Elegant Chapter 2 - Licensed Bodies

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Elegant Chapter 2 - Licensed Bodies - Part 1

General Provisions – Legal Status & Place of Business

Option 1

Clear selection

Q1. When disclosing its legal status, a licensed body must avoid which of the following practices unless prior approval from the Authority has been expressly obtained?

1 point

Stating that it is “subject to Authority’s control”

Displaying its license category, license number and registered address

Using the Authority’s official logo in client agreements or marketing material

Identifying the scope of its licensed financial activities

Clear selection

Q2. Under UAE financial rules, in the event of a force majeure emergency such as fire or power outage, a licensed body is permitted to temporarily avoid disclosure obligations provided it:

1 point

Reports to the Authority immediately, explaining expected effects and steps taken

Waits until normal operations resume before informing the Authority

Notifies clients only, as Authority notification is waived during emergencies

Submits a detailed report only after a 30-day period has lapsed

Clear selection

Close Ties & Supervision

Option 1

Clear selection

Q3. If a licensed firm establishes close ties with another party, the Authority may demand termination or amendment of the relationship if:

1 point

The tie creates new investment opportunities in regulated activities

The other party lacks minimum efficiency and appropriateness standards

The relationship reduces business expenses but not supervision standards

The licensed firm provides documents within 10 working days

Clear selection

Inspections & Investigations

Option 1

Clear selection

Q4. Which language rules apply when a licensed body submits documents to the Authority, and contradictions arise between translations?

1 point

English will prevail if accepted by the Authority

The Arabic version will always supersede

Both languages are considered equally binding

A third-party certified translation must be obtained

Clear selection

Sanctions

Option 1

Clear selection

Q5. Which of the following is NOT a possible sanction the Authority may impose on a licensed body for violations?

1 point

Suspension from financial activity for up to 12 months

Cancellation of license due to severe obligations breach

Public notice of violations in two international newspapers

Financial fine not exceeding AED 100,000

Clear selection

Licensing & Categories

Option 1

Clear selection

Q6. Among the five licensing categories, which activity falls under the fourth category?

1 point

Securities dealing

Investment advice

Credit rating agency

Fund management

Clear selection

Initial Approval – Integrity & Records

Option 1

Clear selection

Q7. Which of the following situations would most likely disqualify an applicant from obtaining initial approval to conduct a licensed financial activity?

1 point

Repeated dishonoured cheques linked to commercial works

A minor administrative penalty within the last 15 years

Settlement of commercial debts through a court-approved plan

Rehabilitation after a prior bankruptcy declaration

Clear selection

Outsourcing & Cloud Computing

Option 1

Clear selection

Q8. In outsourcing arrangements using cloud computing, what is a mandatory requirement regarding servers?

1 point

They may be located in any country that has signed a bilateral MoU with the Authority

They must be situated within the State

They must be situated in the outsourcing firm’s home jurisdiction

They must be located in a country with an investment-grade credit rating

Clear selection

Record-Keeping

Option 1

Clear selection

Q9. For how long must licensed bodies retain client transaction data and financial activity records, and within what timeframe must archived data be retrievable?

1 point

5 years; retrievable within 7 business days

7 years; retrievable within 5 business days

10 years; retrievable within 3 business days

Indefinite; retrievable within 30 calendar days

Clear selection

Governance & Administration

Option 1

Clear selection

Q10. A governance guide submitted by a license applicant must include which of the following as a mandatory element?

1 point

A framework to protect client interests and stakeholders

Only the number of members on the Board of Directors

Details of outsourced IT systems and cloud arrangements

Annual external auditor appointment procedures

Clear selection

Q11. Under administration regulations, who bears responsibility for mistakes resulting from task distribution, supervision, and observation of employees?

1 point

Compliance officer

Senior officer

Risk management officer

Company secretary

Clear selection

Employees & Ethics

Option 1

Clear selection

Q12. License applicants must maintain an updated record of employees’ tasks and responsibilities for how long after the last update?

