ADGM is steadily establishing itself as a growing financial center in the MENA region. An ADGM license is offered for businesses and companies operating in the fintech sector. Abu Dhabi has become an ideal platform due to the independence of top-level regulators, a common law system, excellent infrastructure, and tax incentives. This addresses the growing need for financial and business solutions in Abu Dhabi, the Middle East, and North Africa.

In addition, ADGM, which was founded in 2015, has been ranked among the top 25 financial centers in the world, undoubtedly becoming one of the leading onshore centers in the UAE. Among the things that contributed significantly to its achievements are the pioneering special purpose vehicle (SPV) regime, innovations in the fintech sector, and introducing the region’s first regulatory framework for crypto assets.

Benefits of an ADGM License

Advantages of setting up in the Abu Dhabi Global Market (ADGM) include:

  • Legal and Regulatory Framework
  • Supports international business activities.
  • Allows 100% foreign ownership.
  • No limits on hiring international staff.
  • Free capital repatriation.

Tax Incentives

  • No taxes on profits, capital, or assets for 50 years starting from 2004.
  • Employee income is tax-free.
  • Confidence from Counterparts:
  • Independent, well-respected regulator.
  • Separate English-speaking, common law judicial system.
  • Distinct from the UAE’s legal system, offering a risk-based regulatory framework.

Diverse Business Ecosystem

  • Hub for regional and international transactions.
  • Home to global firms, investment funds, banks, and professional services.
  • Emerging as a significant fund domicile in the region.

Strategic Location

  • Proximity to managed assets for holding companies and family offices.
  • At the heart of the MEASA region’s growing economic influence.
  • Central to the increasing South-South trade, especially between Asia and Africa.
  • Ideal for tapping into emerging market opportunities.

Financial Services Regulatory Authority

  1. Ensuring financial entities adhere to ADGM’s regulations, aligned with global standards for transparency and investor protection.
  2. The FSRA engages in public consultations to refine and update rules, demonstrating a transparent and forward-thinking regulatory approach.

Any entity offering financial services within ADGM needs FSRA regulation, including:

  • Banks, brokers, and dealers
  • Asset managers and corporate financiers
  • Wealth managers, insurers, and insurance intermediaries
  • Firms in virtual assets, crowdfunding platforms, and money service businesses

Licensing and Capital Requirements:

The business model dictates the ADGM license type and capital requirements.

FSRA’s Regulatory Contributions

  • Proactively addresses actions threatening ADGM’s integrity.
  • Applies a risk-based regulatory focus.
  • Looks into allegations of regulatory breaches.
  • Sets specific standards for ADGM-incorporated financial services, on top of general obligations.
  • Commits to leading practices in combating financial crime, including AML, counter-terrorist financing, and adherence to international tax reporting standards like FATCA and CRS.

Types of ADGM Licenses

The Financial Services Regulatory Authority (FSRA) oversees the issuance of ADGM licenses, tailoring each license to the specific financial services a company intends to offer within ADGM. The risk level and business model of the applicant determine the necessary license category, with each category requiring a different base capital:

  1. Category 1 (Banks)
  2. Category 2 (Market Makers/Credit Providers)
  3. Category 3A (Brokerage)
  4. Category 3B (Custodian)
  5. Category 3C (Asset/Fund Manager)
  6. Category 4 (Investment/Insurance Advisor)
  7. Category 5 (Islamic Business)

ADGM Digital Banking License Introduction

The Abu Dhabi Global Market (ADGM) has opened the door for applications for its ADGM digital banking license. This license permits the operation of digital banks which:

  • Accept deposits and provide credit.
  • Offer financial services primarily through online and electronic platforms, moving away from traditional, physical customer interactions.
  • Aim to introduce innovative customer and transaction solutions.

The Financial Services Regulatory Authority (FSRA) evaluates these applications, focusing on:

  • Existing banking institutions are looking to expand digitally.
  • Firms offering innovative financial solutions under the ADGM license framework.

Capital Requirements for Category 1 Digital Banking

The ADGM requires different base capital amounts depending on the license category. For a Category 1 ADGM Digital Banking License under ADGM regulations, the specifics are:

  1. Base capital necessity: $10 million.
  2. The Risk-Based Capital Minimum, often exceeding the base requirement, applies based on:
  3. Overall risk exposure in digital banking operations.
  4. Core Tier 1 (CET1) and Tier 1 capital adequacy ratios are mandated at 6% and 8%, respectively.
  5. A Capital Conservation Buffer is set at 2.5%.
  6. A minimum leverage ratio requirement of 3%.

ADGM Digital Banking License Application

To obtain an ADGM Digital Banking license, applicants must undergo a comprehensive authorization process, showcasing:

  • A solid, well-articulated business plan emphasizing sustainability.
  • Strong internal controls and compliance frameworks.

Essential Appointments for Compliance:

  1. Licensed Directors – The FSRA evaluates board makeup.
  2. