Overview of ADGM Category 2 License
The Abu Dhabi Global Market (ADGM) Category 2 License is designated for firms authorized to engage in dealing investments as a principal and providing credit services. Firms holding this license may also be authorized to perform additional financial services under Category 3A, 3B, 3C, or 4. However, they are not permitted to conduct services specified in Category 1.
Capital Requirements:
Base Capital: USD 2,000,000.
Risk-Based Capital: Minimum CET1 ratio of 6% and Tier 1 ratio of 8%.
Branch Set-Up: Capital requirements are not applicable to branches of existing regulated banks.
Capital Plan: Must be detailed in the Internal Capital Adequacy Assessment Process (ICAAP) Report.
Additional Requirements: The FSRA may impose further capital requirements based on the application review.
Licensing Process for ADGM Category 2
To obtain an ADGM Category 2 License, applicants must submit their application to the Financial Services Regulatory Authority (FSRA). The FSRA evaluates the suitability and merits of the applicant and the license category.
The Application Process
Draft Review: The FSRA conducts an informal review of the draft Regulatory Business Plan and projected financials. If the FSRA is satisfied, a full formal application, including a finalized Regulatory Business Plan, will be required.
MVG Dubai Office Services
Introduction to the Regulator: MVG Dubai facilitates introductions to the FSRA, ensuring effective communication and guidance throughout the regulatory process.
Drafting Regulatory Business Plan: Our team assists in preparing a comprehensive Regulatory Business Plan (RBP), including application forms, business flow processes, and organizational charts.
Financial Modeling and ICAAP: We develop a detailed three-year financial model and draft the ICAAP and Internal Risk Assessment Process (IRAP) reports, crucial for evaluating and managing capital adequacy.
Policy and Manual Preparation: MVG Dubai prepares essential policies and manuals, including Compliance, Anti-Money Laundering (AML), Risk Management, Remuneration, Governance, Conflicts of Interest, and Business Continuity Planning.
Form Preparation and Submission:
Regulatory Application Drafting: MVG Dubai drafts the regulatory application for both the firm and its key individuals, ensuring adherence to FSRA requirements.
Submission and Appointment Support:
Additional Support:
Office Lease Assistance: Assistance with finding and leasing suitable office space for regulatory and operational purposes.
Bank Introduction: Facilitation of introductions to UAE banks for account opening and banking services.
License Issuance: Support in obtaining the financial services license from the FSRA.
Regulatory Application Submission: We manage the submission of the Regulatory Application, including policies and the appointment of the Senior Executive Officer (SEO), Finance Officer (FO), Risk Officer (RO), Money Laundering Reporting Officer (MLRO), and Compliance Officer (CO).
AUT – CORE: Preparation of this form, covering information about the firm, its activities, prospective clients, and controllers.
AUT – IND: Completed for individuals holding mandatory functions, including directors, senior executive officers, finance officers, compliance officers, and money laundering reporting officers.
AUT – AMS: Prepared for firms applying to conduct financial services related to credit arrangement or investment deals, as part of ADGM CO’s proposed activities.
Post-Application Process
After submitting the application, the FSRA will review it and engage in an ongoing dialogue with the applicant, which may include interviews with nominated authorized individuals. Once the FSRA is satisfied with the application and the applicant's compliance with requirements, it will issue an In-Principle approval. This approval includes conditions that must be met before the final license is granted, such as:
Incorporation or registration of the entity with the ADGM Registrar of Companies.
Opening a local bank account and providing proof of capital remittance.
Providing evidence of office space for conducting financial activities.
Upon fulfilling these conditions, the FSRA will issue the formal license.
Conclusion
Securing an ADGM Category 2 License requires thorough preparation and adherence to regulatory standards. MVG Dubai provides expert support throughout the licensing process, ensuring compliance with FSRA requirements and facilitating a smooth transition into the ADGM financial environment. Our comprehensive services help firms achieve their regulatory objectives and successfully operate within the UAE's financial sector.