Central Bank of UAE

Key Objectives

The UAE Central Bank aspires to fulfill the following objectives:

• Preserve the national currency’s soundness within the monetary system’s structure.
• Advancement and preservation of the financial system’s integrity in the nation.
• Guarantee that the Central Bank’s foreign reserves are well-managed.

The Central Bank of the United Arab Emirates (CBUAE) is in charge of maintaining financial stability as well as economic growth in the UAE. CBUAE does this through efficient supervision, cautious reserve allocation, and the creation of a strong financial network and rules that follow worldwide best practices. The Central Bank of the United Arab Emirates has the authority to issue and manage monetary system, to guarantee stable exchange rates, prudent resource control, development of financial facilities and regulations, handle the UAE’s credit policy, and to improve and supervise the UAE financial system.

In the United Arab Emirates, there are two types of banks:

• Locally Incorporated Banks are public shareholding corporations that have been licensed under Union Law No. (10) of 1980.
• Foreign bank branches that have secured Central Bank licenses to operate in the nation in accordance with the terms of the stated Law.

The UAE has four separate regulators that are responsible for the authorisation and supervision of banks, insurers, and other financial institutions.  The Central Bank of the United Arab Emirates (CB), the Insurance Authority (IA), the Securities and Commodities Authority (SCA), the Dubai Financial Services Authority (DFSA), and the Abu-Dhabi Global Market  (ADGM) are regulators among them. The following is the division of responsibility between the CB, IA, SCA, and DFSA:

(a) On a federal level, the CB, IA, and SCA oversee and supervise all banks, insurers, insurance brokers, and securities dealers.

(b) The Dubai Financial Services Authority (DFSA) is the financial regulator and supervisor for all banks, investment firms, securities traders, and insurers operating within the Dubai International Financial Centre (DIFC), a financial free zone in the Emirate of Dubai governed by its own rules and regulations largely based on common law principles, as opposed to civil law on the UAE federal level. Investment businesses, asset managers, hedge funds, brokers, financial advisers, and insurance intermediaries are all regulated by the DFSA.

In the United Arab Emirates, the primary sources of regulatory laws are:

Federal Legislation No. 10 of 1980 covering the Central Bank, the Monetary System, and Banking Organization is the most important federal law in the UAE governing banking and financial services. The Insurance Authority and its activities are controlled by Federal Law No. 6 of 2007, which established the Insurance Authority and organised its operations. The Emirates Securities and Commodities Authority and Market are controlled by Federal Law No. 4 for the year 2000. The three regulators have released a slew of rules that apply to the financial firms that come under their purview.

There are currently no restrictions on international banks engaging with clients in the UAE. The sole constraint would be the inability to hold security, and such institutions would have to rely on a local security agent who is a bank or financial institution regulated by the Central Bank.

Insurers and insurance brokers, who must be regulated by the Insurance Authority, face additional constraints. Foreign insurance companies are prohibited from insuring assets in the UAE.

In the UAE, there are similar prohibitions on the advertising and marketing of foreign money. Unless it is on a reverse solicitation basis if such foreign funds are targeted to Sovereign Wealth Funds, this must be done through a local agent licensed by the Central Bank.

Services for Online Licensing

The Central Bank of the UAE has moved all financial and banking services businesses’ licensing processes to a digital medium, as part of the bank’s process of improving its operations. Banks and financial institutions interested in registering their activities with CBUAE can now complete the following steps to get a license.

1. For existing licensed entities
   The Licensing Automation Portal can be accessed through several online channels.
2. For new applicants/financial institutions that are not yet licensed
   • The CBUAE should first approve the licensing of financial and banking activity in the United Arab Emirates. By submitting an application, the applicant can begin the licensing procedure.
   • The steps involved in submitting a new license application
     The following papers must be attached by new applicants.
     • Business model and strategy proposed
     • A brief overview of the business initiatives and activities

     For the review process, new applicants must meet with CBUAE for at least one pre-requisite meeting.

