experience and skills related to the business and activities of the Licensee, including inter alia, the legal and regulatory framework and risk management and technological requirements.
      4.5No applications for the appointment of Authorized Individuals should be submitted for the Central Bank’s Authorisation until the Licensee is assured that the Person has been assessed as fit and proper and has been found suitable for the proposed function.
      4.6The Licensee must submit the results of the Fit and Proper Process of Applicants along with all supporting documentation to the Central Bank for Authorisation no later than sixty (60) business days prior to the planned appointment date of the Applicant.
      4.7Licensees must ensure that information submitted to the Central Bank in support of an application for Authorisation, including responses in the prescribed forms, is complete, accurate, not misleading or erroneous and is presented in Arabic and/or English (as stipulated), free of errors and signed off on by a Person, authorised to do so by the Board, where applicable. The Person/s signing the form on behalf of the Licensee must have the appropriate authority to do so and must not be the Person for whom Authorisation is being sought, or the Person who will be the direct manager of that Person.
      4.8In all cases, Licensees must obtain the Central Bank’s Authorisation prior to reappointing or renewing the contract of any Authorized Individual. In cases where a contract or appointment instrument of an Authorized Individual is being amended, at a minimum, Authorisation must be sought from the Central Bank where the amendment relates to the tenure of the contract or period of appointment.
      4.9Licensees and Applicants must not make external, public announcements about proposed appointments prior to obtaining the Central Bank’s Authorisation.
      4.10If an Authorized Individual is deemed to be not fit and proper following the completion of an assessment by either the Licensee or the Central Bank, the Authorized Individual must be removed from the Designated Function. The Person must be replaced within the period specified by applicable law or Regulations; and where not specified, within ninety (90) days, subject to the fit and proper and suitability requirements. The Licensee may apply for an extension to the ninety (90) days and provide the Central Bank with adequate justification for the request.
      4.11In all cases, a Licensee must obtain the non-objection of the Central Bank prior to the termination, dismissal or removal of an Authorized Individual. The request for non-objection to the Central Bank must include all pertinent details, including the planned termination date, reasons for the planned termination, dismissal/ or removal and relevant signed decisions. In the case of ISSC members and heads of internal Shari’ah control and internal Shari’ah audit departments, the Licensee must also obtain a non-objection from the Higher Shari’ah Authority, before the termination, dismissal or removal of the Person.
      4.12In cases where termination, dismissal or removal of an Authorized Individual is required for actions which can severely impact the safety or soundness of the Licensee or where the Person’s actions could amount to criminal misconduct, including fraud, significant legal or regulatory breaches, or gross negligence, the Licensee must immediately notify the Central Bank prior to pursuing the termination, dismissal or removal action. In such cases, the Central Bank may waive the requirement for seeking prior-non-objection.
       

    • Article (5): Material Risk Takers

      5.1Licensees must designate Material Risk Takers following an assessment of the functions and duties of its Staff to identify which roles will therefore be subject to the Fit and Proper Process at appointment and on an ongoing basis, in line with this Regulation and the accompanying Standards.
      5.2Material Risk Takers must be assessed by the Licensee as fit and proper and suitable for their roles, in the sense that they are sufficiently skilled, knowledgeable and capable of performing the specific function; and possess the relevant minimum qualifications and experience requirements for the post.
       