1 point

3 years

5 years

10 years

Indefinite retention

Clear selection

Q13. Under employee behaviour rules, which of the following is specifically prohibited?

1 point

Contributing to rumours that may affect the Authority’s reputation

Accepting client gifts valued below AED 1,000

Working with overseas regulators under Authority supervision

Attending Authority meetings without written approval

Clear selection

Technical Systems & Cybersecurity

Option 1

Clear selection

Q14. License applicants must notify the Authority and cybersecurity entities immediately in case of:

1 point

Employee resignation from IT roles

Cybersecurity hack or breach

Non-compliance in external audit reports

Data retention exceeding 10 years

Clear selection

Risk Management

Option 1

Clear selection

Q15. The risk management guide of a license applicant must include:

1 point

Emergency evacuation procedures for the firm

Policies and procedures to manage risks to firm and clients

A strategy to reduce compliance officer workload

Mechanisms for client complaint escalation

Clear selection

Compliance

Option 1

Clear selection

Q16. The compliance officer must have unrestricted access to:

1 point

Only board-level records and minutes

All records and senior management without restriction

Outsourced party audit reports only

Authority’s internal communication system

Clear selection

Internal Audit

Option 1

Clear selection

Q17. What must internal auditors have to ensure independence in licensed firms?

1 point

Merged responsibilities with compliance to avoid duplication

No interference and unrestricted access to records

Limited access only to HR and operational documents

A 6-monthly Authority supervision schedule

Clear selection

Information Confidentiality

Option 1

Clear selection

Q18. Disclosure of client information is permissible only when:

1 point

Requested by shareholders or Board members

Agreed to by the client or required under legislation

Needed for competitor benchmarking

Disclosed by outsourced IT vendors

Clear selection

Whistleblowing & Breaches

Option 1

Clear selection

Q19. Whistleblowing policies must ensure:

1 point

Immediate termination of reported employees

Confidentiality and protection of the whistleblower

No Authority involvement until internal review is complete

Reports remain within HR department only

Clear selection

Complaints Handling

Option 1

Clear selection

Q20. Upon receiving a client complaint, a licensed body must:

1 point

Resolve it within 7 calendar days without exception

Record it immediately and provide complainant contact details

Refer it directly to the Authority before investigation

Archive it only if financial loss exceeds AED 10,000

Clear selection

Q21. If a complainant refuses referral of their complaint to another body and does not respond within the set deadline, the complaint must be:

1 point

Cancelled without any further action

Considered based on available information

Automatically escalated to the Authority

Forwarded to the compliance officer of another firm

Clear selection

Outsourcing

Q22. Which of the following is NOT allowed under outsourcing regulations?

1 point

Written outsourcing contracts with Authority access rights

Outsourcing main tasks such that the applicant retains no essential function

Outsourcing with emergency and crisis management plans in place

Ensuring outsourced parties keep data confidential

Clear selection

Q23. When outsourcing to a party outside the State, what must be ensured?

1 point

The foreign jurisdiction’s economic laws do not prevent obligations

Servers are physically located in at least two continents

The foreign firm holds a dual license in the UAE

The outsourcing party is listed in UN sanction lists

Clear selection

Q24. In outsourcing using cloud computing, what is the minimum period data must be securely stored and protected from loss?

1 point

3 years

5 years

10 years

Indefinitely

Clear selection

Record Keeping

Option 1

Clear selection

Q25. Licensed bodies must ensure archived data can be retrieved within how many business days?

1 point

Clear selection

Sanctions – Licensed Bodies

Option 1

Clear selection

Q26. Which of the following sanctions can be imposed on a licensed body for failing to comply with Authority provisions?

1 point

Public apology letter to all clients

Suspension from financial activity for not more than 1 year

Mandatory capital injection by shareholders

Temporary removal of compliance officer only

Clear selection

Q27. If a licensed body fails to pay the annual renewal fee for financial activity, the Authority may:

1 point

Suspend activity for 6 months and impose a fine

Cancel the license

Transfer operations to another regulator

Automatically extend license validity by 30 days

Clear selection

Q28. Which of the following is NOT a valid ground for license cancellation by the Authority?