   • Following the first phase criteria
     • After a successful evaluation, CBUAE grants ‘in-principle approval’ to new applicants.
     • Applicants have one year from the date of CBUAE’s ‘in-principle approval’ to meet the conditions mentioned in the letter.
   • Criteria for the second phase and supplementary information
     • An ‘in-principle approval’ cannot be regarded as the application’s final confirmation.
     • Financial institutions cannot engage in activities that are regulated by CBUAE unless they have secured a license for the application.
     • Even after issuing an ‘in-principle approval’, CBUAE is not obligated to award the license if the application does not fulfill the relevant parameters.

     Finally, CBUAE will award the necessary license when the applicant has met the requirements, together with any terms or criteria that the licensee must meet.

Type of Company Setup in Dubai

Frequently Asked Questions – Regulated License

1. How to set up an insurance advisory firm in UAE?

   To start an insurance business in Dubai, you must first register with the Dubai Economic Department and then receive a license from the Insurance Authority. The type of services supplied determines which operating license is awarded.

2. How to apply for a regulated license in DIFC?

   The Department of International Financial Centre, or DIFC, performs a wide range of regulatory functions for the DIFC which are to help protect the financial system and markets in Dubai. As part of its duties to regulate licensing in Dubai, they issue licenses in order to carry out business in Dubai. It is necessary for any company that conducts business in Dubai to be licensed to do so by the DIFC. Given below are the stages for applying a license.

3. How to establish a crowdfunding platform in UAE?

   It may seem like an impossible task, but establishing a crowdfunding platform in UAE isn’t as difficult as you might think.  Before establishing your crowdfunding platform in UAE, it’s best to formulate an idea for a project you want to fund. You can’t just launch a campaign for no reason – people want to know the purpose behind your project and what you hope to achieve by receiving donations. Anyone can now start their own crowdfunding campaign with the help of online platforms. These websites allow entrepreneurs to create profiles where they can post about their planned project, including videos, information about the product or cause, and a deadline for fundraising. A properly executed crowdfunding campaign can be very effective at raising funds. They allow you to connect directly with potential investors or customers, building your brand one person at a time.

4. How to register a private equity firm in DIFC?

   In order to register a private equity firm in the DIFC, you will need to complete the following steps:

   • STEP 1 – Submission of application form.
   • STEP 2 – Provide necessary information about your company and provide copies of relevant documents when requested by the DIFC Authority.
   • STEP 3 – Pay for registration fee at any bank branch in UAE Dirhams or US Dollars via wire transfer/online banking/at any branch of Commercial Bank of Dubai or through credit card.

5. How to set up financial services company in Dubai?

   To set up a financial services company in Dubai, a company needs to have a paid up capital of at least Dh500,000. It needs to be registered with the appropriate authorities and present basic documentation such as a certified copy of passport, trading license and memorandum and articles of association.

6. How to setup a regulated license in ADGM?

   If you would like to set up a regulated ADGM license, it is best to start by consulting with the ADGM licensing and regulatory services. They will be able to tell you whether or not your product requires a license and how to go about getting one. Before they can help you, though, they will need an accurate description of your product.

7. What are the procedures for regulated license in UAE?

   The United Arab Emirates has been working to build a regulated environment for the financial industry. In order to issue a license in the United Arab Emirates, businesses must be registered with their respective central bank as well as sign a Memorandum of Understanding (MoU) with Dubai International Financial Centre Authority (DIFCA). The MoU outlines particular objectives of any given company’s activities and can also allow certain companies to make use of foreign currency transactions.

