Deutsche Bank To Join Dubai Finance Centre

by Lorys Charalambous, Tax-News.com, Cyprus

09 October 2002

After the Dubai International Financial Centre said two weeks ago that 25 major international financial firms had expressed interest in joining the Centre, it was quickly able to announce that top private Swiss bank Julius Baer was applying for licences to operate from the Centre.

Now Deutsche Bank is announcing that it plans to run global corporate finance, private wealth and asset management operations in the Centre. And, says Imran Markar, senior manager at the DIFC, more than 60 institutions have now shown interest, of which five are in the course of applying for licenses, all from the US and Europe.

The DIFC concept was launched earlier this year by Dubai's crown prince, Sheikh Mohammed Bin Rashid al-Maktoum. Spokesman Geoff Rapp explains that: 'The basic premise is that there is a piece missing in the puzzle. There isn't a financial centre between Frankfurt and Singapore.'

The DIFC will focus on asset management, Islamic finance, re-insurance, back office operations and the establishment of a regional securities exchange; but some Western commentators (competitors?) worry that the secretive and autocratic Dubai regime may not insist on international levels of transparency and regulation.

Says Geoff Rapp: 'We are not about brass plating. We are creating a market. It is not an offshore centre.'

Some concerns are shared locally, however: Sultan al-Suweidi, UAE central bank governor, says: "The DIFC is a Dubai initiative. Its relationship with the central bank remains ambiguous. A quick determination of this issue is in everyone's interest."

Chairman of the DIFC Board, Anis al-Jallaf stresses the legitimacy of the initiative, and the ambitious nature of the project: 'The long term impact will be substantial,' he says, adding that: 'DIFC was not developed for the generation of profit for itself, but to create and facilitate the right environment to attract the top financial institutions of the world to Dubai, the UAE, and the region.'

Dubai has announced that the DIFC will have a separate set of laws called the Commercial Code, comprising a comprehensive set of regulations including company law, legislation on property rights, including laws on security and collateral, title to goods and securities, commercial transactions and contracts, and insolvency.

According to the announcement, DIFC licences will not be subject to the laws of the UAE or Dubai. The Regulatory Authority will be a 'one-stop for everything' regulator: it is intended that financial institutions will be granted an umbrella licence covering all services, but with separate permissions for discrete activities such as wholesale banking, asset management, insurance, re-insurance, securities underwriting, broking, dealing, corporate finance advice, investment advice, derivatives trading, etc.

The Regulatory Authority will issue rules to prevent money laundering, requiring a licensed institution in DIFC to appoint an appropriately qualified money laundering reporting officer. The announcement said the authority will only give licence to branches of institutions with headquarters in member countries of the Financial Action Task Force (FATF) or from a country that is in strict compliance with FATF standards on money laundering.

The Regulatory Authority says it has concluded or is planning to conclude a satisfactory regulator-to-regulator memorandum of understanding or some equivalent arrangement with entities including the UAE Central Bank, and banking, insurance and financial services regulators in the U.S., UK, Canada, Japan, Hong Kong, Singapore, Australia, etc.

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