Compliance Handbook

Fit and Proper Assessment Preparation

How to Prepare Key Personnel for VARA, ADGM, and DIFC Regulatory Assessments

Published February 16, 2026 · UAE Tokenization Regulations Editorial Team

Successful Fit and Proper assessment positions key personnel as regulatory assets — individuals whose expertise and integrity enhance the VASP's compliance standing and institutional credibility. Investing in thorough preparation delivers returns throughout the licensing lifecycle, from initial application through ongoing supervisory engagement and future license extensions or activity additions.

This implementation guide provides step-by-step instructions for practitioners navigating this aspect of UAE virtual asset compliance. Designed for compliance officers, in-house legal teams, VASP founders, and regulatory consultants, the guide translates regulatory requirements into actionable operational procedures that can be implemented within existing compliance workflows. All regulatory citations reference official publications from the relevant UAE regulatory authorities, with guidance current as of February 2026.

Regulatory Framework Context

The UAE's virtual asset regulatory architecture encompasses five distinct authorities: VARA governing Dubai mainland and free zones (excluding DIFC), ADGM FSRA operating as an independent international financial center in Abu Dhabi, DIFC DFSA functioning as a separate common-law jurisdiction within Dubai, the SCA/CMA providing federal-level securities oversight, and the CBUAE retaining exclusive authority over payment tokens and AED-denominated stablecoins. Each regulator maintains distinct requirements, and practitioners must identify the applicable regulatory authority before implementing compliance measures. All guidance in this handbook reflects the regulatory framework as of February 2026, incorporating VARA Rulebook 2.0 (effective June 2025), ADGM FRT framework (effective January 2026), and DIFC Consultation Paper 168 proposals.

Implementation Considerations

Compliance implementation in the UAE requires navigating jurisdictional complexity that goes beyond simply meeting a single regulator's requirements. Multi-jurisdictional operators — holding licenses in both VARA and ADGM, for example — must maintain parallel compliance programs tailored to each regulator's specific rulebook requirements. The August 2025 CMA-VARA mutual recognition agreement is reducing some of this burden through shared frameworks, but operational compliance teams should continue to treat each jurisdiction's requirements independently until formal harmonization is confirmed. Technology compliance, AML/CFT programs, and governance structures must be documented separately for each licensing jurisdiction, even where underlying systems are shared across entities.

Practical Recommendations

Engage specialist UAE virtual asset legal counsel before committing to a regulatory pathway — the choice of jurisdiction has cascading implications for licensing costs, capital requirements, operational structure, and client access. Begin banking engagement immediately upon receiving initial VARA or ADGM approval, as account opening typically takes 3-6 months and can delay operational launch. Build OECD CARF-compliant data collection infrastructure from inception rather than retrofitting existing systems. Invest in technology compliance from day one — the cost of implementing TGRAF, penetration testing, and custody standards increases significantly when bolted onto existing infrastructure versus being designed into the platform architecture from the ground up. For the latest regulatory guidance, consult official sources: VARA Regulations, ADGM Digital Assets, and DFSA. This guide is for informational purposes only and does not constitute legal, financial, or regulatory advice.

Common Assessment Challenges

The most frequent challenges in Fit and Proper assessments include: incomplete background checks from all jurisdictions of residence (assessors require checks from every country where the individual has lived or worked in the past 5-10 years), unexplained gaps in employment history, prior involvement with entities that have faced regulatory enforcement actions (even if the individual was not personally sanctioned), expired professional certifications, and insufficient documentation of relevant experience in virtual asset or financial services compliance. Address potential concerns proactively — provide explanatory statements for any gaps, regulatory associations, or unusual career transitions rather than waiting for assessors to raise questions.

Interview Preparation

VARA and ADGM may conduct interviews with proposed Responsible Individuals as part of the assessment process. Prepare candidates to discuss: their understanding of VARA Rulebook 2.0 or ADGM FSRA requirements, how they would structure the compliance function for the specific VASP being licensed, their approach to AML/CFT risk management in a virtual asset context, how they would handle specific compliance scenarios (enforcement inquiry, suspicious activity detection, technology incident), and their plan for maintaining ongoing regulatory engagement and compliance monitoring post-licensing.

Board Composition Strategy

Design board composition to satisfy both VARA regulatory expectations and operational governance requirements. Include at minimum one independent non-executive director with financial services regulatory experience, ensuring board-level oversight that VARA considers adequate for compliance governance. Board members are subject to Fit and Proper assessment — extend preparation procedures to all directors, not only the designated Responsible Individuals. Establish a board compliance committee with quarterly reporting from the MLRO and CCO, demonstrating governance oversight that moves beyond tick-box compliance toward genuine risk-based decision-making that regulators increasingly expect from licensed VASPs operating in the UAE market.

Ongoing Compliance for Key Personnel

Fit and Proper status requires annual recertification — not merely initial assessment at licensing. Responsible Individuals must maintain clean regulatory records, disclose any changes in personal circumstances affecting fitness (financial difficulties, legal proceedings, regulatory actions in other jurisdictions), and demonstrate continued professional development relevant to their role. VARA may conduct follow-up assessments based on inspection findings, enforcement trends, or changes in the VASP's risk profile. Build annual recertification into your compliance calendar with sufficient lead time for documentation preparation and submission before the recertification deadline.

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