    • Article (6): The Fit and Proper Process

      6.1The Fit and Proper Process must be applied to all Applicants and Material Risk Takers.
      6.2The Central Bank may require any Person employed within or engaged by a Licensee to be subject to the Fit and Proper Process, at its sole discretion.
      6.3In cases where a Licensee established in the UAE, is a member of a Group, the Fit and Proper Process must be undertaken on the board and senior managers of other entities in the Group, if they exercise a material or controlling influence on the Licensee. In such cases, the Licensee must ensure that an assessment is completed, highlighting any material differences between the requirements herein and those in the jurisdiction of the Parent and submit to the Central Bank, a compliance plan which ensures full compliance in the host jurisdiction while considering the regulatory requirements in the State. In all cases, where there is no clear conflict between the requirements, the stricter and/or more prudent requirements must be complied with. Where the Licensee is not established within the UAE, the Central Bank, may, at its sole discretion, require that the Fit and Proper Process be undertaken for the board and senior managers of other entities in the Group, on a case by case basis. The Central Bank may exempt a Licensee from the requirements herein, if the Licensee demonstrates to the satisfaction of the Central Bank, that the fit and proper requirements of another jurisdiction are satisfactory and are being met by the Licensee.
      6.4If the Fit and Proper Process results in adverse findings, that is, finds that the Person concerned is not fit and proper or not suitable for the position they hold and therefore demonstrate the need to remove the Person from that function, the Central Bank’s non-objection must be sought, where required, in line with this Regulation and the accompanying Standards.
      6.5
      The Central Bank recommends that Authorised Individuals undergo the Fit and Proper Process on an annual basis. All Authorized Individuals and Material Risk Takers must be subject to the Fit and Proper Process:
       
      a.Prior to appointing the Person to a Designated Function or as a Material Risk Taker;
      b.Regularly, and at a minimum, every three (3)years or prior to the renewal of thecontract or reappointment of the Person,whichever is earlier;
      c.If there is reason to believe that the Person may no longer be fit and proper either due to a trigger event (as set out in Article 6.11 of the accompanying Standards) or any other reason; and
      d.Any other time, as determined by the Central Bank.
       

    • Article (7): Fit and Proper Criteria

      7.1
      The criteria for the assessment of fitness and propriety and suitability takes consideration of all relevant information, whether obtained within the State or another jurisdiction, and relies on establishing whether a Person, where applicable:
       
      a.Possesses the necessary knowledge, skills, expertise and experience;
      b.Has a record of acting honestly, ethically, with integrity and is of good repute;
      c.Has a good record of financial conduct;
      d.Is able to make his/her own decisions in a reasoned, objective and independent manner; and does not have any Conflict of Interest that could affect his/her conduct;
      e.Has sufficient time to devote to fully performing his/her duties and responsibilities;
      e.Contributes to the Collective Suitability of the Board or the collective competence of the Senior Management team, where applicable; and
      f.Meets any additional requirements specified in applicable Regulations.
       

    • Article (8): Collective Suitability

      8.1The Board must have the collective experience, knowledge and skills to understand all the areas of the Licensee’s activities including the main risks and the management thereof; set the strategy and provide effective leadership, direction and oversight; and facilitate independent opinions and constructive challenge in the decision-making process.
      8.2Diversity of skills and knowledge must be taken into account when selecting Authorized Individuals. Diversity of the Board must be considered in relation to skills, knowledge, qualifications, professional background, age and gender.
      8.3The Fit and Proper Process must therefore be supported by a comprehensive suitability assessment, where applicable, to ensure that the appointment of Authorized Individuals supports a broader objective of ensuring that the Board meets the requirement of Collective Suitability.
      8.4In the event that the results of the assessment reveal a deficiency in the Collective Suitability of the Board, the Licensee must submit to the Central Bank an action plan for achieving Collective Suitability. The Central Bank may consider this action plan in assessing any applications for approval of Applicants for appointment or reappointment to the Board.
       

    • Article (9): Continuous Professional Development (CPD) Requirements

      9.1Authorized Individuals and Material Risk Takers must have current, relevant and sufficient knowledge, skills and experience; and remain competent for the positions they hold.
      9.2Licensees must provide opportunities for and/or facilitate access to CPD for Authorized Individuals and Material Risk Takers to maintain and enhance their competencies and stay up to date on developments relevant to their areas of responsibility.
      9.3Unless otherwise specified by applicable Regulations, the minimum number of CPD hours to be completed by Authorized Individuals and Material Risk Takers is ten (10) hours per calendar year. The Central Bank may set minimum requirements for specified functions, including requiring the completion of specific programmes, as approved by the Central Bank.
      9.4The Central Bank may set more specific competency requirements for specified functions including inter alia recognised qualifications, minimum CPD requirements and the programmes, training, or qualifications which are considered as adequate to meet the requirements of CPD.
      9.5Licensees must maintain detailed records of CPD participation by Authorized Individuals and Material Risk Takers along with supporting documentation including inter alia attendance or completion certificates and course receipts. These records must be submitted to the Central Bank, where required and be made available to the Central Bank, upon request.
       

