Financial Services Regulation in the UAE

Financial service providers continue to focus on establishing themselves in the United Arab Emirates (UAE).

This popularity comes alongside the Emirate of Dubai’s Economic Agenda (D33) which seeks to double the size of Dubai’s economy over the next decade and to become a top global financial service and talent hub alongside London, New York and Singapore.

However, unlike some other global jurisdictions, the UAE has multiple concurrent financial services regimes and new market entrants should be aware of the benefits and considerations that these entail when assessing the ideal UAE jurisdiction for establishing their financial services business.

What are the financial services regimes in the UAE?

The UAE is comprised of seven confederated Emirates which form the Federal (or “onshore”) jurisdiction. Separate to this jurisdiction are the two financial freezones: the Abu Dhabi Global Market (ADGM) and the Dubai International Financial Centre (DIFC).

The relevant financial services regimes are set out as follows:

How do I know if I need a financial services licence in the UAE?

In general, if you want to run a financial service business (i.e., carrying out regulated financial services in relation to regulated financial products) in or from the UAE, you will most likely need a financial services licence to do so.

However, each regulator listed above has a separate regime to determine the types of products and services that form part of its financial services regime and accordingly a requirement to obtain either a financial services licence or another form of prior approval / authorisation where applicable.

How do you obtain a financial services licence in the UAE?

Each regulator has a similar but distinct approach to facilitating financial services licences in their jurisdictions and bespoke requirements that apply on the basis of the proposed financial services business.

However, in general, obtaining a financial services licence in the UAE requires satisfaction of the following steps:

a) satisfying initial due diligence and discussions with the regulator;
b) submitting a formal application to be assessed by the regulator;
c) receiving an in principle approval from the regulator;
d) completing the conditions set out in an in principle approval; and
e) receipt of the financial services licence.

Throughout the licensing process, successful applicants are required to demonstrate to the regulator that they have a thorough understanding of their obligations under the relevant financial services regime, access to the minimum capital requirements, have made mandatory personnel appointments, implemented mandatory policies and procedures and client facing documentation, and a suitable place of business in the UAE.

How much does a financial services licence cost in the UAE?

There are a range of different costs to consider when budgeting for obtaining a financial services licence in the UAE. These will vary depending on the type of business you want to operate and the resources you may already have on hand from operating outside of the UAE. However, some costs you may wish to consider could include:

a) regulatory fees (application and ongoing supervisory fees);
b) incorporation of the relevant entity (or group of entities);
c) appointment of relevant personnel (including visa sponsorship if it is required);
d) regulatory capital and ongoing operational expenses; and
e) external advice to support your application and business (i.e., legal advisors, tax consultants, etc.).

How can we assist you with financial services regulation in the UAE

We can provide as much or as little support to establishing financial service businesses in the UAE as you may require. This could include an initial structuring / feasibility advice that considers your business model and the relevant UAE regulatory jurisdiction, assistance to obtain authorisations, drafting client facing documentation and internal policies.

We are also able to provide ongoing legal advice to support your UAE business including when the regulator implements a change of law and/or policy or when you decide to change the products and services you offer to clients.

If you are looking to provide financial services in or from the UAE or are unsure whether your business model would require a financial services licence in the UAE, please reach out to our local experts Gregory Man and Jessica White.