There are two main onshore financial centers within the UAE where financial licenses can be obtained, alongside several authorities responsible for regulating the financial services companies’ activities in the UAE. All financial companies operating in Dubai must comply with licensing requirements imposed by the Central Bank. Also, all financial companies set up within the onshore financial centers must adhere to the rules and regulations set forth by the independent regulators, depending on the jurisdiction.
The DUBAI INTERNATIONAL FINANCIAL CENTER (DIFC) is one of the two Financial Free Zones within the UAE. At the heart of the DIFC model is an independent risk-based regulator, the Dubai Financial Services Authority (DFSA), which grants licenses and regulates the activities of all banking and financial institutions in DIFC. The DIFC is a broadly based recognized and renowned international financial center serving local, regional and international institutions, and serves in the obtainment of Financial Licensing Categories 1, 2, 3A, 3B, 3C, 3D, 4 & 5.
These three authorities ensure that DIFC offers a highly professional yet business-friendly environment operating with the best practices and recognized by all the major financial centers across the world.
DIFC is unique in that it has a legislative system consistent with English Common law. DIFC has its own set of civil and commercial laws -Companies Law DIFC Law No. 5 of 2018 including UK Companies Act 2006 plus policy decisions on where to deviate or apply lighter touch than UK or other common law positions)- and regulations and has developed a complete code of law governing financial services regulation. As part of its autonomy, DIFC has created an independent judicial system. The DIFC Courts is the entity responsible for the independent administration and enforcement of justice in DIFC. The Courts have exclusive jurisdiction over all civil and commercial disputes arising within DIFC and or relating to bodies and companies registered in DIFC.
In each DIFC Financial category, the Authorised Firm, may only conduct the activities for which it has been specifically authorised.
For example, an Authorised Firm which is a Category 2 licensed entity can only conduct the activities for which it was authorised at the time of licensing – it is not automatically allowed to conduct Category 3A, 3B, 3C and 4 activities.
Authorised Firms must observe the rules in the DFSA Rulebook, in particular, the following restrictions:
Breaching the rules and regulations may result in withdrawal of authorisation of the Authorised Firm by the DFSA. This can be in respect of one or more of its Financial Services. If the DFSA considers it necessary, such consequences may also extend to the Authorised Individuals or other persons performing any functions in the Authorised Firm. Any breach of obligations on the part of the aforesaid persons entitles the DFSA to restrict them from performing their functions or in the case of Authorised Individuals, suspend or withdraw their status.
DIFC Category 1 License Authorised Firm is a firm that is licensed to carry out the Financial Service of Accepting Deposits or Managing a Profit Sharing Investment Account (received on an unrestricted basis). The Authorised Firm under this category may be authorised to conduct other Financial Services, but its authorisation for Accepting Deposits and/or Managing a Profit Sharing Investment Account is what determines it as a Category 1 Authorised Firm, rather than another. A Category 1 firm may apply for an Islamic Window to conduct certain aspects of its business in a Sharia-compliant manner.
Base Capital – US$ 10,000,000.
Risk-based Capital minimum based on the totality of risks – CET1, 6%; Tier 1, 8%.
Capital Requirement is not applicable to a Branch set-up of existing regulated bank.
Capital Plan must be captured in Internal Capital Adequacy Assessment Process Report.
Note that additional capital requirements may be imposed by DFSA on the review of the application.
An applicant is required to submit an application to the DIFC’s regulatory body, the DFSA, which will consider the merits and suitability of the applicant, and the category of license for which the application is made.
The Application Process
Wincore will assist you in the following:
4. Once the conditions on the in-principle approval are fulfilled, the DFSA will issue the formal license.
Wincore Advisory Group helps businesses to articulate their objectives and aspirations to set up a DIFC Category 1 Financial Licence. Contact us at [email protected]
This is an Authorised Firm licensed to carry out the Financial Service of Dealing In investments as Principal, and Providing Credit. In addition to this activity, the Authorised Firm under this category may also be authorised to conduct other Financial Services found in Category 3A, 3B, 3C or 4, provided that it cannot be authorised to conduct the Financial Services set out in Category 1.
Base Capital – US$ 2,000,000
Risk-based Capital minimum based on the totality of risks – CET1, 6%; Tier 1, 8%.