1 point

Severe violation of obligations

Misleading documents submitted to Authority

Repeated minor administrative violations with no client impact

Failure to practice licensed activity for 6 months

Clear selection

Q29. After cancellation of a license, the Authority requires publication of the cancellation notice:

1 point

In 2 daily newspapers in the State, one in Arabic

On the licensed body’s website and email circulation

In the Gazette and Authority’s quarterly bulletin only

On an international press release platform

Clear selection

Q30. If a licensed body’s authorized employees commit violations, which sanction CANNOT be imposed directly on them?

1 point

Suspension for up to 2 months

Financial fine not exceeding AED 100,000

Cancellation of Authority approval

License revocation of the firm

Clear selection

Licensing Categories

Option 1

Clear selection

Q31. Which of the following activities falls under “Arrangement and Advice” category?

1 point

Trading and clearing broker

Listing adviser

Registrar of private joint stock companies

Custodian of securities

Clear selection

Q32. A “Trading broker in the international market” would most likely be categorized under:

1 point

Dealing in securities

Arrangement and advice

Credit rating

Fund management

Clear selection

Q33. Which licensed activity is specifically linked with the role of “Promotion manager”?

1 point

Securities portfolios management

Financial consultations

Promotion

General clearing

Clear selection

Q34. “Registrar of private joint stock companies” is best classified as:

1 point

Investment activity

Clearing and registration

Arrangement and advice

Credit rating

Clear selection

Q35. Which of the following activities is unique to the “Credit Rating Agencies” category?

1 point

Financial adviser for issuance

Deposit bank’s agent

Credit rating analysis officer

Investment funds management

Clear selection

Initial Approval Conditions

Option 1

Clear selection

Q36. Which of the following would automatically disqualify an applicant under “Honesty and Integrity” conditions?

1 point

Pending civil lawsuit for debt recovery

Conviction for fraud or deception

Minor tax arrears settled within 3 months

A disciplinary warning issued 12 years ago

Clear selection

Q37. Which professional record issue would most likely prevent licensing approval?

1 point

Dismissal by a foreign supervisory authority

A role as external consultant in past 5 years

Resignation due to personal reasons

Previous work in a high-risk financial sector

Clear selection

Q38. The compliance requirement for initial approval prohibits:

1 point

Being listed on UN sanction lists

Employment in multiple financial firms simultaneously

Appointment of relatives in governance

Holding a dual role as compliance and risk officer

Clear selection

Q39. Under “Experience and Efficiency”, which is most critical for license approval?

1 point

Evidence of past financial sector work

Membership in international chambers of commerce

Academic qualifications only, without practice

Political connections within the State

Clear selection

Q40. The Authority may reject an applicant if, within 10 years before filing, the applicant:

1 point

Committed a moderate violation

Resigned voluntarily from a licensed entity

Changed commercial address more than once

Received training in a foreign jurisdiction

Clear selection

Governance & Technical Systems

Option 1

Clear selection

Q41. Governance guides must specify:

1 point

The commercial targets and strategies of the applicant

Compensation structures of board members

Dividend distribution policy for shareholders

Outsourcing contracts with cloud vendors

Clear selection

Q42. Which duty is explicitly expected from senior management under administration regulation?

1 point

Supervising employees’ tasks and ensuring compliance

Managing external auditors’ contracts directly

Reviewing and approving client complaints personally

Drafting Authority’s annual report

Clear selection

Q43. Employees’ rules must include:

1 point

A professional code of ethics prohibiting financial crime

A policy requiring free meals in office

An automatic bonus scheme for sales staff

Authority-approved dress code

Clear selection

Q44. Technical systems must include:

1 point

Information safety and cyber risk protection

Client onboarding through AI only

Dual approval for all email communication

Authority-prepared software package

Clear selection

Risk Management, Compliance & Audit

Option 1

Clear selection

Q45. Risk management procedures must ensure the risks officer can:

