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A Thorough Guide to Licenses of DIFC! Read Now

By Sakshi Srivastava - 03 Jun 2022 Last Updated: 03 Jun 2022
A Thorough Guide to Licenses of DIFC! Read Now

Table of Contents 

  1. 1. Various License categories under DIFC
  2. 2. Various Categories Explained

Dubai International Financial Center is home to gourmet restaurants, high-end boutiques, a plethora of commercial facilities, and globally famous art galleries (DIFC). It is a key worldwide financial hub for South Asian, African, and Middle Eastern markets, located in a Dubai suburb near Downtown and Business Bay. DIFC, or Dubai International Financial Center, is a 110-hectare zone renowned as the 'portal to growth.' It is a bustling residential community, energetic and excellent for individuals wanting a modern suburban lifestyle, in addition to a booming business zone.

DIFC is one of the greatest neighborhoods in Dubai for frequent commuters, with public transportation that easily connects to other sections of the city. Continue reading to learn more about the area, amenities, and what it's like to live in the heart of Dubai.

Well that's an introduction about the DIFC, but in today's blog Dhanguard will extensively discuss the types of Licenses which are available in DIFC, if you want to establish your Company. So without any further ado, let's learn!

Various License categories under DIFC

The Dubai Financial Services Authority, or DFSA, requires firms interested in providing financial services from the DIFC to file applications.

The type of business the applicant seeks to operate determines the type of license necessary-

  1. A DIFC Category 4 License is required for low-risk activities such as advising or arranging,

  2. A DIFC Category 3C License is required for a discretionary portfolio manager.

  3. A DIFC Category 3A License is required for a STP broker operating on a matched principal basis.

  4. A DIFC Category 2 License is required for a market maker or provider of credit.

  5. A DIFC Category 1 License will apply to full-fledged banks that accept deposits.


Various Categories Explained

Banks (Category 1)

  • $10 million in initial capital

  • Capital Needs- plus any appropriate Capital Buffers, whichever is higher i.e. Base Capital or Risk-based Capital.

  • Activities- Accepting Deposits and Managing a Profit-Sharing Account With No Limits

  • Appointments required- The personnel needs for Category 1 enterprises, which include banks, are determined by the size, scope, and nature of the product portfolio that the DIFC plans to offer.

The DFSA would require the following appointments at the very least:

  1. Board of Directors

A well-organized and diversified Board of Directors with a majority of Independent Directors and strong governance policies.

  1. Senior Executive Officer

A senior banking executive with at least 10-15 years of experience who is normally based in the United Arab Emirates.

  1. Chief Risk Officer

A senior risk executive who may come from the parent company.

  1. Compliance Officer

A senior compliance specialist with over 10 years of experience who is normally based in the United Arab Emirates.

  1. Money-Laundering Reporting Officer

A senior anti-money laundering specialist with more than ten years of experience who is usually based in the UAE.

  1. Internal Auditor

A senior and appropriately qualified internal auditor.

  1. Finance Officer

A senior finance professional with appropriate qualifications.

Credit Provider and Market Creator (Category 2)

  • $2 million in initial capital

  • Capital Needs- The highest of the Base Capital, Expense-based Capital, or Risk-based Capital requirement plus applicable Capital Buffers.

  • Activities- Dealing in investments as a principal, and extending credit.

  • Appointments required- Staffing requirements for Category 2 activities are determined by the size, scope, and nature of the product portfolio to be offered by the DIFC.

The DFSA would require the following appointments at the very least:

  1. Board of Directors

A well-organized, diverse Board of Directors with Independent Directors and strong governance policies.

  1. Senior Executive Officer

A senior banking executive with at least 10-15 years of experience who is normally based in the United Arab Emirates.

  1. Finance Officer

A senior finance professional with appropriate qualifications. The FO for a group might be from the parent firm and does not have to be a UAE resident. In the event of a group, the Chief Risk Officer can be a senior risk professional from the parent entity.