Capital Requirement not applicable to a Branch set-up of existing regulated bank.
Capital Plan must be captured in Internal Capital Adequacy Assessment Process Report.
Note that additional capital requirements may be imposed by DFSA on review of the application.
An applicant is required to submit an application to the DIFC’s regulatory body, the DFSA, which will consider the merits and suitability of the applicant, and the category of license for which the application is made.
The Application Process
Wincore will assist you in the following:
4. Once the conditions on the in-principle approval are fulfilled, the DFSA will issue the formal license.
Wincore Advisory Group helps businesses to articulate their objectives and aspirations to set up a DIFC Category 2 Financial Licence. Contact us at [email protected]
In this category, an Authorised Firm is licensed to carry on one or more of the Financial Services of: Dealing in Investments as Principal where it does only so as a Matched Principle; Dealing in Investments as Agent. An Authorised Firm grouped under this category may be authorised to conduct other Financial Services found in Category 3B, 3C or 4, but it cannot be authorised to conduct any of the Financial Services in Categories 1 or 2.
Base Capital – US$ 500,000
Risk-based Capital minimum based on the totality of risks – CET1, 6%; Tier 1, 8%.
Capital Requirement is not applicable to a Branch set-up of existing regulated bank.
Capital Plan must be captured in Internal Capital Adequacy Assessment Process Report.
Note that additional capital requirements may be imposed by DFSA on the review of the application.
An applicant is required to submit an application to the DIFC’s regulatory body, the DFSA, which will consider the merits and suitability of the applicant, and the category of license for which the application is made.
The Application Process
Wincore will assist you in the following:
Wincore Advisory Group helps businesses to articulate their objectives and aspirations to set up a DIFC Category 3A Financial Licence.Contact us at [email protected]
An Authorised Firm in this category is licensed to Provide Custody (but only for a Fund) and act as trustee for a Fund. An Authorised Firm in this category can carry on financial services in Category 3C and 4 but cannot carry on financial services in Categories 1, 2 or 3A.
Base Capital – US$ 4,000,000
Capital Requirement is not applicable to a Branch set-up of an existing regulated bank.
Capital Plan must be captured in Internal Capital Adequacy Assessment Process Report.
Note that additional capital requirements may be imposed by DFSA on the review of the application.
An applicant is required to submit an application to the DIFC’s regulatory body, the DFSA, which will consider the merits and suitability of the applicant, and the category of license for which the application is made.
The Application Process
Wincore will assist you in the following:
Wincore Advisory Group helps businesses to articulate their objectives and aspirations to set up a DIFC Category 3B Financial Licence. Contact us at [email protected]
An Authorised Firm in this category may be licensed to carry on one or more Financial Services of Managing a Collective Investment Fund, Managing Assets, Providing Trust Services as a trustee of an express trust, Providing Custody (other than for a fund) and Managing a Profit Sharing Investment Account (received on a restricted basis). An Authorised Firm that has a 3C licence can also provide Financial Services in Category 4 but cannot provide Financial Services in Categories 1, 2, 3A or 3B.
Base Capital – US$ 500,000
Base capital requirement 3C Fund Manager – US$ 140,000 (to manage a Public Fund US$ 70,000 to manage exempt funds/QIFs).
Expenditure based capital requirement of 18/52 of annual operating expenditure (as the Fund Manager will hold or control Client Money)
Capital Plan must be captured in Internal Capital Adequacy Assessment Process Report.
Note that additional capital requirements may be imposed by DFSA on the review of the application.
The DIFC Financial Licensing Process for DIFC Category 3C License
An applicant is required to submit an application to the DIFC’s regulatory body, the DFSA, which will consider the merits and suitability of the applicant, and the category of license for which the application is made.
The Application Process
Wincore will assist you in the following:
Wincore Advisory Group helps businesses to articulate their objectives and aspirations to set up a DIFC Category 3C Financial Licence. Contact us at [email protected]
An Authorised Firm in this category may be licensed to carry on one or more Financial Services of providing money services where the firm is providing or operating a payment account, executing payment transactions or issuing payment instruments. This includes creating and maintaining accounts for executing payment transactions, issuance of personalized sets of procedures agreed upon by the users and the provider, for initiation or execution of payment instructions. An Authorised Firm that has a 3D licence can also provide Financial Services in Category 4 but cannot provide Financial Services in Categories 1, 2, 3A or 3B, 3C or 5.