1 point

Provide advice to the board and senior management

Approve financial promotions independently

Replace the compliance officer during absence

Conduct audits on behalf of the Authority

Clear selection

Q46. Compliance regulations must allow:

1 point

Compliance officer to report violations immediately

Board to block access to sensitive records

Compliance officer to consult Authority only annually

Compliance tasks merged into HR role

Clear selection

Q47. Internal auditors must be able to:

1 point

Act independently without interference

Share audit findings only with HR

Merge responsibilities with risk officer role

Report exclusively to outsourced consultants

Clear selection

Information & Breaches

Option 1

Clear selection

Q48. Which situation justifies disclosure of confidential client information?

1 point

Client agrees in writing

To gain a competitive advantage

At request of prospective investors

To facilitate outsourcing negotiations

Clear selection

Q49. Whistleblowing policies must:

1 point

Encourage reporting of violations to senior management and Authority

Ensure reports remain only within the department involved

Allow disclosure of whistleblower identity to all managers

Protect only outsourced employees

Clear selection

Q50. Which reporting duty arises if a licensed body submits incorrect or misleading information to the Authority?

1 point

Notify the concerned entity immediately and correct the information

Wait until annual filing cycle to amend the data

Submit a revised report within 90 days only if requested

Archive the error internally without disclosure

Clear selection

Complaints Handling

Option 1

Clear selection

Q51. When recording a client complaint, a licensed body must:

1 point

Provide the complainant with contact details of the employee in charge

Forward the complaint directly to the Authority without recording

Record the complaint only if financial loss exceeds AED 5,000

Retain records only until the complaint is resolved

Clear selection

Q52. A complainant must be notified periodically regarding:

1 point

The progress of complaint handling

The internal promotion criteria for staff

The Authority’s external audit findings

Outsourced party performance reviews

Clear selection

Q53. If a complaint is referred to another body, the licensed firm must:

1 point

Obtain complainant’s written consent and notify them in writing

Escalate directly to the Authority without client approval

Transfer only financial complaints exceeding AED 100,000

Retain the complaint internally with no notification

Clear selection

Q54. In complaints handling, which safeguard ensures fairness?

1 point

The employee subject to complaint must not manage the service in question

The compliance officer must always decide in favour of the client

Complaints must be escalated to external arbitration within 10 days

A financial settlement must always be offered

Clear selection

Q55. If a complainant refuses referral to another body and does not reply within 10 business days, the licensed body must:

1 point

Consider the complaint using available information

Automatically escalate to the Board of Directors

Return the complaint file without any consideration

Close the complaint as unresolved

Clear selection

Outsourcing & Cloud Computing

Option 1

Clear selection

Q56. Outsourcing contracts must include which clause to protect Authority oversight?

1 point

Authority’s right to access outsourced party headquarters and records

Authority’s right to approve outsourcing party’s employee salaries

Authority’s right to dictate outsourcing firm’s audit committee structure

Authority’s right to pre-approve annual budgets of outsourced party

Clear selection

Q57. Under outsourcing regulations, the licensed body:

1 point

Remains fully responsible for failures of the outsourced party

Transfers legal responsibility entirely to the outsourced party

Shares responsibility equally with the outsourced party

Is relieved of responsibility if written contract exists

Clear selection

Q58. Which outsourcing prohibition is explicitly stated?

1 point

Outsourcing all main tasks such that entity has no essential function

Outsourcing payroll management to a foreign jurisdiction

Outsourcing IT systems to approved cloud service providers

Outsourcing client onboarding functions within the State

Clear selection

Q59. When outsourcing using cloud computing, the outsourced party must:

1 point

Provide an annual external audit report on data security

Share full client data with third-party vendors

Host servers outside the State with Authority approval

Allow client access to server locations without restriction

Clear selection

Q60. Cloud outsourcing arrangements must ensure “zero data loss” for how long?

1 point

3 years

5 years

10 years

Indefinite period

Clear selection

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