New CISI UAE-Financial-Rules-and-Regulations Dumps & Questions Updated on 2025
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NEW QUESTION # 21
If the perpetrator of a money laundering crime is a repeat offender, what impact does this have on the minimum fine compared to a first offence?
- A. It is tripled
- B. It is quadrupled
- C. It is increased by 50%
- D. It is doubled
Answer: D
Explanation:
Under Federal Law No. 20 of 2018 and CISI UAE Financial Rules and Regulations, if a person convicted of a money laundering offence is a repeat offender, the minimum fine imposed is doubled compared to the first offence. This increased penalty reflects the heightened regulatory and punitive response to repeated non- compliance, emphasizing deterrence and the protection of the financial system. Repeat offenders face more severe consequences to underscore the seriousness of continued illegal activity and to promote adherence to AML laws.
Reference: CISI UAE Financial Rules and Regulations - AML Penalties and Repeat Offences, Section 8.4.6 (2023).
NEW QUESTION # 22
The disclosure of a licensed body's legal status, including the fact that it is licensed by the Authority, is important because:
- A. it ensures that no clients suffer from perceived or actual misbehaviour at the hands of a firm which is regulated
- B. it allows third party firms to use, utilise, or copy the Authority's logo for any reason and this reassures clients
- C. it forces firms to disclose their regulatory status and that they are subject to the Authority's control and supervision
- D. it enables those that might suffer from perceived or actual misbehaviour at the hands of a firm to raise their concerns with the regulator
Answer: D
Explanation:
Disclosing a licensed body's legal status and its licensing by the Authority is crucial because it enables clients and others who may suffer from perceived or actual misbehaviour to raise their concerns with the regulator.
This transparency mechanism empowers investors and market participants to seek redress and promotes regulatory oversight. While the disclosure also signifies the firm's subjection to regulatory supervision, the primary benefit is facilitating complaint handling and protection. It does not imply that no misbehaviour occurs, nor does it authorize the unauthorised use of the Authority's branding by third parties.
Reference: CISI UAE Financial Rules and Regulations - Client Protection and Regulatory Disclosure, Section 4.1.8 (2023).
NEW QUESTION # 23
A vote carried out by the board of the Authority resulted in a tie. What happens in these circumstances?
- A. The vote for the resolution is automatically carried
- B. The chairman or their deputy is granted the casting vote
- C. The vote against the resolution is automatically carried
- D. The decision is postponed until another vote can be taken
Answer: B
Explanation:
Under the CISI UAE Financial Rules and Regulations, in the event of a tie vote by the board of the Authority, the chairman or their deputy is granted the casting vote to resolve the deadlock. This mechanism ensures decisions can be made efficiently without indefinite postponement. The casting vote provides a decisive voice to the chair in balancing the board's decisions, reflecting common governance principles in corporate and regulatory bodies. Automatic carriage or rejection of resolutions without further input is not allowed, and postponement is typically avoided to maintain regulatory effectiveness.
Reference: CISI UAE Financial Rules and Regulations - Governance and Board Procedures, Section 2.4.8 (2023).
NEW QUESTION # 24
A real estate investment fund may borrow no more than what percentage of its total assets value?
- A. 10%
- B. 50%
- C. 75%
- D. 25%
Answer: B
Explanation:
According to the CISI UAE Financial Rules and Regulations, real estate investment funds are subject to borrowing limits to ensure financial stability and prevent excessive leverage. A real estate investment fund may borrow no more than 50% of its total assets value. This limit helps mitigate the risks associated with high levels of debt and ensures that the fund remains adequately capitalized to handle fluctuations in the real estate market. By restricting the borrowing capacity, the regulations aim to protect investors and ensure the fund's long-term sustainability.
Reference: CISI UAE Financial Rules and Regulations - Borrowing Limits for Real Estate Investment Funds, Section 6.1.5 (2023).
NEW QUESTION # 25
Where a local investment fund is established by an entity licensed to conduct family investment management, what minimum proportion of the units must be owned by family members?
