Is the DIFC about to see a boom in the money service industry?

By Akeela Bharuchi, Head of Middle East - Equiom Corporate Services (Middle East) Limited 

The Dubai Financial Services Authority (DFSA), the Financial Services Regulator in the Dubai International Financial Centre (DIFC) recently amended its legislation allowing money/payment services as one of the permissible activities within the DIFC. 

The enactment of this activity is an important milestone for Dubai, as up until this point, the general flow of money service companies in the UAE that wanted a financial licence in a free zone were driven to the Abu Dhabi Global Market (ADGM). With the DFSA’s introduction of a comprehensive framework for money services businesses, the DIFC is able to cement its competitive position as a regulated jurisdiction, attracting companies from around the world to set up their business there. 

The DIFC is known as a staunch promotor of FinTech companies with the DIFC Hive and its accelerator programmes contributing to growth this year.  A total of 87 new FinTech firms have set up in the DIFC within the first 6 months of 2020 – a time when many start-ups are struggling and many entrepreneur’s dreams have been delayed or quashed. Until now, FinTech companies wanting to provide a money service were unable to be licenced by the DFSA, and therefore were forced to look elsewhere. 

DIFC – open for business

The recent enactment of the regulated money service activity means this is no longer the case and these companies can now open in the DIFC and benefit from the regulatory protection, legal security and the prestige that the DIFC has become well known for.  What’s more, they have a suite of regulated activities to choose from with two separate licence categories.

Providing money services includes providing or operating a payment account and issuing payment instructions, issuing stored value, providing foreign exchange or money transmission. 

Arranging or advising on money services is a licence for those giving advice on which money provider to use or arranging for a person to use or receive money services, providing a payment initiation service and providing an account information service. 

In good company

Many international companies such as Worldpay have not yet entered the UAE market and it is conceivable that such companies may wish to set up their regional hub in the DIFC, which houses many of the world’s international banks and insurance companies.

We have started to see a flurry of activity from local and international money service companies and FinTech companies that wish to take advantage of the opportunity that this change brings. The licence will not be gifted to companies however, in keeping with its known high standards, the DFSA has set strict rules for money service organisations and they can expect a robust analysis of their activity prior to gaining a licence.

Let us help

Should you wish to set up a money services business in the DIFC or would like more information on the changes that have been announced by the DFSA, please contact Akeela.

This article has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The article cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact Equiom to discuss these matters in the context of your particular circumstance. Equiom Group, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this article or for any decision based on it.