  1. Compliance Officer

A senior compliance specialist with over 10 years of experience who is normally based in the United Arab Emirates.

  1. Money Laundering Reporting Officer

A senior anti-money laundering specialist with more than ten years of experience who is usually based in the UAE.

Brokerage (Category 3A)

  • US$500,000 in initial capital

  • Activities- Investing as a Matched Principal, Investing as an Agent

  • Appointments Required- Because the DFSA considers brokerage to be a high-risk business, the personnel requirements are determined by the size, extent, and type of the product portfolio that the DIFC plans to offer.

The DFSA would require the following appointments at the very least:

  1. Board of Directors

A well-organized, diverse Board of Directors with Independent Directors and strong governance policies.

  1. Senior Executive Officer

A senior banking executive with at least 10-15 years of experience who is normally based in the United Arab Emirates.

  1. Finance Officer

A senior finance professional with appropriate qualifications. The FO for a group might be from the parent firm and does not have to be a UAE resident.

  1. Chief Risk Officer

In the event of a group, the Chief Risk Officer can be a senior risk professional from the parent entity.

  1. Compliance Officer

A senior compliance specialist with over 10 years of experience who is normally based in the United Arab Emirates.

  1. Money-Laundering Reporting Officer

A senior anti-money laundering specialist with more than ten years of experience who is normally based in the UAE. This function can be integrated with Compliance, and one person can do both tasks.

  1. Internal Auditor

A senior and appropriately qualified internal audit professional.

Employee and Custodian Money Purchase Plans (Category 3B)

  • $4 million dollars in initial capital

  • Activities- Providing Custody (only if for a Fund), Acting as a Trustee for a Fund, Managing an Employee Money Purchase Plan, and Managing an Employee Money Purchase Plan

  • Appointments Required- The DFSA expects the firm to be sufficiently staffed, similar to other category firms, based on the size, breadth, and nature of the product portfolio that is intended to be offered from the DIFC.

The DFSA would require the following appointments at the very least:

  1. Board of Directors

A well-organized, diverse Board of Directors with Independent Directors and strong governance policies.

  1. Senior Executive Officer

A senior banking executive with at least 10-15 years of experience who is normally based in the United Arab Emirates.

  1. Finance Officer

A senior finance professional with appropriate qualifications. The FO for a group might be from the parent firm and does not have to be a UAE resident.

  1. Chief Risk Officer

In the event of a group, the Chief Risk Officer can be a senior risk professional from the parent entity.

  1. Compliance Officer

A senior compliance specialist with over 10 years of experience who is normally based in the United Arab Emirates.

  1. Money Laundering Reporting Officer

A senior anti-money laundering expert with over ten years of experience who is normally based in the United Arab Emirates. This function can be integrated with Compliance, allowing a single person to handle both tasks.

  1. Internal Auditor

An internal audit specialist who is senior and appropriately qualified. Outsourcing is an option.

Funds & Assets Manager (Category 3C)

  • $500,000 dollars in starting capital

  • US$ 70,000 in base capital for EF and QIF managers

  • VC Fund Managers' Starting Capital ? $0

  • Activities- 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 are some of the activities that can be done.

  • Appointments Required- The DFSA expects the firm to be sufficiently staffed, similar to other category firms, depending on the size, breadth, and nature of the product portfolio intended to be offered from the DIFC.

The DFSA would require the following appointments at the very least:

  1. Board of Directors

A well-organized, diverse Board of Directors with Independent Directors and strong governance policies.

  1. Senior Executive Officer

A senior banking executive with at least 10-15 years of experience who is normally based in the United Arab Emirates.

  1. Finance Officer

A senior finance professional with appropriate qualifications. The FO for a group might be from the parent firm and does not have to be a UAE resident. This job can be outsourced as well.

  1. Risk Officer

A senior risk professional who may come from the group's parent corporation.