- A. 51%
- B. 90%
- C. 75%
- D. 100%
Answer: B
Explanation:
CISI UAE Financial Rules and Regulations specify that when a local investment fund is established by an entity licensed for family investment management, at least 90% of the fund units must be owned by family members. This high ownership threshold ensures that the fund serves its intended purpose as a family investment vehicle, restricting external investor participation. The rule protects the fund's family-oriented investment strategy, governance, and compliance with related regulatory provisions. It also aligns with the regulatory framework promoting transparency and proper segmentation of family investment funds in the UAE financial markets.
Reference: CISI UAE Financial Rules and Regulations - Family Investment Management Funds, Ownership Requirements, Section 6.6.5 (2023).
NEW QUESTION # 26
If a discrepancy comes to light when conducting an external reconciliation, what must the firm do?
- A. Immediately suspend operations with the third party
- B. Immediately inform the regulator verbally and follow this up in writing
- C. Close the client's account by close of business on the same day
- D. Investigate and correct it as soon as possible
Answer: D
Explanation:
If a discrepancy is identified during an external reconciliation process, the firm is required to investigate and correct it as soon as possible. The CISI UAE Financial Rules and Regulations emphasize that discrepancies, whether in financial data or operational procedures, must be thoroughly examined to determine the root cause and rectified promptly. Immediate corrective action helps to ensure that financial statements and other reports remain accurate and reliable, preventing any further errors or compliance issues. While it may be necessary to inform the regulator or suspend operations in extreme cases, the first priority is to address the discrepancy through investigation and correction.
Reference: CISI UAE Financial Rules and Regulations - Reconciliation and Error Resolution, Section 8.1.4 (2023).
NEW QUESTION # 27
In order for the contents of a financial promotion which quotes yield figures to satisfy the clear, fair, and not misleading rule, it should:
- A. make the promotion available simultaneously in printed form and online
- B. give a balanced impression of both short and long term prospects
- C. always assume the communication is intended for a retail client
- D. ensure all monetary examples are calculated to at least two decimal places
Answer: B
Explanation:
For a financial promotion that quotes yield figures to comply with the clear, fair, and not misleading rule, it must give a balanced impression of both short and long term prospects. This ensures that the promotion does not mislead the client by focusing too heavily on short-term returns or exaggerating long-term performance. A balanced presentation of both short and long-term outcomes is essential for providing a full, accurate picture of the investment, allowing clients to make informed decisions. This approach aligns with the principles of transparency and fairness that underpin financial regulation.
Reference: CISI UAE Financial Rules and Regulations - Financial Promotions and Yield Quotes, Section
5.2.3 (2023).
NEW QUESTION # 28
If an issuer provides its shareholders with bonus shares, then the CSD Department will deposit the bonus shares issued in the account and will register them as a whole, round number. What happens in the case that there are fractions of shares?
- A. These are also added to the shareholder's account
- B. They are totalled up and put in a suspense account
- C. The issuing company must sell them within 30 days
- D. The issuing company must sell them within 45 days
Answer: B
Explanation:
When bonus shares are issued, the Central Securities Depository (CSD) registers shares in whole numbers only. Any fractions of shares that result from the bonus share calculation cannot be credited to individual shareholder accounts. According to CISI UAE Financial Rules and Regulations, these fractional shares are aggregated and placed into a suspense account by the CSD. The suspense account holds these fractional shares collectively until such time as they can be properly managed, such as by being sold off and the proceeds distributed to shareholders in proportion to their holdings. This process prevents fractional shares from being credited inaccurately, ensuring operational clarity and market integrity. The issuing company is not immediately responsible for selling these fractions, but regulatory oversight governs their eventual disposal.
Reference: CISI UAE Financial Rules and Regulations - Securities Issuance and Registration, Section 5.3.6 (2023).
