Dubai’s financial regulator has found a private banker guilty of defrauding a client, and has banned him from working in the Dubai International Financial Centre for six years. He was fined Dh73,400.
The Dubai Financial Services Authority (DFSA) enforced the penalty against the banker, who has the initials ND, for forging a client’s signature, falsifying account information and making two unauthorised transactions amounting to more than Dh30.82 million.
An investigation led by the DFSA revealed that between July last year and January this year, ND executed two separate transactions worth Dh12.48m and Dh18.35m without obtaining his client’s consent. The client, however, did not suffer any financial loss as a consequence of ND’s actions.
The DFSA said ND had “forged the client’s signature on a number of documents and sent fraudulent letters and account statements, containing false and misleading information about his investments”. ND could not be reached for comment.
On its part, the regulator has accepted an enforcement undertaking after ND agreed to comply with the sanctions.
“Should [ND] fail to comply with any condition of the undertaking then the DFSA may seek to enforce that condition in the DIFC Courts,” the DFSA said.
“The DFSA expects private bankers who provide services in or from the DIFC to act ethically and with integrity,”said Ian Johnston, the DFSA chief executive. “Bankers who do not meet these minimum standards will have to answer to the DFSA.”
Since its inception in 2004 as the regulator for the DIFC, the DFSA has been steadily building a body of regulations to govern Dubai’s financial markets. It has actively pursued a “naming and shaming” policy in recent years as a warning to individuals and members that contravene its regulations.
“We’ve certainly seen ongoing effort by the DFSA to be proactive and pursue the highest standards of regulation, and anyone guilty of fraud … deserves appropriate punishment,” said Niall O’Toole, the managing partner at the law firm Clyde & Co’s Abu Dhabi practice. “Fraud happens in every jurisdiction, so congratulations to the DFSA that they have found it.”
Earlier this month, the regulator enforced a penalty of US$50,000 against United Investment Bank (UIB) after an investigation revealed the lender’s failure to provide appropriate safeguards for its financial products.
UIB demonstrated weakness in its “systems and controls” for its custodian services, in which share certificates or other assets are held with a third party on behalf of an individual or company, the DFSA said on September 11.
Referring to a particular case, the DFSA said the bank failed to provide custody services to a client even though it had been contracted to do so, according to the fund’s prospectus.