UAE issues rules on exchange business

To regulate, enhance profession, support its geographical spread and facilitate provision of services in the country

The UAE Central Bank has issued the regulations on licensing and monitoring of exchange businesses. The regulations aim to regulate and enhance the exchange business profession, and facilitating process for offering exchange services throughout the UAE based on solid legal foundations.

The regulations define Exchange Business as businesses dealing in the trading of foreign currencies and travellers cheques, carrying out remittance operations in local and foreign currencies, the payment of wages by linking with “wages protection” ( WPS) operating system, and any other businesses that are licensed by the Central Bank.

Licensing compulsory

The regulations state that licensing is compulsory. No person, whether natural or juridical, can carry out exchange business operations in the UAE unless licensed, in writing, by the Governor of the Central Bank or a person authorised by the Governor to do so.

Any natural or juridical person may submit an application for an exchange business licence to the Central Bank.

The applicant must provide an undertaking which states that, if the application is approved, a bank guarantee must be given to the Central Bank. The bank guarantee must be issued by a UAE licensed bank, and the value must be equal to 100 per cent of the paid up capital.

The applicant must sign an undertaking to comply with the provisions of Federal Law No. 10 of 1980, Regulation No. 24/ 2000 regarding Procedures for Anti- Money Laundering, Combating of Terrorist Financing, and any other resolutions or instructions issued by the Central Bank.

Paid- up capital

A licence shall not be granted unless certain criteria are met. Paid- up capital of the licence applicant should not be less than Dh2 million for carrying out operations pertaining to the purchase, sale and exchange of foreign currencies in the form of bank notes, coins and travellers cheques, and not less than Dh5 million for carrying out remittance business within and outside the UAE in addition to sale and purchase of foreign currencies and travellers cheques.

The applicant’s capital must not be less than Dh10 million if they are applying for wage payment services, remittance business and sale/ purchase of foreign currencies and travellers cheques, and not less than Dh50 million if the applicant is a Limited Liability Company ( LLC),. The paid- up capital must be increased by 10 per cent for each opened branch.