NEW QUESTION # 29
If there is a material change in the nature of the relevant software, the regulations state that investors who have accepted an offer of crypto assets must be notified:
- A. within no less than 7 days
- B. immediately after implementation
- C. promptly in advance
- D. within no less than 14 days
Answer: C
Explanation:
The CISI UAE Financial Rules and Regulations require that investors in crypto assets be promptly notified in advance of any material change in the nature of the software relevant to the assets. This advance notification is crucial to allow investors to make informed decisions regarding their holdings before changes take effect.
Material changes could affect functionality, security, or value of the crypto asset. The regulation promotes transparency and investor protection by ensuring timely and clear communication, preventing investors from being blindsided by unexpected developments. The requirement aligns with international best practices on disclosure for crypto asset issuers.
Reference: CISI UAE Financial Rules and Regulations - Legislation and Practice, Crypto Asset Regulation, Section 7.2.1 (2023).
NEW QUESTION # 30
An applicant for a financial activities licence must have procedures in place to recover electronic records from the archive within what maximum period?
- A. Five business days
- B. Four calendar days
- C. Two calendar days
- D. Three business days
Answer: D
Explanation:
According to CISI UAE Financial Rules and Regulations, applicants for a financial activities licence must ensure that their record-keeping systems allow for recovery of electronic records from archives within a maximum period of three business days. This requirement ensures timely access to data necessary for audits, investigations, and regulatory reviews. The three-business-day timeframe balances operational feasibility with regulatory needs for responsiveness and data integrity, supporting transparency and compliance in the UAE financial sector.
Reference: CISI UAE Financial Rules and Regulations - Record-Keeping and Data Recovery Procedures, Section 3.5.10 (2023).
NEW QUESTION # 31
The policies of a firm applying for a financial activities licence must include arrangements to provide a copy of its complaints handling procedure to clients:
- A. within 48 hours of accepting the client
- B. on receipt of a complaint
- C. within 24 hours of accepting the client
- D. on request
Answer: D
Explanation:
Under the CISI UAE Financial Rules and Regulations, firms applying for a financial activities licence are required to have formal policies addressing client protection, including clear complaints handling procedures.
Such firms must make these proceduresavailable to clients on request, ensuring transparency and accessibility without imposing undue burden on clients or firms. The regulatory framework does not mandate automatic distribution within fixed timeframes upon client acceptance or complaint receipt but emphasizes accessibility and prompt responsiveness when clients seek the information. This approach balances operational feasibility and client rights to be informed about how their complaints will be managed. Providing the procedure upon request also fosters a trust-based relationship and helps resolve disputes effectively.
Reference:CISI UAE Financial Rules and Regulations - Client Protection and Complaints Handling, Section 4.2.7 (2023).
NEW QUESTION # 32
If in-kind shares are provided when the fund is founded; if the subscription fails and there is no special agreement, who would bear the expenses?
- A. Share providers
- B. Evaluators
- C. Founders
- D. Auditors
Answer: C
Explanation:
According to CISI UAE Financial Rules and Regulations, when in-kind shares are provided at fund inception and the subscription fails, the founders bear the related expenses in the absence of any special agreement. This allocation reflects the founders' responsibility in establishing and capitalizing the fund and absorbing initial setup costs, including those related to failed subscriptions. Share providers, auditors, or evaluators are not typically liable for such expenses unless contractual terms explicitly assign such responsibility. This regulatory stance encourages clarity and accountability in fund founding arrangements.
Reference: CISI UAE Financial Rules and Regulations - Investment Funds Incorporation and Expense Allocation, Section 6.2.11 (2023).
NEW QUESTION # 33
Which of the following is one of the prescribed financial activities for which the Authority can issue a license?
- A. Promotion
- B. Analysis
- C. Corporate planning
- D. Risk management
Answer: D
Explanation:
Under CISI UAE Financial Rules and Regulations, risk management is among the prescribed financial activities for which the Securities and Commodities Authority (SCA) issues licenses. Licensing ensures that entities engaging in financial risk assessment and mitigation services meet regulatory standards related to expertise, governance, and compliance. Activities such as analysis, promotion, and corporate planning are not independently licensable financial activities but may be ancillary functions within licensed firms. The licensure of risk management activities supports market stability and investor protection by formalizing oversight of critical financial functions.
