Establishing a Money Services Provider in Dubai in 2024
With a thriving financial sector, Dubai is set as one of the world-class hubs for business and innovation companies. The Dubai International Financial Centre (DIFC) ranks among the leading eight onshore financial centres globally, providing entities a reliable and well-regulated business infrastructure to conduct financial service activities. The Dubai Financial Services Authority (DFSA) is the independent regulatory authority responsible for overseeing financial and ancillary services conducted in or from the DIFC. It is tasked with ensuring that firms operate in a stable and transparent environment that adheres to international standards.
For Money Services Providers (MSP) operating outside the DIFC, the Central Bank of the UAE (CBUAE) serves as the regulatory authority overseeing their economic activities. The Central Bank is vital in ensuring the stability of the national economy and enacting measures to prevent economic crimes. Consequently, Dubai situated businesses offering money services are mandated to register and operate under the supervision of both DFSA and DIFC.
Within the next sections, the SALVUS Payment Services Licensing team sheds light into the DFSA’s requirements for obtaining an MSP license, exploring the different categories. The article is divided in the following sections:
1. Why establish an MSP in Dubai?
2. MSP License Categories & Features
3. Main Principles of MSP
4. How SALVUS can support your MSP application?
1. Why establish a Money Services Provider in Dubai?
Dubai is renowned as one of the most rapidly expanding and advanced financial technology (FinTech) hives on a global scale, nurturing innovation and providing credibility. The DFSA is the most established and robust financial market of the region, giving investors the confidence to pioneer in the most exciting new sectors. Its legislation model is built on the legal framework used by global financial centres ensuring a stable and secure system.
Firms situated in Dubai enjoy a highly advantageous tax environment, with no income tax on personal or corporate earnings during a forty-year period. Additionally, the United Arab Emirates (UAE) has established numerous double taxation treaties with many countries, including several EU member states, deeming it an attractive destination for international investors.
Operating under a unique legal framework, the DIFC, is aligned with the English Common law accompanied by its own civil and commercial laws and regulations. Further, it applies no restrictions on foreign talent, capital repatriation and no currency exchange control for existing groups’ branches or subsidiaries in DIFC.
From a geographic standpoint, Dubai is considered the epicentre of FinTech investments as it is Middle East, Africa and South Asia’s (MEASA) most popular avenue. To this end, Dubai has strong economic ties with major global economies, such as the United States, China, and the European Union, allowing investors to benefit from global economic policies and trends.
2. MSP License Categories & Features
As a Money Services Provider license in the DIFC Free Zone is regulated by the DFSA, its activities are distinguished by the regulator under:
- Category 3C License,
- Category 3D License, and
- Category 4 License.
The features of each MSP category, indicating the different services and requirements are provided in the table below:
| Features | Category 3C | Category 3D | Category 4 |
|---|---|---|---|
| Services | - Issuing Stored Value | - Providing or Operating a Payment Account, - Executing Payment Transactions, or - Issuing Payment Instruments | - Arranging or Advising on Money Services, - Providing Money Transmission Services |
| Minimum Regulatory Capital Requirements | From 500,000 USD, depending on the combination of services to be offered. | From 200,000 USD, depending on the nature, quantum of business and annual expenditure. | From 30,000 USD, depending on the combination of services to be offered. |
| Licensing Timeframe | approx. 12 months | approx. 12 months | approx. 8 months |
Contact us via email at info@salvusfunds.com if you are interested in obtaining an MSP license with DFSA in DIFC or if you would like more information about UAE licensing; our Payment Services Licensing team is ready to answer your questions.
3. Main Principles of MSP
According to DFSA all Authorised Firms, including an MSF, shall satisfy the following 12 principles:
- Ensuring high standards of integrity and fair dealing,
- Acting with due skill, care and diligence,
- Managing affairs effectively and responsibly, having adequate systems and controls,
- Maintaining and demonstrating the existence of adequate resources to conduct its affairs,
- Observing proper standards of market conduct in financial markets,
- Paying due regard to the interests of its customers, having clear and concise communication avoiding misleading information.
- Taking all reasonable steps to prevent, manage or disclose conflicts of interest,
- Assuring suitability of advice and discretionary decisions to customers that rely upon its judgement,
- Arranging proper protection when controlling customer assets and money,
- Dealing with regulations in a co-operative manner and notifying the DFSA promptly of significant events,
- Employing a corporate governance framework, ensuring compliance with high standards of corporate governance,
- Having a remuneration structure and strategies which align with the long-term interests of the firm.
In summary, adhering to the DFSA’s 12 Principles is essential for maintaining a robust, fair, and transparent financial system, protecting client interests, ensuring regulatory compliance, while promoting the overall health and stability of the financial sector in Dubai.
4. How SALVUS can support your MSP application?
The SALVUS Payment Services Licensing team is composed of industry-leading professionals able to support you in every step of your Money Services Provider license application with DFSA and DIFC.
Our team employs a sophisticated project management approach, beginning from designing an effective portfolio of money services that suit your business plan and objectives. We work closely with our clients and their teams, to ensure the preparation of a complete and well-supported application package, leading your interaction with the regulator.
Finally, we ensure that your application to the DIFC and DFSA is detailed and well-prepared, fulfilling all regulatory requirements for the successful launch of operations. Leveraging on our profound understanding of Dubai’s financial regulations and substantial experience in the field we constitute a prominent choice for companies seeking to achieve regulatory compliance.
Contact us at info@salvusfunds.com if you are interested in licensing an MSP under DIFC and DFSA in Dubai; our Payment Services Licensing team is ready to help you.
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The information provided in this article is for general information purposes only. You should always seek professional advice suitable to your needs.