DFSA Reverses CP165
Finance Officer Remains Licensed Function (July 2026)
The Dubai Financial Services Authority (DFSA) has reversed its proposal to reclassify Finance Officers as "Designated Functions." After months of industry feedback on Consultation Paper 165 (CP165), the regulator decided to keep these roles as Licensed Functions. The final rules are set out in DFSA Rule-making Instrument No. 430, and they take effect on July 1, 2026.
At a Glance: Regulatory Change Summary
| Element | Detail |
|---|---|
| Regulator | DFSA (Dubai Financial Services Authority) |
| Original Proposal | CP165 - Reclassify Finance Officer as Designated Function |
| Final Outcome | Finance Officer remains Licensed Function |
| Effective Date | July 1, 2026 |
| Key Changes | Annual suitability reviews, expanded Conduct Principles, multi-firm oversight |
| Penalty Risk | Regulatory censure for inadequate documentation |
What Changed: From Proposal to Final Rule
Back in March 2025, the DFSA floated an idea. They wanted to remove authorization requirements for Compliance Officers, Finance Officers, and Senior Managers. The goal was to streamline things. Let firms handle more internally.
But the industry pushed back. Hard.
In December 2025, the DFSA published its Feedback Statement. They listened. The roles stay Licensed. Firms keep applying for prior approval. The public register stays intact.
New Requirements Effective July 1, 2026
1. Annual Suitability Reviews
You now need formal annual assessments of your Finance Officer's competence. Here's the catch: you don't submit these to the DFSA. But you must keep records for 6 years. And they need to be audit-ready at any moment.
2. Conduct Principles Expansion
The "Principles for Authorised Individuals" are now called Conduct Principles. Principles 1-4 now apply to all Relevant Employees, not just authorized staff. That means your middle office and client-facing teams are now covered. Ancillary staff are excluded, but the net just got wider.
3. Enhanced Independence
Finance Officers need clear seniority and independence. For smaller firms, this is not just checking boxes anymore. It's a core governance requirement.
Critical Impact: Multi-Firm Appointments
Here's where it gets tricky. Many Finance Officers in the DIFC serve multiple firms. The DFSA calls this "over-boarding," and they're watching it closely under Instrument No. 430.
If your Finance Officer works elsewhere, you need to map capacity by documenting hours and days allocated to your firm. You must evaluate conflicts by proving their duties elsewhere don't compromise integrity at your firm. And you need to show proportionate diligence with records that prove you've assessed capability relative to your specific risk profile.
CP165: Proposal vs. Final Law
| Aspect | Original CP165 Proposal | Final Outcome (Instrument 430) |
|---|---|---|
| Role Classification | Designated Function | Licensed Function (Retained) |
| DFSA Authorization | Not required | Required (Prior Approval) |
| Public Register | Removal proposed | Retained |
| Conduct Principles | Applied to AI/DI | Expanded to All Relevant Employees |
| Annual Reviews | Not included | Mandatory Internal Assessment |
July 2026 Readiness Checklist
Before the deadline, make sure you've covered these basics:
- Review appointments: Identify all staff falling under "Relevant Employee"
- Training: Brief your non-authorized staff on Conduct Principles 1-4
- Audit trail: Ensure Fit and Proper records are accessible and cover 6 years
- Policy updates: Amend your Compliance Manual for annual internal reviews
- Multi-firm gap analysis: If using an outsourced Finance Officer, get their capacity statement and conflict log
Need help appointing a Finance Officer? Explore our Finance Officer services.
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Schedule Consultation View DIFC ServicesFrequently Asked Questions
What is DFSA CP165 and what changed?
DFSA Consultation Paper 165 (CP165) originally proposed reclassifying Finance Officers from Licensed Functions to Designated Functions, which would have removed authorization requirements. After industry feedback, the DFSA reversed this decision in December 2025. Finance Officers remain Licensed Functions requiring full DFSA authorization, but new requirements include mandatory annual suitability reviews, expanded Conduct Principles applying to all Relevant Employees, and enhanced oversight of multi-firm appointments effective July 1, 2026.
Do existing Finance Officers need re-authorisation?
No. Current Authorised Individuals retain their status. The new rules apply to ongoing assessment and record-keeping obligations. This means your existing Finance Officer can continue in their role without interruption, but you must implement the new annual suitability review process and ensure their conduct records are maintained to the enhanced standard required from July 2026.
What is the deadline for compliance?
July 1, 2026. Firms should begin updating their Compliance Manuals and HR policies immediately. Early preparation is critical given the documentation requirements for multi-firm appointments and the need to train non-authorized staff on the expanded Conduct Principles before the rules take effect.
Are annual reviews submitted to the DFSA?
No. Annual reviews are internal requirements. Records must be retained for 6 years and made available to DFSA upon request. Your documentation should demonstrate a rigorous assessment of competence, capacity, and integrity, with clear evidence that the review was conducted by senior personnel independent from the Finance Officer being assessed.
What if our Finance Officer works for multiple firms?
You must assess their capacity, capability, and independence on an ongoing basis, documenting your proportionate due diligence. This includes maintaining time allocation records, conflict of interest declarations, and evidence that their other commitments do not impair their ability to fulfill core functions at your firm. The DFSA expects to see this documentation during thematic reviews.
What happens to our Compliance Manual and internal policies?
You must update your internal governance and manuals before July 1, 2026. The DFSA expects to see a documented process for the new Annual Suitability Reviews and training records for the expanded Conduct Principles. Most firms will need 8-12 weeks to complete these updates properly, accounting for board approval and staff training timelines.
Does this change the fees for Authorised Individual applications?
No. Since the Finance Officer remains a Licensed Function, the existing application process and associated DFSA fees remain unchanged. However, firms should budget for potential increases in compliance costs related to the enhanced record-keeping requirements and the expanded scope of Conduct Principles training for Relevant Employees.
Official Sources and Further Reading
DFSA Feedback Statement on CP165 (PDF)
DFSA Notice of Amendments: December 2025 (Instruments 430 & 431)