Base Capital – US$ 200,000
Expenditure based capital requirement – 9/52 of annual operating expenditure
Capital Plan must be captured in Internal Capital Adequacy Assessment Process Report.
Note that additional capital requirements may be imposed by DFSA on the review of the application.
The DIFC Financial Licensing Process for DIFC Category 3D License
An applicant is required to submit an application to the DIFC’s regulatory body, the DFSA, which will consider the merits and suitability of the applicant, and the category of license for which the application is made.
The Application Process
Wincore will assist you in the following:
Wincore Advisory Group helps businesses to articulate their objectives and aspirations to set up a DIFC Category 3D Financial Licence. Contact us at [email protected]
Authorised Firms in this category can do one or more of Arranging Deals in Investments, Advising on Financial Products, Arranging Custody, Insurance Intermediation, Insurance Management, Operating an Alternative Trading System, Providing Fund Administration, Arranging Credit and Advising on Credit, Operating a Crowdfunding Platform and/or Providing Trust Services (other than as a trustee of an express trust). In Categories 2-4, Authorised Firms may apply to conduct their business in a wholly Sharia Compliant manner or through an Islamic Window.
Base Capital – US$ 10,000
Operating a crowdfunding platform while holding client money –$140,000
Expenditure-based capital requirement of 6/52 of annual operating expenditure (18/52 if will holding or controlling Client Money).
Note that additional capital requirements may be imposed by DFSA on the review of the application.
An applicant is required to submit an application to the DIFC’s regulatory body, the DFSA, which will consider the merits and suitability of the applicant, and the category of license for which the application is made.
The Application Process
Wincore will assist you in the following:
Wincore Advisory Group helps businesses to articulate their objectives and aspirations to set up a DIFC Category 4 Financial Licence. Contact us at [email protected]
An Islamic Financial Institution carries out its entire business in accordance with the principles of Sharia and manages a profit-sharing investment account (received on an unrestricted basis).
Base Capital – US$ 10,000,000
Risk-based Capital minimum based on the totality of risks – CET1, 6%; Tier 1, 8%.
Capital Requirement is not applicable to a Branch set-up of an existing regulated bank.
Capital Plan must be captured in Internal Capital Adequacy Assessment Process Report.
Note that additional capital requirements may be imposed by DFSA on the review of the application.
An applicant is required to submit an application to the DIFC’s regulatory body, the DFSA, which will consider the merits and suitability of the applicant, and the category of license for which the application is made.
The Application Process
Wincore will assist you in the following:
Wincore Advisory Group helps businesses to articulate their objectives and aspirations to set up a DIFC Category 5 Financial Licence. Contact us at [email protected]
A DIFC representative office is an Authorised Firm and is regulated by the DFSA. However, it is not included in the above Authorised Firms categorisation table because it does not have any capital requirements as per the DFSA PIB Module. This is because a DIFC Representative Office can only be set up as a branch of an already established firm.
Any firm in a financial services sector can apply to be a Representative Office in DIFC but they must be regulated in an acceptable home jurisdiction (other than the DIFC). A representative office’s activities are confined to the general marketing of financial services and financial products already being offered from a location outside the DIFC by its head office or a member of its group.
What can the DIFC Representative Office do?
What you cannot do with the DIFC Representative Office
A DIFC Representative Office has no regulatory capital requirements and has also no share capital (being a branch of a foreign company).
An applicant is required to submit an application to the DIFC’s regulatory body, the DFSA, which will consider the merits and suitability of the applicant, and the category of license for which the application is made.
The Application Process
Wincore will assist you in the following:
Wincore Advisory Group helps businesses to articulate their objectives and aspirations to set up a DIFC Representative Office. Contact us at [email protected]
DISCLAIMER
This is not intended as an offer and the information contained on this website is of a general nature only and does not constitute financial, legal, tax or other professional advice. Information on this website is subject to change at any time and without notice, and under no circumstances will Wincore Advisory Group be liable for any loss caused by reliance on any opinion or statement made on this website.