DFSA investigation reveals OCS International Finance Limited mismanaged USD 46 million of client funds and imposes fine on Firm and its CEO

Dubai, UAE, 3 October 2024: An investigation by the Dubai Financial Services Authority (DFSA) has revealed that OCS International Finance Limited (OCS) had breached multiple DFSA Rules, including mismanaging USD 46 million (AED 168,820,000) of client funds, and misleading a bank and the DFSA. As a result, the DFSA has imposed a fine, after a 30% settlement discount, of USD 720,905 (AED 2,645,721) on OCS, and USD 186,003 (AED 682,631) on its CEO, Mr Christian Franz Thurner.

Alongside the financial penalties, Mr Thurner has been prohibited from holding any executive or employee position in an Authorised Person, Designated Non-Financial Business or Profession, Reporting Entity, or Domestic Fund. He is also restricted from performing any financial service-related functions in or from the Dubai International Financial Centre (DIFC).

A pattern of misleading conduct and regulatory breaches

The DFSA's investigation revealed a series of regulatory violations committed by OCS, including:

• mishandling approximately USD 46 million in client funds before being authorised by the DFSA to carry on financial services within the DIFC;
• misleading its bank by submitting false documents related to these client funds;
• failing to maintain these funds in a separate client account and misusing them for purposes not authorised by the client;
• providing its bank with misleading documents that disguised the true nature of its financial arrangement with the client. Despite agreeing with the client to void the agreement, OCS presented a falsified version of the agreement to the bank;
• submitting false or misleading information to the DFSA, including concealing Mr Thurner's prior convictions during his application for DFSA authorisation, and sharing incorrect information on the client's bank account opening dates. Both OCS and Mr Thurner repeatedly failed to provide the DFSA with bank statements, including one that documented the receipt of the USD 46 million in client funds;
• Obstructing the DFSA's investigation by withholding required documents; and
• consistently failing to meet the DFSA's regulatory reporting requirements.

Regarding Mr Thurner, the DFSA found that he was knowingly involved in several of OCS' contraventions, and obstructed the DFSA's investigation.

These breaches not only violated the DFSA's Principles for Authorised Firms and Individuals, particularly those related to integrity, but also threatened the stability and trust of the DIFC, a critical financial hub in the region.

Ian Johnston, Chief Executive of the DFSA, said: "The integrity of the DIFC is essential in maintaining investor confidence. Firms and individuals in the DIFC must adhere to the highest standards of conduct and integrity, especially when dealing with client funds. Our enforcement actions send a strong message that we will not tolerate misleading or obstructive behaviour, and we will take necessary steps to protect investors."

The DFSA's Decision Notices regarding OCS and Mr Thurner are available in the Regulatory Actions section of the DFSA website.