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.

The suitability is an indicator which evaluate the investor willingness and ability to take a certain amount of risk. Any authorized Firm which carries on or intends to carry on financial services has to follow the core rules of the DFSA Conduct of Business Module (COB), including the provisions related to the suitability of the investment for the client. The objective of such rules is to protect the client and avoid him losses that are more important that the ones he could actually suffers.

• Investment Suitability: Assessment of the customer's appetite for risk and its ability to carry out that amount of risk.