Amendment in the laws relating to DIFC Financial Institutions
AMENDMENT IN THE LAWS PERTAINING TO THE DIFC FINANCIAL INSTITUTION.
Dubai Law No5 of 2021 has been issued pertaining to the activities of Dubai Financial Services Authority for regulation of financial institutions that primarily operate from DIFC. It had replaced the old law no.9 of 2004. The main aim of introduction of the new law is to expand the ambit of the objective of the institution. The novel objective of the institution exclaims that the instituition tends to advance the sustainable economic growth of Dubai through ways of developing the economy and diversifying it along with the increase in the GDP contribution of various sectors. It will eventually increase the investment made in Dubai and will attract not only regional but also international entities to stand up as a principal place of business.
Other than the objective, the new law also provides for the provision of services for the customers outside the DIFC. Article 19(c) of the new law enumerates that the establishments under the DIFC, which also include the firms with the DFSA regulations must provide services to customers outside DIFC with the help of DIFC, where the customers are located within the boundary of the jurisdiction of the DIFC. Through ways of this provision, a clarification is given for doubts pertaining to serving the customers outside the jurisdiction of Dubai and within UAE. Further it even aligns the new law to the laws subjected to financial free zones.
In addition to this, the law provides for offering of the products and promoting them outside the jurisdiction of the DIFC. Article 19(e) enumerates that the establishments of the DIFC along with the DFSA regulated firms can offer their services or goods outside the DIFC with the condition of fulfilling the DIFC laws, its regulations and other legislations with respect to it.
The introduction of Article 19(e) provides a limited scope for the offering of services and promoting them as it is not inclusive of financial products. DFSA regulated firms are still under the obligation to fulfil the regulations such as Emirates Securities and Commodities Authority’s 2017 Promotion and Introduction Regulations. In case of these entities, promotion is only possible for onshore UAE areas where the promotion can be linked to a specific product. There is still a restriction on the central bank licensed activities as mentioned under the UAE Decretal Federal Law 2018 on the Central Bank and Organisation of Financial Institutions and Activities.
So in conclusion, the products and services can be provided outside the DIFC establishment as long as they are provided outside the center.