What is DFSA in UAE?
The Dubai Financial Services Authority (DFSA) is the independent regulator of financial and market activities conducted in or from the Dubai International Financial Centre (DIFC), with the principal functions of being a policymaker, regulator, and enforcer.
Its vision is to make the DIFC the leading financial center in the Middle East, Africa, and South Asia region. The DFSA's mission is to protect and enhance the reputation of the DIFC as a safe and well-regulated financial center.
What does the DFSA do?
In order to protect and enhance the reputation of the DIFC as a global financial center, the DFSA ensures that market participants adhere to high standards of integrity, professionalism, and fair dealing. The DFSA also promotes investor confidence in the DIFC's financial markets by confirming that they are properly regulated and supervised.
Who regulates the financial system in the UAE?
In the United Arab Emirates (UAE), the Dubai Financial Services Authority (DFSA) regulates the financial system. Specifically, the DFSA supervises financial institutions and markets in the Dubai International Financial Centre (DIFC). The DFSA's objectives are to protect consumers, maintain market confidence, and promote healthy competition. In addition, the DFSA enforces laws and regulations, provides guidance to financial institutions, and oversees financial markets to achieve these objectives. The DFSA also works closely with other regulators in the UAE to ensure a coordinated and effective approach to regulation.
Read more on: Financial Services Regulatory Authority Abu Dhabi (FSRA)
What is the difference between the DIFC and DFSA?
DIFC is the Dubai International Financial Centre, while DFSA is the financial regulatory authority within the DIFC. The Dubai International Financial Centre (DIFC) is an onshore financial center which was established in 2004. The Centre is located in Dubai, United Arab Emirates and its mission is to support the development of Dubai as a regional and international financial hub.
The DFSA is the regulatory authority for the financial free zone of DIFC. DFSA's objective is to contribute to the stability of the UAE financial system by examining and supervising the financial activities conducted in or from the DIFC. Also, DFSA promotes and enforces high standards of market conduct.
What is the DFSA registration?
Under the Rule 9.8.3 of the Markets Rules Module of the DFSA Rulebook, Reporting Entities must disclose to the Market information through a DFSA approved Regulatory Announcement Service. The DFSA's website includes a list of all Approved Regulatory Announcers, and the list is updated as and when new Approved Regulatory Announcers are added.
All DFSA-registered companies must have an announcement submission agreement in place with one of the DFSA-approved Regulatory Announcement Services providers before submitting any announcements. Reporting entities may submit their DFSA registration number via the online form on the DFSA website to check whether they have an existing agreement in place.
Does your business need to be regulated by the DFSA?
Depending on the type of financial services business that needs to get conducted in the Dubai International Financial Centre (DIFC), financial institutions will need to obtain the appropriate DFSA regulatory approval and be authorized to undertake the specified regulated activities.
The DFSA Rulebook sets out the DFSA's requirements for authorized firms, including banks, brokers and dealers, asset managers, corporate financiers, wealth managers, insurers, and insurance intermediaries.
If financial services wish to conduct any of these financial businesses in the DIFC, they must comply with all DFSA rules and regulations. Further information on DFSA regulation and the rulebook can be found on the DFSA website.
The Dubai Financial Services Authority invites fintechs to the ITL program
The Dubai Financial Services Authority (DFSA) has been at the forefront of regulating fintech firms in the UAE. Furthermore, the DFSA was one of the first financial regulators globally to issue specific guidance for fintech firms operating in or from the Dubai International Financial Centre (DIFC) and has been working closely with fintech firms to support their growth and development.
In 2021, the Dubai Financial Services Authority (DFSA) released a statement inviting a new wave of fintechs to apply for the Innovation Testing Licence (ITL) Programme. The ITL Programme provides fintechs with regulatory sandboxes to test their products and services in the Dubai International Financial Centre (DIFC). This offer is in line with the DFSA's commitment to encouraging innovation and creativity in the financial sector.
The DFSA's regulatory regime is based on principles rather than prescriptive rules, which provides flexibility for fintech firms to innovate and develop new products and services. Additionally, the DFSA is open to testing new regulatory approaches through its Regulatory Sandbox, which allows fintech firms to trial new products and services in a controlled environment.
To date, the DFSA has received over 80 applications for the ITL Programme and has issued 24 licenses. The DFSA is confident that the new wave of applicants will bring even more innovative solutions to the market.