TBY talks to Saeb Eigner, Chairman of the Dubai Financial Services Authority (DFSA), on its mandate, creating a financial center, and the regulatory environment.
TBY What does the regulatory mandate of the Dubai Financial Services Authority (DFSA) cover?
SAEB EIGNER The DFSA’s regulatory mandate covers all financial and related activities conducted in or from the Dubai International Financial Centre (DIFC), including asset management, banking and credit services, securities, collective investment funds, custody and trust services, commodities futures trading, Islamic finance, insurance, an international equities exchange, and an international commodities derivatives exchange. In addition, the DFSA registers auditors, ancillary service providers (law firms and accountants), and is responsible for anti-money laundering supervision in the DIFC.
Creating a financial hub in Dubai has been part of the ongoing vision for the long-term prosperity of the city. What are the strengths of the Emirate in this regard?
The Emirate of Dubai, through its Ruler His Highness Sheikh Mohammed Bin Rashid Al Maktoum, has created by means of legislation a modern financial and business hub connecting the region’s emerging markets with the developed markets of Europe, Asia, and the Americas. Since 2004, Dubai has been committed to encouraging economic growth and development in the UAE and the region through its strong financial and business infrastructure, such as the creation of the DIFC. For example, the DIFC offers its member companies benefits such as 100% foreign ownership and a 0% tax rate with no restriction on capital convertibility or profit repatriation. Furthermore, the DIFC has its own independent common law judiciary, namely the DIFC Courts. The Emirate continues to enhance its infrastructure. For example, it has recently enacted legislation to extend the jurisdiction of these courts to enable the benefits of the DIFC Courts to be more widely available. Combining all of these attributes, including the fact that financial institutions find that Dubai offers a high standard of living for their employees as well as modern office space, the Emirate positions itself as the appropriate and first-in-mind location attracting and retaining businesses and talent.
What have been the most significant recent developments in terms of the DFSA’s regulation?
There have been two recent significant developments. The first development was the enlargement of the DFSA’s regulatory remit to make it responsible for all anti-money laundering supervision across the DIFC rather than, as was previously the case, in respect only of firms it regulates for conducting financial and other related activities. The second development was the acceptance by the DFSA of a delegation of power from the Registrar of Companies to be responsible for investigations and conducting enforcement action in respect of breaches of DIFC laws administered by the Registrar of Companies, such as the Companies Law.
Financial services companies wishing to obtain a license to operate within the DIFC are processed through the DFSA. What kind of trends have you witnessed in terms of applications?
The 2011 period was a time of growth in the DIFC, with the number of authorized firms increasing by 8% after two years of consolidation and following the rapid growth experienced in 2005-2008. In 2012, this momentum is continuing with applications 80% higher than for the same period last year. The DIFC is being selected as a hub to offer products and services to clients in the GCC, wider Middle East, and North Africa and Asia. In terms of specific growth drivers, we see banks—particularly from China and India—increasing their presence and offering their commercial lending and trade finance services, wealth managers from Europe seeking to enhance and grow institutional and private banking relationships in the region, and global investment banks and other wholesale intermediaries migrating trading teams to the center.
You have recently visited China, where the DFSA signed an updated Memorandum of Understanding (MoU) with the China Banking Regulatory Commission and then travelled to Hong Kong and Singapore. What are the benefits of such cooperation agreements and high-level visits?
Cooperation among regulators has always been important, but at a time where so much activity and capital flows are across borders, it is even more so. In that regard, we are pleased to have updated our cooperation agreements with the Chinese regulator. Also, as the center of global wealth and activity moves eastward, the DIFC is well placed. We further cemented our strong relationships with the Hong Kong and Singapore authorities and met with leading government and industry identities. We have much to consider from how Hong Kong and Singapore have developed as financial centers. It was also pleasing for us to hear from them.
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