    • Article (10): Reporting and Record Keeping

      10.1Licensees must document the results of the Fit and Proper Process for all Persons; and all information and results of the process must be kept confidential. The consent of the Person must be obtained prior to sharing any information or documents, except in cases where required under UAE law.
      10.2Upon completion of the Fit and Proper Process for Authorized Individuals or Collective Suitability assessments for the Board, whether conducted as part of the Licensee’s ongoing programme of reassessments or triggered by an event, the results of these assessments must be submitted to the Central Bank immediately upon finalisation. If the Person is found to be not fit and proper and/or suitable for the Designated Function, the action taken or proposed plan of action for remediation of the breach must also be reported to the Central Bank.
      10.3Where a Licensee becomes aware of circumstances or information that may materially, adversely affect the fitness and propriety of an Authorized Individual, or the Collective Suitability of the Board the Licensee must immediately notify the Central Bank in writing and provide all necessary details, supporting documentation and the results of the reassessment, where applicable. The Licensee must provide an indication of whether the information led or will lead to a reassessment of fitness and propriety of the Person or the Collective Suitability, and if not, the Licensee must provide appropriate justification for not conducting the reassessment.
      10.4A Licensee must formally notify the Central Bank in a form specified by the Central Bank, of the resignation or retirement of any Authorized Individual immediately, but no later than five (5) business days of the Licensee’s receipt of the retirement or resignation notice, as the case may be. In the case of members of the ISSC, and heads of internal Shari’ah control and internal Shari’ah audit departments, in addition to the Central Bank, the Licensee must also notify the Higher Shari’ah Authority. The notifications to the Central Bank and Higher Shari’ah Authority must include all pertinent details, including the effective date of the retirement or resignation and in the case of resignation, the reasons cited by the Person for the resignation, where applicable.
      10.5A Licensee must conduct an exit interview with an Authorised Person who has resigned from their post. The proceedings of the exit interview must be documented and made available to the Central Bank, upon request.
      10.6Licensees must report any other matter that the Central Bank reasonably expects to be aware of, including breaches of any of the provisions of this Regulation and accompanying Standards.
       

    • Article (11): Enforcement and Sanctions

      11.1Violation of any provision of this Regulation and the accompanying Standards may subject the Licensee to supervisory action, administrative action and/or financial sanctions as deemed appropriate by the Central Bank.
      11.2Without prejudice to the provisions of the Central Bank Law, supervisory action and sanctions by the Central Bank may include withdrawing, replacing or restricting the powers of Senior Management or Members of the Board, providing for the interim management of a Licensee, or barring individuals from the UAE financial sector.
       

    • Article (12): Interpretation of Regulation

      12.1The Regulatory Development Department of the Central Bank shall be the reference for interpretation of the provisions of this Regulation and the accompanying Standards.
       

    • Article (13): Publication and Application

      13.1This Regulation and the accompanying Standards shall be published in the Official Gazette and shall come into effect on the date of its publication.
       

    • Article (14): Transitional Arrangements

      14.1Any Person who has been approved by the Central Bank to hold a Designated Function on the effective date of this Regulation and the accompanying Standards, is deemed Authorised by the Central Bank to hold the Designated Function, until a reassessment is required, based on the requirements herein.
      14.2In line with the requirements set in this Regulation and accompanying Standards, within nine (9) months of the effective date of this Regulation and the accompanying Standards, Licensees must complete the Fit and Proper Process for any Person who holds a Designated Function and has not been Authorised by the Central Bank; and for any Material Risk Taker, where an assessment has not been conducted within the three (3) years prior to the effective date of this Regulation and the accompanying Standards.
      14.3The Licensee must submit to the Central Bank a report of the exercise conducted in Article (14.2), including the records of assessments conducted and details of any related actions.