DFSA Category 4 License

A Category 4 Licence authorises a company to carry on one or more of the financial services:

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Arranging Deals in Investments

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The activities which constitute making arrangements with a view to another person buying, selling, underwriting or subscribing for an investment or crypto token (whether that other person is acting as principal or agent) generally involve the following elements:

• the purpose of such an arrangement is to ‘facilitate’ or ‘bring about’ transactions between other parties such as: 

  • buyers and sellers of Investments or Crypto Tokens

  • issuers of and subscribers for securities (note – subscription is generally an activity associated with an initial offer of securities);

  • issuers of and buyers of Crypto Tokens

  • issuers and underwriters of securities or Crypto Tokens (note – underwriting here is an activity associated with an initial offer of securities or Crypto Tokens, as opposed to underwriting of risks, which is an activity of an insurer); and

  • insurers writing Long-Term Insurance and policyholders who wish to obtain such insurance.

Advising on Financial Products

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Advising on financial products means giving advice to a person in his capacity as an investor or potential investor, or in his capacity as agent for an investor or a potential investor, on the merits of his buying, selling, holding, subscribing for or underwriting a particular financial product (whether as principal or agent).

• Financial Products mean include the below: 

  • an Investment;

  • a Deposit;

  • a Profit Sharing Investment Account;

  • a right under a contract of Long-Term Insurance, that is not a contract of reinsurance;

  • a right under an Employee Money Purchase Scheme; a right or interest in a pension, superannuation, retirement or gratuity scheme or arrangement, or a broadly similar scheme or arrangement; or

  • a Crypto Token.

 Arranging Custody

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• Arranging custody means negotiating and settling terms of the contract between the custody provider and the person who is obtaining that service (the Client);

• assisting the Client to complete application forms and other processes;

• collecting and processing the Client’s payments; and

• transmitting information (including instructions from the Client and confirmations by the custody provider) between the Customer and the custody provider. Arranging Custody means arranging for one or more persons to carry on the activity as per below:

Arranging Credit and Advising on Credit

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The following activities constitute arranging credit:

• Introducing potential borrowers to a credit provider (who can be in the DIFC or outside the DIFC);

• Assisting a potential borrower to obtain credit, such as completing application forms and other processes relevant to the transaction;

• Negotiating terms of credit, including any fees payable to the arranger; and

• Arranging collateral or other assurances needed by the potential borrower to obtain credit.

Insurance Intermediation

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Insurance Intermediation means:

• advising on a Contract of Insurance;

• acting as agent for another Person in relation to the buying or selling of a Contract of Insurance for that other Person;

• making arrangements with a view to another Person, whether as principal or agent, buying a Contract of Insurance; or

• operating an Insurance Aggregation Site.

‘advising’ means giving advice to a person in his capacity as a policyholder, or in his capacity as agent for a policyholder on the merits of his entering into a Contract of Insurance whether as principal or agent.

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Insurance Management

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Insurance Management means:

• performing underwriting or administration functions for or on behalf of an insurer, for the purposes of that insurer effecting or carrying out a Contract of Insurance as principal;

• advising on a Contract of Insurance for which the person performs, or is proposing to perform, underwriting functions

• arranging reinsurance for and on behalf of an insurer for whom it is underwriting.

Operating an Alternative Trading System

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The financial service of Operating an Alternative Trading System, to the extent that such activities constitute operating a Multilateral Trading Facility, may be carried on by an Authorised Market Institution which is permitted to do so by an endorsement on its Licence.

Providing Fund Administration

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Providing Fund Administration means providing one or more of the following services in relation to a Fund:

• processing dealing instructions including subscriptions, redemptions, stock transfers and arranging settlements;

• valuing of assets and performing net asset value calculations;

• maintaining the share register and Unitholder registration details;

• performing anti money laundering requirements;

• undertaking transaction monitoring and reconciliation functions;

• performing administrative activities in relation to banking, cash management, treasury and foreign exchange;

• producing financial statements, other than as the Fund’s registered auditor;

• communicating with participants, the Fund, the Fund Manager, and investment managers, the prime brokers, the Regulators and any other parties in relation to the administration of the Fund.

Providing Trust Services (where it is not acting as trustee in respect of an express trust)

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Providing Trust Services means:

• the provision of services with respect to the creation of a trust;

• arranging for any person to act as a trustee in respect of any trust;

• acting as trustee in respect of a trust;

• the provision of Trust administration services in respect of a trust;

• acting as protector or enforcer in respect of a trust.

Providing Money Services (where it only provides Money Transmission)

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“Money Transmission” means the transmission of money or monetary value, without a Payment Account being created in the name of the payer or the payee, where funds are:

• received from a payer for the sole purpose of transferring a corresponding amount to a payee or to another Payment Service Provider acting on behalf of the payee;

• received on behalf of, and made available to, the payee.

“Payment Account” means an account held in the name of one or more Users which is used to execute Payment Transactions;

Operating a Crowdfunding Platform

Crowdfunding Business sector within the DIFC is classified into 3 different sub-sectors as follows:

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A loan crowdfunding platform;

• A company operates a Loan Crowdfunding Platform if it does both of the following:

  • operates an electronic platform that facilitates the bringing together of potential lenders and borrowers who wish to obtain funding for a business or project; and

  • administers a loan agreement that results from operating the electronic platform.

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An Investment Crowdfunding Platform; and

• A company operates an Investment Crowdfunding if it does both of the following:

  • operates an electronic platform that facilitates the bringing together of potential investors and Persons who wish to obtain funding for a business or project (other than the sale of a property), resulting in an investor making an Investment with the Person seeking funding; and

  • administers an Investment that results from operating the electronic platform

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A Property Investment Crowdfunding Platform.

• A company operates a Property Investment Crowdfunding Platform if it does both of the following:

  • operates an electronic platform that facilitates the bringing together of potential investors and Persons who wish to sell a property, resulting in an investor making an investment in an individual property; and

  • administers an Investment or a beneficial interest in a trust that results from operating the electronic platform.

Arranging or Advising on Money Services

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Arranging or Advising on Money Services means:

• making arrangements for another Person to receive Money Services;

• giving advice to another Person on the merits of using a particular Money Services Provider

• providing an Account Information Service; or

• providing a Payment Initiation Service

Capital requirement

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The capital requirement for a Category 4 licence is as follows:

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• If the company is authorised to Operate a Crowdfunding Platform, Provide Money Transmission its Base Capital Requirement is $140,000.

• In any other case, the Base Capital Requirement is $30,000.

Expenditure Based Capital Minimum

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• A Category 4 Licence Operating a Crowdfunding Platform and holding client’s money is 13/52

• A Category 4 Licence Providing Money Services (where it only provides Money Transmission) and it holds client’s money is 18/52

• A Category 4 Licence Providing Money Services (where it only provides Money Transmission) and it does not hold client’s money is 6/52

• A Category 4 Licence Providing Insurance Intermediation or Insurance Management and it holds Insurance Monies, 9/52

​Office

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The company must have its Head Office and Registered Office in the DIFC. Head office means the place where the day-to-day management and control of the business and licensed activities are carried out.

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