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2023

DIFC Category 1 License Overview: Accepting Deposits and Managing Unrestricted Profit Sharing Accounts

When Michelle Kim, former head for the Asia-Pacific region at Tiffany & Co., worked in the iconic jeweler’s in...

What is a DIFC Category 1 License?

A DIFC Category 1 License authorizes firms to accept deposits or manage unrestricted profit-sharing investment accounts. This license distinguishes Category 1 firms by their ability to conduct these specific financial services. Additionally, Category 1 firms may apply for an Islamic Window to conduct certain operations in compliance with Sharia law.

Key Requirements:

  • Base Capital: USD 10,000,000

  • Risk-Based Capital Minimum: CET1 - 6%; Tier 1 - 8%

  • Capital Requirement: Not applicable for a Branch setup of an existing regulated bank

  • Capital Plan: Must be included in the Internal Capital Adequacy Assessment Process (ICAAP) Report

  • Additional Requirements: The DFSA may impose extra capital requirements upon application review.

Licensing Process for DIFC Category 1 License

Application Submission:

  1. Initial Application: Submit an application to the Dubai Financial Services Authority (DFSA). The DFSA will assess the applicant’s suitability and the appropriateness of the license category.

  2. Draft Review: The DFSA will review a draft Regulatory Business Plan and projected financials informally. If satisfactory, a full formal application, including a finalized Regulatory Business Plan, will be required.

MVG Dubai Office’s Assistance Includes:

  • Regulator Introduction: Facilitate initial contact with the DFSA.

  • Draft Regulatory Business Plan: Includes application forms, business flow processes, and charts.

  • Financial Model Preparation: Develop a three-year financial model and draft ICAAP and Internal Risk Assessment Process (IRAP) report.

  • Policies and Manuals: Draft policies and manuals for Compliance, Anti-Money Laundering (AML), Risk Management, Remuneration, Governance, Conflicts of Interest, and Business Continuity.

  • Required Forms:

    • AUT – CORE: Provides information on the applicant, activities, prospective clients, and controllers.

    • AUT – IND: For individuals holding mandatory functions, including directors and senior officers.

    • AUT-AMS: For financial services relating to arranging credit or deals in investments.

Application Submission:

  • Draft Regulatory Application: Prepare the application for the company and individuals.

  • Submission of Application: Includes policies and appointment details for Senior Executive Officer (SEO), Finance Officer (FO), Risk Officer (RO), Money Laundering Reporting Officer (MLRO), and Compliance Officer (CO).

  • Office Lease: Secure office space.

  • Bank Account: Introduction to a UAE bank for account opening.

  • License Issuance: Obtain the regulator’s financial services license.

DFSA Review Process:

  • Ongoing Dialogue: The DFSA will engage with the applicant through interviews and discussions.

  • In-Principle Approval: Upon satisfaction, the DFSA will issue an In-Principle approval with conditions such as:

    • Incorporation or registration with the DIFC Registrar of Companies.

    • Opening a local bank account and proof of capital remittance.

    • Evidence of office space for financial activities.

Final License Issuance:

Once the conditions of the In-Principle approval are met, the DFSA will issue the formal Category 1 License.

For expert guidance through the DIFC Category 1 licensing process, contact the MVG Dubai Office. Our experienced team provides comprehensive support to ensure a seamless application and compliance with all regulatory requirements.


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