Reference: CISI UAE Financial Rules and Regulations - Regulatory Infrastructure and Licensing, Section
3.1.2 (2023).
NEW QUESTION # 34
Which of the following is an administrative penalty that can be imposed on financial institutions that violate the law and regulations in relation to money laundering and terrorism financing?
- A. A penalty of no less than AED 50,000 and no more than AED 5,000,000 for each violation
- B. A penalty of no less than AED 5,000 and no more than AED 1,000,000 for each violation
- C. A penalty of no less than AED 100,000 and no more than AED 10,000,000 for each violation
- D. A penalty of no less than AED 15,000 and no more than AED 5,000,000 for each violation
Answer: A
Explanation:
Under Federal Law No. 20 of 2018 and CISI UAE Financial Rules and Regulations, financial institutions that violate anti-money laundering (AML) and counter-terrorism financing (CTF) laws may be subjected to administrative penalties ranging from no less than AED 50,000 and no more than AED 5,000,000 for each violation. These substantial fines underscore the UAE's commitment to stringent AML/CTF enforcement and deterrence. Administrative penalties are imposed alongside other measures such as corrective actions and possible criminal sanctions, ensuring comprehensive regulatory oversight.
Reference: CISI UAE Financial Rules and Regulations - AML Enforcement and Penalties, Section 8.5.4 (2023).
NEW QUESTION # 35
If a Special Purpose Acquisition Company fails to complete a business combination, measures to return the funds to investors must be taken within what maximum number of business days?
- A. 0
- B. 1
- C. 2
- D. 3
Answer: B
Explanation:
Under CISI UAE Financial Rules and Regulations, if a Special Purpose Acquisition Company (SPAC) does not complete a business combination within the stipulated timeframe, it must initiate measures to return the funds to investors within a maximum of 20 business days. This safeguard ensures that investors are not indefinitely exposed to risks related to unutilized capital in the SPAC, maintaining market discipline and investor protection. The regulations mandate clear timelines for fund returns to prevent misuse or undue delay, aligning with international SPAC best practices. Timely fund returns uphold investor confidence and market integrity, essential in the UAE's evolving financial landscape.
Reference: CISI UAE Financial Rules and Regulations - SPAC Regulations, Investor Protection and Fund Return, Section 6.3.8 (2023).
NEW QUESTION # 36
Where self-fund founders intend to accept in-kind shares, the fund prospectus must state whether these shares:
- A. will be held as capital assets of the fund
- B. may subsequently be disposed of
- C. are consistent with the fund's investment strategy
- D. are to be valued subjectively
Answer: C
Explanation:
For self-funded founders accepting in-kind shares into a fund, the CISI UAE Financial Rules and Regulations require that the fund prospectus clearly state whether such shares are consistent with the fund's investment strategy. This ensures transparency for investors regarding the nature and suitability of the assets held within the fund. Declaring consistency with the investment strategy helps investors assess the fund's objectives and risk profile accurately. Other details like valuation and disposal are important but the primary disclosure focus is on strategic alignment to maintain trust and regulatory compliance. This requirement underscores the importance of fund governance and investor protection.
Reference: CISI UAE Financial Rules and Regulations - Investment Funds, Fund Prospectus Requirements, Section 6.2.4 (2023).
NEW QUESTION # 37
An error was made by a broker which led to a trade being conducted using the wrong trading account number.
