The Qatar Financial Centre Regulatory Authority has imposed a financial penalty of 200,000,000 Qatari riyals (US$53,646,000) on First Abu Dhabi Bank PJSC for obstructing its investigation of allegations that the bank manipulated the Qatari Riyal, Qatari Government securities and related financial instruments.

The QFCRA commenced its investigation in March last year. In connection with that investigation, it required First Abu Dhabi Bank to provide copies of the relevant trading records and related documentats in its possession. According to the regulator, the bank demurred.

As a result of the bank’s alleged failure to comply with the notice to produce and its unwillingness to engage in an open and constructive manner with the regulator, on 29 July last year the QFCRA asked the Qatar Financial Centre Civil and Commercial Court to require the bank to hand over the documents. On 18 November last year, the Court of First Instance ordered the bank to comply. The bank subsequently appealed against this order to the court's Appellate Division. On 13 May this year, the court dismissed the appeal. Even now, the QFCRA is accusing it of not honouring this decision by denouncing its continuing "refusal to comply with final and binding court orders." It is also accusing it of refusing to obey it by promising not to destroy the documents and records in question. All these things have promted it to levy the fine.

The bank's failure to comply with the court’s orders is still blocking the investigation. Ten weeks ago, after the court dismissed First Abu Dhabi Bank's appeal, the bank told the public that it was withdrawing from the Qatar Financial Centre and closing its branch, but it has still not applied to the regulator to allow it to withdraw. This means that it is still a regulated firm and still has to comply with the two supervisory notices that the regulator sent it on 14 March and 9 June this year, which restrict the branch's activities.

The financial penalty has been imposed because:

• the bank allegedly obstructed the QFCRA in the exercise of its functions in contravention of Article 57 Financial Services Regulations, on the subject of obstructing regulators;
• the bank allegedly failed to observe a high standard of integrity in the conduct of its business in contravention of Section 1.2.2 (Principle 1, on integrity) of the General Rules; and
• the bank allegedly failed to deal with the QFCRA openly and co-operatively in contravention of Section 1.2.14 (Principle 13, on relations with the regulators) of the General Rules.

Examples of obstruction in Article 57 include the destruction of documents, a failure to produce them, a failure to attend and answer questions, the provision of false or misleading information and a failure to help a regulatory investigation.

The QFCRA’s investigation will continue and further disciplinary action is in the offing.

The 13 Qatari principles, to be found in the GENE (General Rules) part of the QFCRA's rulebook, are almost a straight lift from the British Financial Conduct Authority's 11 Principles for Business (PRIN 2.1.1) and appear in almost exactly the same order.

GENE 1.2.4 Principle 3 (management) states that an authorised firm must ensure that its affairs are managed effectively by its senior management, while GENE 1.2.5 Principle 4 (systems and controls) state that it must have effective systems and controls, including risk management systems and adequate human and technological resources. These are a rather unnecessary division of one British rule, Principle 3 on management and control, which obliges a firm to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.

Only with Principle 12, on confidentiality, does the Qatari rulebook part company with the British. This says that an authorised firm must ensure that information of a confidential nature received in the course of dealings with its customers is treated in an appropriate manner. Qatar is a relatively minor and unsuccessful offshore centre - largely because of the seepage of local power interests into its financial centre - and this is a very vague nod to the banking secrecy laws that used to plague the offshore world. Indeed, it is the nearest thing that Qatar has to a banking secrecy rule.