This Practice Note aims at raising awareness about the regulatory risks which retail and investment banks, brokerage firms, investments funds, and any other financial institution are exposed to for not complying with DIFC rules and regulations while exercising their activities in the DIFC.

As of the initial meeting with potential clients, each financial institution carries significant risks related to licensing requirements, client classification and investment suitability.

Pursuant the DFSA Conduct of Business Module (COB) , every authorized firm who is carrying on, or intends to carry on financial services in the DIFC for a client has to do a client classification prior any operation. Client classification consists of examining and identifying the client's profile and then categorizing him into one of the three categories proposed by the COB: retail client, professional client, or market counterparty. The objective of such classification is to protect the client and provide him a level of information in accordance to his knowledge and experiences about financial activities.

• Client Classification: Identification of the client profile regarding its personal details including its previous experiences, and knowledge of the product.