  1. Compliance Officer

A senior compliance specialist with over 10 years of experience who is normally based in the United Arab Emirates.

  1. Money Laundering Reporting Officer

A senior anti money laundering expert with over ten years of experience who is normally based in the United Arab Emirates. This function can be integrated with Compliance, allowing a single person to handle both tasks. In some cases, the CO and MLRO positions can be outsourced.

  1. Internal Auditor

An internal audit specialist who is senior and appropriately qualified. Outsourced to a professional firm in most cases.

Money Service Companies (Category 3D)

  • $200,000 in initial capital

  • Activities- Providing Money Services (other than Issuing Stored Value)

  • Appointments Required- Because this is a novel type of licensing, the DFSA anticipates that the firm will be sufficiently staffed, depending on the size, scope, and nature of the product portfolio that will be offered by the DIFC.

The DFSA would require the following appointments at the very least:

  1. Board of Director

A well-organized, diverse Board of Directors with Non-executive Directors and strong governance standards.

  1. Senior Executive Officer

A senior banking executive with at least 10-15 years of experience who is usually based in the UAE.

  1. Finance Officer

An experienced and well-qualified finance expert. The FO of a group might be from the parent firm and does not have to be a UAE resident. This function could also be outsourced.

  1. Risk Officer

A senior risk professional who may come from a group's parent corporation.

  1. Compliance Officer

Senior compliance specialist with over 10 years of experience, usually based in the UAE.

  1. Money Laundering Reporting Officer

A senior anti-money laundering specialist with more than ten years of experience who is usually based in the UAE. This function can be integrated with Compliance, allowing one person to handle both tasks.

  1. Internal Auditor

A senior and appropriately qualified internal auditor. Normally done by a professional firm.

Advisory and Activity Planning (Category 4)

  • $10,000 in initial capital

  • US$ 140,000 - Starting Capital for a Crowdfunding Platform or Money Transfer Services

  • Activities- 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

  • Appointments Required- Depending on the extent, scope, and nature of the product portfolio intended to be offered from the DIFC, the DFSA requires the firm to be suitably staffed.

The DFSA would require the following appointments at the very least:

  1. Board of Director

A well-organized Board of Directors with strong governance policies.

  1. Senior Executive Officer

A senior banking executive with more than ten years of experience who is usually based in the UAE.

  1. Finance Officer

A senior finance professional with appropriate qualifications. The FO for a group might be from the parent firm and does not have to be a UAE resident. This job can be outsourced as well.

  1. Risk Officer

This is a non-mandatory post that is generally outsourced.

  1. Compliance Officer

A senior compliance specialist with over 10 years of experience who is normally based in the United Arab Emirates.

  1. Money-Laundering Reporting Officer

A senior anti-money laundering specialist with more than ten years of experience who is usually based in the UAE. This function can be integrated with Compliance, allowing one person to handle both tasks. The duties of CO and MLRO can also be outsourced.

  1. Internal Auditor

A senior and appropriately qualified internal auditor. Normally done by a professional firm.

Islamic Commerce (Category 5)

  • 10 million dollars in initial capital

  • Activities- Operating an Islamic Business

Conclusion

To enhance openness and eliminate anomalies in financial transactions by enterprises operating in DIFC, the DFSA maintains a rigorous regulatory framework based on worldwide best practices. Its goal is to ensure that enterprises operating in the Financial Center meet high quality and compliance standards. Thus we hope this blog provided you with insightful information. For more information on other related aspects, feel free to check out our website as well.

Dhanguard provides the business setup and company formation services in Dubai, UAE with the guidance of our professional team of consultants. Faster and hassle-free company setup in Mainland and Freezone in UAE.

Dhanguard provides faster and hassle-free Trade License with minimum paper work. With the guidance of our professional team of consultants you will get General trading license, Freelance license, Etrader license, Event Management License, Travel Agency license in Mainland and Freezone in UAE.

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