Clements (Dubai), the local unit of Washington-headquartered Clements Worldwide, was fined $85,191 (£65,667, €75,607) by the DFSA for breaching its rules on selling insurance products in the United Arab Emirates (UAE) beyond the DIFC.
The DFSA said its investigation, carried out in conjunction with the Insurance Authority (IA), found that Clements had provided prohibited insurance intermediation services in breach of its rules on 21 occasions. It also failed to have adequate systems and controls in place to detect, monitor and prevent such activities from occurring.
The investigation found the company it refers to as CDL had sold a range of products including term life insurance, health insurance and commercial insurance to customers outside the DIFC.
Its employees had communicated directly with the customers, obtained details from them that were required to process the insurance applications on their behalf, and subsequently arranged for the insurance policies to be issued to the customers.
Ian Johnston, chief executive of the DFSA said: “Intermediating direct insurance in the UAE (outside of the DIFC) is prohibited by DFSA administered legislation and the UAE Federal Law.
“The DFSA will take appropriate action against firms in the DIFC that engage in any unlicensed insurance activities,” he warned.
DFSA rules restrict its licenced insurance intermediaries from acting in relation to a Contract of Insurance for a risk situated in the UAE, unless the risk is situated in the DIFC; or the contract is one for re-insurance.
The DFSA said it first raised concerns about the activities of Clements to the management in early 2014.
“At the meeting, CDL confirmed to the DFSA that it was not intermediating insurance for risks situated in the UAE,” the DFSA said in its Decision Notice.
“On or shortly after 25 August 2014, the chairman of CDL became aware of the existence of insurance policies issued to UAE residents (outside the DIFC) and intermediated by CDL. CDL then took steps to restrict its business pending a review of its operations carried out by a law firm,” it said. The law firm subsequently found Clements may have breached its licence obligations.
The DFSA noted that Clements had cooperated with it after the breaches were identified and the DFSA subsequently discounted the amount of the fine imposed as a result of the company’s decision to self-report the misconduct, take steps to remediate its deficiencies and co-operate fully with the DFSA's investigation.
The DFSA also noted that Clements voluntarily appointed a new senior executive officer, and compliance and money laundering reporting officer.