8. How to establish a representative office in Dubai?

   A Representative Office (Rep Office) is permitted to carry on a very narrow set of activities described as ‘marketing’ of financial services or financial products offered in a jurisdiction outside the DIFC by a ‘related party’ (i.e., its head office, another branch of the head office or a Group member).The ‘marketing’ activities of a Rep Office can include one or more of the following:

   1. Providing information about financial services or products offered by its head office or a Group member outside the DIFC;
   2. Engaging in Financial Promotions (such as holding events and seminars) relating to the financial products or financial services referred to above; and
   3. Making introductions or referrals to its head office or a member of its Group for the financial services or financial products offered by them outside the DIFC

   Activities not permitted

   Arranging deals

   Advising

   Promoting a third–party products

   Marketing financial products of a related party located in DIFC

   Compliance Requirement

   1. Officers required:
   2. A resident authorized representative
   3. Annual AML return filing

   Requirements

   1. A detailed business plan
   2. Corporate documents attested from UAE Embassy in Country of origin
   3. Passport copy of authorized representative (authorized representative must be a resident)
   4. UBO passport copy
   5. Financial Regulatory Authority certificate of the parent

   General Procedure

   1. Submission of intent letter to DIFC
   2. Initial application with DIFC
   3. Submission of Business plan to DFSA
   4. Initial Application with DFSA
   5. Arranging Meeting with DFSA for presentation
   6. Obtaining in Principal approval from DFSA
   7. Identifying office space
   8. Completion of registration of companies with Registrar for companies (Office set-up, Visa, bank account opening etc.)
   9. DFSA inspections
   10. Authorization from DFSA

   Estimated Timeline

   Usually, the time taken for a representative office is 3-5 Months from the date of submission of interest. However, the timeline depends on the approval from authority.

9. What is technology license in DIFC?

   The Dubai International Financial Centre (DIFC) is in the process of issuing licenses to companies in the digital technology sector. They are doing so by way of a licensing framework, which has been designed to encourage innovation and entrepreneurship in different areas. This framework will comprise two different types of license: The Digital Technology Innovation License (DTLI) and the Digital Innovation Business License (DIBL). There are 37 criterias that need to be met for any applicant wishing to obtain one, but these licenses will provide greater legal protection for technology-related matters.

10. How to get central bank approval for a regulated license in UAE?

    The Central Bank of UAE is the country’s financial regulator and is responsible for protecting and developing the economic and financial system of UAE. It oversees the operations of all the banks in the country, as well as operating licenses for financial institutions.UAE has recently announced plans to tighten its already existing regulation for issuing licenses for businesses and financial institutions in the country.Banks are required to submit detailed plans detailing their plans for finances, risk management, effective internal controls for operations for approval. These are all determined by regulation No. 1 of 2002. The regulation was put into place to ensure respect for UAE’s international commitments with regard to transparency, accountability and compliance with international standards in banking systems.

    Based on the review of the regulatory business plan, an in principle approval will be granted, allowing the applicant to proceed with the remaining formalities, such as appointing officers and locating office space. The central bank will grant the final license if all of the conditions have been met.

11. How to register a foundation in DIFC?

    The DIFC Authority has issued the following guidelines to help you set up your own foundation in Dubai International Financial Centre.

    Type of registration: The DIFC Authority recognizes two types of foundations, private and public, which have different requirements for operation and registration. Private foundations must be created to provide a specific charitable or social benefit to a defined group of people, while public foundations are established with a social agenda that can span across borders and geographical regions.

    Scope of work: To set up a private foundation you must demonstrate written evidence of the intended use of the registered funds.

    Determine duration: The term for which the foundation is to remain active can vary depending on its purpose for public and private.

    Obtain approval: The foundation must be registered with the DIFC Authority and be approved by its client. Approval is granted after consideration of the foundation’s objectives, activities and benefit to the DIFC community.

    The Dubai International Financial Centre (DIFC) has established a new license for startups, entrepreneurs, and technology enterprises. The new Innovation License will bring new sorts of enterprises to the Centre and is a crucial project for His Highness Sheikh Mohammed bin Rashid Al Maktoum’s Dubai Future District. The new license will encourage regional innovation, creativity, and entrepreneurship by providing commercial licensing choices at a reduced cost. Companies will also get discounted entry to DIFC co-working spaces.