DIFC as a centre for wealth management

DIFC as a centre for wealth management
DIFC as a centre for wealth management

It has been a decade since the DIFC opened for business. What was once seen as a bold experiment has now matured into a robust business model, a beacon for financial services in the region. In this article, we explore how the DIFC is ideal base for wealth management activities in the MENA region.

The Dubai International Financial Centre (DIFC) is an onshore Financial Centre, providing a secure and efficient platform for Financial Institutions to operate from. The DIFC envisions bridging the gap between the world’s major financial centers from Hong Kong and London in the East to London and New York in the West. Since its inception a decade ago, the DIFC has seen its client base expand rapidly to now include 22 of the world’s top 30 banks and 11 of the top 20 money managers. Over 1,000 companies employing over 15,000 professionals now operate from the DIFC.

The region’s growing wealth, cross-border trade and investment activity, M&A activity and ongoing restructuring by state owned enterprises, corporations and private entities makes a strong case for establishing banking and brokerage operations at the DIFC.

Financing requirements in the region are now becoming increasingly sophisticated. A large number of projects have taken off in the UAE, spurred by the Expo 2020 announcement, and project finance needs are increasing. Investment banks in the DIFC are able to address these requirements.

Why should wealth management firms consider being based in the DIFC?

Robust Regulation

The Dubai Financial Services Authority (DFSA) is a leading regulator in the region with a comprehensive, world-class regulatory framework for fund management, domiciliation, marketing and adminstration. It is internationally recognised with 50 MoUs in place with regulators around the globe including the US Federal Reserve and the FCA in the UK. The DFSA participates in the development of global standards in regulation through its membership of the international regulatory standard setting bodies Basel, IOSCO and the IAIS.

DIFC-domiciled funds can offer investors, both in
the region and from elsewhere, a real alternative to Caribbean or EU domiciled funds with protections in line with international standards but at the same time requirements that are tailored to the regional context.

 Alternative Investments

The DFSA Collective Investment Law and Trust Law are specifically designed for facilitating alternative investment products, and remains the only financial center in the region do so. Firms can also use the listing platform at NASDAQ Dubai to list all types of securities.

Strength of Private Banking

A strong concentration of HNWI in the Middle East, coupled with a large community of financial and professional firms, make the DIFC an ideal destination for private banking activities.

 Excellent infrastructure for Funds

DIFC has put in place a flexible and robust environment to support all types of fund-related activities, including domiciling, distributing, administering and managing all types of collective investment products, including:

  • Open-ended Funds (ETFs and non-ETFs)
  • Funds of Funds
  • Private equity Funds
  • Hedge Funds
  • Real estate Funds
  • Shari’a-Compliant Funds

Regional headquarters

The DIFC is an excellent option to base the regional headquarters of your financial business in the Middle East. A stable country environment, coupled with a comprehensive legal and judicial framework make the DIFC the best onshore financial centre in the region.

Free Capital Movement

DIFC-based companies face no restrictions or constrains on capital or profit flows, and there are no currency exchange controls in this US dollar-denominated jurisdiction.

Full Foreign Ownership

Within DIFC, subsidiaries and other incorporated entities enjoy 100% foreign ownership, as well as a flexible, world-class regulatory environment that allows for a wide range of options for structuring legal entities. It also offers a specific option for a representative office license.

Common Law Framework

DIFC’s legal system and courts follow a Common Law framework that is administered by an independent and highly regarded regulator and adjudicated on by an equally respected court system. Administered independently of the UAE legal system, laws and regulations are issued in English, while internationally renowned judges sit on the bench. Contracts and other legal documents can be drawn up so that issues will be heard within the DIFC Courts system or in another recognised jurisdiction. The DIFC LCIA Arbitration Centre, founded in partnership with the London Court of International Arbitration, provides an effective and trusted avenue for dispute resolution services, arbitration and mediation.

Financial Services Cluster

The Centre enjoys a critical mass of companies operating in, or serving, the financial services sector. As of June 2013, 979 companies, including 365 regulated firms, were operating from DIFC. They include 21 of the world’s top 25 banks, 11 of the world’s top 20 money managers, and 6 of the top 10 insurance companies.

Premier Professional Services

Top-tier professional services firms have operations in DIFC, including global law firms, big-four accounting firms, consultants and recruitment firms, including six of the world’s top 10 law firms, and four of the top five accounting firms.