If the trader submitted a request to have the number amended 40 minutes after the end of the trading session, the amendment would only be made if:
- A. the circumstances are considered to be exceptional
- B. an alteration fee is paid at the same time
- C. the correction is within a 5% error margin
- D. an impact assessment gives acceptable results
Answer: A
Explanation:
In trading systems regulated under the CISI UAE Financial Rules and Regulations, brokers must ensure the accuracy of account details associated with transactions. However, if an error occurs, such as using an incorrect trading account number, amendments are generally not allowed beyond the trading session unless specific conditions are met. The CISI rules state that amendments will only be made in exceptional circumstances. For instance, if the request for the amendment is made shortly after the session, such as within
40 minutes, and it can be demonstrated that the error had no significant impact on market stability or the involved parties, it may be considered exceptional. Therefore, a correction request is usually subject to a careful review of its impact, and the circumstances of the error must be deemed significant enough to warrant such an exception.
Reference: CISI UAE Financial Rules and Regulations - Trading Errors and Amendments, Section 8.4.1 (2023).
NEW QUESTION # 38
Where a client is a legal person, the customer due diligence obligations require verification of identity for any natural persons holding what minimum controlling ownership interest?
- A. 51%
- B. 10%
- C. 3%
- D. 25%
Answer: D
Explanation:
According to CISI UAE Financial Rules and Regulations, when the client is a legal person, customer due diligence (CDD) requires verification of identity for any natural person holding a minimum controlling ownership interest of 25%. This threshold identifies beneficial owners who have significant influence or control over the legal entity. Verifying these individuals is critical for AML/CTF compliance to prevent misuse of corporate vehicles for illicit purposes. The 25% figure aligns with international standards such as FATF recommendations and ensures that regulatory scrutiny extends beyond the legal entity to its key controllers.
Reference: CISI UAE Financial Rules and Regulations - Client Due Diligence, Beneficial Ownership Verification, Section 8.1.4 (2023).
NEW QUESTION # 39
The statement in a suitability report giving reasons for the recommendation must also indicate:
- A. the client's ability to bear any risks and losses
- B. whether or not the client has accepted this guidance
- C. why the next best product or service was disregarded
- D. the extent to which the author is qualified to make this judgement
Answer: A
Explanation:
In CISI UAE Financial Rules and Regulations, suitability reports must include a clear statement addressing the client's ability to bear any risks and losses associated with the recommended financial product or service.
This disclosure ensures that recommendations are made with a full understanding of the client's financial capacity and risk tolerance, protecting clients from unsuitable advice. While explanations about alternative products, client acceptance, and author qualifications are relevant, the ability to bear risk is essential to justify the recommendation and meet regulatory standards for investor protection.
Reference: CISI UAE Financial Rules and Regulations - Client Protection and Suitability Reporting, Section
4.3.11 (2023).
NEW QUESTION # 40
The Board of a securities market wished to suspend a rule relating to the operations of that market, why was it unable to do so?
- A. A 30-day notice was not provided
- B. An Authority penalty was pending
- C. The majority of the board was not present
- D. It failed to seek permission from the Authority
Answer: D
Explanation:
When the Board of a securities market wishes to suspend a rule related to the market's operations, it must first obtain permission from the regulatory Authority. According to the CISI UAE Financial Rules and Regulations, if permission is not sought from the Authority before attempting to suspend the rule, the suspension request will not be valid. This requirement ensures that the Authority has oversight over the market's operational changes and can assess whether suspending the rule aligns with regulatory goals such as market stability, fairness, and transparency. This helps prevent arbitrary or inconsistent rule changes that might undermine investor confidence or disrupt the smooth functioning of the market.
Reference: CISI UAE Financial Rules and Regulations - Market Rule Suspension Procedures, Section 2.4.7 (2023).
NEW QUESTION # 41
When establishing a local investment fund, how much are the founders required to subscribe?
- A. At least 5 million dirhams
- B. At least 20 million dirhams
- C. At least 10 million dirhams
- D. At least 1 million dirhams
Answer: C
Explanation:
When establishing a local investment fund in the UAE, the founders are required to subscribe a minimum amount to demonstrate commitment and to comply with the legal and financial requirements set by the Securities and Commodities Authority (SCA). The minimum required subscription is at least 10 million dirhams. This ensures that the fund has a solid financial base, contributing to its credibility and ability to cover initial operational and management expenses. The founders' subscription also serves to align their interests with those of potential investors and provides an assurance of the fund's viability and long-term sustainability.
