Abu Dhabi Global Markets (ADGM) is a purpose-built financial services free zone based in the capital of the United Arab Emirates, Abu Dhabi. Situated at Al Maryah Island, ADGM has been operating since 2015 and home to over 3,000 businesses. ADGM is an autonomous jurisdiction with its own regulations, independent courts (Common Law), and arbitration centres with an independent Financial Services Regulatory Authority (FSRA).
ADGM free zone is widely recognized worldwide along with the top financial service jurisdictions set in London, New York, Singapore, and Hong Kong.
WHAT BENEFITS DOES ADGM OFFER?
Companies are drawn to ADGM to set-up a business and can enjoy the following:
- Complete ownership of businesses
- Modern and technological driven infrastructure
- Independent legal and judiciary system
- Diverse financial and innovative products
- Competent and globally recognized independent regulators – FSRA
- No restriction on capital repatriation and 0% corporate and income tax
Over the years the ADGM and FSRA positioned themselves as the leading financial services regulators in the region with a ready acceptance for revolutionary innovations and virtual assets making it home to some of the leading financial services companies and ground-breaking FinTech start-ups.
ADGM IS DESIGNED TO CATER TO FINANCIAL SERVICES COMPANIES INCLUDING:
- FinTech governed under the RegTech regime in ADGM
- Private, retail and investment banking
- Financial brokerage
- Market makers
- Insurance and reinsurance
- Fund management
- Asset management
- Wealth management
- Private equity
- Multilateral trading facilities
Companies that offer financial services (e.g. advisory services on virtual assets) in the UAE are regulated by a centralised regulatory body to standardise their activities and ensure transparency, safety, and security of consumers for risk management and mitigation. FSRA regulates all financial services activities within ADGM.
CLASSIFICATION OF FSRA FINANCIAL SERVICES:
Regulates the Islamic Financial Businesses (ISF) which manages a Profit Sharing Investment Accounts (unrestricted) (PSIAu) in the ADGM. This category covers the scope of Islamic Funds, Islamic Securities and PSIAus.
Base Capital required for the activity is US$ 10 million.
Companies offering financial advisory services are governed under Category 4 which involve business activities including:
- Financial consultancies
- Investment deals arrangement
- Insurance intermediaries
- ATS Operation
- Custody arrangement
- Credit advisory
Category 4 licensed companies are required to demonstrate the right skill set to offer financial services and require the following roles within the company:
- Board of Directors (BoD)
- Senior Executive Officer (SEO) with residence in the UAE
- Finance Officer (FO)
- Compliance Officer (CO)
- Money-Laundering Reporting Officer (MLRO)
Base capital requirement for a Category 4 License is US$ 10,000.
Category 3 is subdivided into three sub-categories offering different services and provisions:
Financial services firms that offer asset management and fund management services are regulated under Category 3C. It also covers activities such as:
- Providing trustee services of an express trust
- Managing a PSIAr
- Providing custody (other than a fund)
- Issue stored value (for money services providers)
Fund Management Businesses can register funds in the ADGM.
Base capital requirement for a Category 3C License is US$ 500,000.
Category 3B covers the financial services business involved in providing custody services for a fund (financial services businesses responsible for holding customers marketable securities and cash in the fund) and acting as a trustee for a fund.
Firms in this category are required to have the roles of:
- Board of Directors with its Chair as a non-executive Director
- Resident SEO with relevant experience
- Finance Officer
- Chief Risk Officer
- Compliance Officer
- Internal and external Auditor
Base capital requirement for a Category 3B license is US$ 4 Million.
Financial brokerage firms offering investments as agents and matched principals are covered under the scope of category 3A. Activities in this category are highly regulated under the FSRA and require its regular supervision. This also means that all applications for the financial brokerage firm go through a thorough due diligence process and crucial to have SEO experience in managing this business to secure approvals from the FSRA.
Base capital requirement for a Category 3A license is US$ 500,000.
Investment banks and market makers are covered under the scope of Category 2 license. It allows financial businesses to deal in investments as principal and can provide credit.
Base capital requirement for a Category 2 license is US$ 2 Million.
Banks are covered under Category 1 which allows financial businesses to accept deposits and manage profit sharing investment accounts (unrestricted).
As a bank, it is heavily regulated by the FSRA and has a base capital requirement of US$ 10 Million.
Creation Business Consultants has worked with FSRA and ADGM over the years and advised several regulated entities in the ADGM. For more information regarding ADGM and FSRA requirements, contact our team on email@example.com or call +971 4 878 6240 for your free consultation.