A DIFC Category 5 license is specifically for Islamic Financial Institutions that operate in full compliance with Sharia principles. Such institutions are responsible for managing profit-sharing investment accounts on an unrestricted basis. This license allows firms to conduct all their financial activities in adherence to Islamic finance laws and principles, ensuring that their operations align with Sharia requirements.
Base Capital Requirement:
US$ 10,000,000
Risk-Based Capital Requirements:
Common Equity Tier 1 (CET1): Minimum of 6% of risk-weighted assets
Tier 1 Capital: Minimum of 8% of risk-weighted assets
Note: The capital requirement does not apply to a branch setup of an existing regulated bank.
Capital Plan Requirements:
The Capital Plan must be detailed in the Internal Capital Adequacy Assessment Process (ICAAP) Report. Additionally, the DFSA may impose further capital requirements based on the review of the application.
DIFC Category 5 License – Licensing Process
To secure a DIFC Category 5 license, an applicant must submit a comprehensive application to the Dubai Financial Services Authority (DFSA). The DFSA will assess the application based on its merits and suitability, considering the specific category of the license being applied for.
The Application Process:
Initial Review: The DFSA will conduct an informal review of a draft Regulatory Business Plan and projected financials. If the draft is satisfactory, the applicant will be invited to submit a formal application, including a finalized Regulatory Business Plan.
MVG Dubai Office Will Assist You in the Following:
Introduction to the Regulator: Facilitating initial contact and communication with the DFSA to ensure a smooth introduction and understanding of regulatory requirements.
Drafting the Regulatory Business Plan (RBP): Assisting in the creation of a comprehensive RBP, which includes application forms, business flow processes, and organizational charts.
Financial Model Preparation: Developing a detailed three-year financial model and drafting the ICAAP and IRAP reports to meet regulatory standards.
Policy and Manual Preparation: Creating essential policies and manuals, covering Compliance, AML, Risk Management, Remuneration, Governance, Conflicts of Interest, and Business Continuity Planning.
Required Forms:
AUT – CORE: Must be submitted by all applicants seeking a license for financial services in or from the DIFC. This form includes detailed information about the applicant, its activities, prospective clients, and controllers.
AUT – IND: To be submitted by individuals holding mandatory roles, including directors, the Senior Executive Officer (SEO), Finance Officer (FO), Compliance Officer (CO), and Money Laundering Reporting Officer (MLRO).
AUT – AMS: Required for applicants intending to conduct financial services related to arranging credit or deals in investments.
Submission of Regulatory Application:
MVG Dubai Office will manage the drafting and submission of the regulatory application, including all necessary policies and the appointment of SEO, FO, MLRO, RO, and CO.
Provision of Full-Time Functions:
SEO: Senior Executive Officer
FO: Finance Officer
RO: Risk Officer
MLRO: Money Laundering Reporting Officer
CO: Compliance Officer
Assistance in fulfilling mandatory roles such as:
Additional Services:
Office Lease: Assistance in securing appropriate office space.
Introduction to UAE Banks: Facilitating the opening of a local bank account.
Issuance of Financial Services License: Coordinating with the DFSA throughout the review process, including managing interviews with nominated authorized individuals.
Upon the DFSA's satisfaction with the application, an In-Principle approval will be issued. This approval will outline several conditions that must be met before the final license is granted, including:
Incorporation or Registration: Completing the incorporation or registration of the entity with the DIFC Registrar of Companies.
Local Bank Account: Opening a local bank account and providing proof of remittance of capital to the DFSA.
Office Space: Providing evidence of the office space from which financial activities will be conducted.
Once these conditions are fulfilled, the DFSA will issue the formal license.
Why Choose MVG Dubai Office?
MVG Dubai Office offers extensive expertise and experience in guiding firms through the DIFC Category 5 licensing process. Our team provides tailored support and strategic insights to ensure a smooth and efficient application process. We are dedicated to delivering high-quality service and helping clients achieve compliance with Islamic finance regulations. Partner with MVG Dubai Office to benefit from our deep understanding of the regulatory environment and our commitment to excellence.