DFSA

Dubai Financial Services Authority

DFSA is the independent regulator of financial services conducted in or from the Dubai International Free Zone Centre (DIFC), a purpose-built financial free zone in Dubai, UAE.

Asset management, banking and credit services, securities, collective investment funds, custody and trust services, commodities futures trading, Islamic finance, insurance, virtual assets, international equities exchange, and international commodities derivatives exchange are just some of the areas that fall under DFSA’s regulatory purview. DFSA’s purview extends beyond the oversight and regulation of financial and auxiliary services inside the DIFC to include the supervision and enforcement of AML and CTF regulations.

As the sole independent financial services regulator for the DIFC, DFSA conducts a variety of functions to fulfil its mandate, including Supervision, Recognition, Enforcement, Authorisation, Governance & Regulation, and International Cooperation.

DFSA’s strategy is to “be a risk-based regulator while avoiding unnecessary regulatory burden.” DFSA believes that regulation should focus on mitigating risks that would otherwise be unacceptable and that compliance responsibilities should be proportionate to risk mitigation within a framework that allows regulated firms to meet their compliance obligations effectively and efficiently.

AUTHORISATION SERVICES

Entities that wish to conduct Financial Services in or from the Dubai International Financial Centre must obtain authorization from the DFSA. The DFSA grants authorization in the form of a licence that specifies the type of Financial Services that may be conducted.

Steps to Licensing

  1. Type of Business: Determine the type of business you intend to conduct and decide which Financial Services you need to register for.
  2. Management Team: Determine who will comprise the senior leadership and who will fill the required positions. Prepare to complete the required individual application forms.
  3. Business Plan: Develop a comprehensive Regulatory Business Planthat sets out your proposed activities, 3-year financial projections and budget, resources such as human, control systems, IT/cyber infrastructure and financial. This can be shared with the DFSA Authorisation Enquiries Team for feedback.
  4. Know the Regulations:Familiarise yourself with the applicable DFSA Rulebook regulations and be prepared to demonstrate compliance with those regulations. This will include the provision of a compliance manual, a compliance monitoring programme, and policies for risk management.
  5. Base Capital: Determine your minimum regulatory capital requirements, with which you must always comply. This should be included in your 3-year financial projections.

Fees

The application fee will vary according to the Financial Services to be provided. Comprehensive details of fees can be found in the Fees module (FER) of the DFSA Rulebook.

Timeline.

DFSA seeks to complete most applications within four (4) months, on average. The processing time for the application will depend on its nature, scope, and complexity, as well as the timeliness with which the applicant submits information/documentation and respond to clarification requests from DFSA.

If the application is approved, DFSA will issue an in-principle decision letter, allowing the applicant to complete the DIFCA Registrar of Companies process. DFSA will subsequently provide the applicant with a DFSA Licence once the applicant can show that they have successfully registered with the Registrar of Companies, adequately financed the firm, and have met any other in-principle conditions outlined in the decision letter issued by DFSA.

DFSA Licence Categories

The type of Licence required is determined by the kind of business that the applicant desires to conduct. A firm engaged in low-risk services such as advising or arranging, for example, will need a DIFC Category 4 Licence, whereas a discretionary portfolio manager will need a DIFC Category 3C Licence. A DIFC Category 3A Licence is required for a STP broker dealing on a matched principle basis, whereas a market maker or credit provider requires a DIFC Category 2 Licence. Full-fledged banks that accept deposits fall under DIFC Category 1 Licence.

Category

Base Capital

Description

Business Activity

Cat 1

USD 10 million

Banks

Accepting Deposits, Managing an Unrestricted Profit-Sharing Account.

Cat 2

USD 2 million

Market maker, provider of credit.

Dealing in Investments as Principal, Providing Credit

Cat 3

3A USD 500,000

Brokerage

Dealing in Investments as Matched Principal,

Dealing in Investments as Agent.

3B USD 4 million

Custodian and Employee Money Purchase Schemes

Providing Custody (only if for a Fund), Acting as Trustee for a Fund, Operating an Employee Money Purchase Scheme, Acting as the Administrator of an Employee Money Purchase Scheme.

3C USD 500,000

Asset Manager, Fund Manager, Issuer of Stored Value (Money Services)

Managing Assets, Managing a Collective Investment Fund, Providing Custody, Managing a PSIAr, Providing Trust Services as a trustee of an express trust, Providing Custody (other than for a Fund), Providing Money Services (Issuing Stored Value)

Cat 4

USD 10,000

Advising and arranging activities (non-discretionary)

Arranging Deals in Investments, Arranging Credit and Advising on Credit, Advising on Financial Products, Arranging Custody, Insurance Intermediation, Insurance Management, Operating an ATS, Providing Fund Administration, Providing Trust Services, Operating a Crowdfunding Platform, Arranging or Advising on Money Services.

Cat 5

USD 10 million

Islamic Business

Operating an Islamic Business

Note: Base Capital for Operating a Crowdfunding Platform or Money Transmission Services is US$ 140,000.

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