Reference: CISI UAE Financial Rules and Regulations - Fund Formation Requirements, Section 6.1.2 (2023).
NEW QUESTION # 42
Which of the following features of a previous order can be changed with the order remaining valid?
- A. Volume
- B. Order type
- C. Market
- D. Share category
Answer: A
Explanation:
In UAE financial markets, certain order attributes can be modified after submission while keeping the order active. According to the CISI UAE Financial Rules and Regulations on Trading, thevolumeof a previous order is the feature that can be changed without invalidating the order. Adjusting volume allows traders to increase or decrease the quantity of securities to be traded without withdrawing and resubmitting the order.
However, changes to share category, market, or order type typically require cancellation of the existing order and placing a new one, as these changes affect the fundamental nature and execution venue of the order. This flexibility in modifying volume supports market efficiency and helps traders respond swiftly to changing conditions while maintaining order validity.
Reference:CISI UAE Financial Rules and Regulations - Trading Rules and Order Modifications, Section
7.1.5 (2023).
NEW QUESTION # 43
What does the Authority usually do before deciding to delist a company's shares?
- A. Consult with the relevant firm
- B. Issue a fine for payment within 30 days
- C. Issue an improvement notice of 30 days
- D. Consult with the relevant market
Answer: C
Explanation:
Before deciding to delist a company's shares, the regulatory authority typically follows a procedure designed to ensure that the company has an opportunity to rectify any issues. According to the CISI UAE Financial Rules and Regulations, the Authority usually issues an improvement notice of 30 days to the company. This notice outlines the deficiencies or non-compliance issues that the company needs to address in order to avoid delisting. The 30-day period allows the company time to correct the issues, such as failure to meet financial reporting requirements, governance standards, or other operational obligations. This approach ensures fairness and transparency before taking any drastic actions like delisting.
Reference: CISI UAE Financial Rules and Regulations - Delisting Procedures, Section 2.5.3 (2023).
NEW QUESTION # 44
When debt securities are offered through a public subscription, the offeror will be required to announce any replacement of the trustee:
- A. within a maximum of 72 hours
- B. within a maximum of 48 hours
- C. after 5 working days
- D. immediately
Answer: A
Explanation:
CISI UAE Financial Rules and Regulations stipulate that for debt securities issued via public subscription, the offeror must announce any replacement of the trustee within a maximum of 72 hours. Prompt notification ensures transparency, allowing investors to be informed about key custodial and fiduciary changes that may affect the security's management and enforcement of rights. Delays beyond this period could impact investor confidence and violate continuous disclosure requirements, thus the 72-hour timeframe strikes a balance between operational feasibility and timely communication.
Reference: CISI UAE Financial Rules and Regulations - Debt Securities Public Offers and Trustee Notifications, Section 5.8.6 (2023).
NEW QUESTION # 45
A brokerage firm's records include client agreements, selling orders and accounts. Under the Professional Code of Conduct, which of these does the DFM have the right to access and review?
- A. Accounts and client agreements only
- B. Client agreements and selling orders only
- C. Selling orders and accounts only
- D. Client agreements, selling orders and accounts
Answer: D
Explanation:
The Dubai Financial Market's Professional Code of Conduct grants the DFM the right to access and review all core client-related records maintained by brokerage firms, including client agreements, selling orders, and accounts. This comprehensive access enables the DFM to monitor compliance, investigate complaints, and ensure that firms adhere to regulatory and ethical standards. Access to all three categories is essential to provide a complete picture of client interactions and transactions, ensuring market transparency and investor protection. Partial access would impair effective oversight and enforcement.
Reference: CISI UAE Financial Rules and Regulations - DFM Professional Code of Conduct, Records Access and Review, Section 4.1.6 (2023).
NEW QUESTION # 46
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