General Prohibition: What It Is and Why It Matters

In the AIFC, you may only carry on regulated activities if you are licensed for that specific activity. If you operate outside your licence scope, you can trigger enforceability issues, recovery claims, and other legal consequences, even if you did not intend to breach the rules.

The General Prohibition sits at the centre of the system. It shapes who can carry on certain activities and the consequences when those boundaries are crossed.

AIFC FINANCIAL SERVICES FRAMEWORK REGULATIONS

24. The General Prohibition
A Centre Participant must not carry on a Regulated Activity, Market Activity or Ancillary Service unless it is licensed to do so by the AFSA.

What this means in practice

1

Permissions are strictly bounded — anything not expressly permitted is prohibited. A regulated activity is either covered by a licence or it falls outside it. The regulatory perimeter is built on an exhaustive permission model.

2

Contract effects are uneven. A firm acting outside scope may be unable to enforce an agreement, while the counterparty may retain claims.

3

Promotions affect outcomes. Agreements linked to prohibited financial promotions can raise enforceability issues even if the activity appears routine.

4

Form is secondary to substance. Classification turns on what is done and how it is done, not on internal descriptions.

Several elements depend on close factual distinctions. Whether conduct is “by way of business,” whether an exclusion applies, whether an activity is incidental, or what a counterparty knew can vary with small changes in facts. The wording creates overlap areas where multiple rules interact. In these areas, minor factual differences can shift an activity between permitted, excluded, and prohibited categories without any change in commercial purpose.

Feedback & Suggestions

Share your thoughts or suggest a topic you would like us to cover in a future article.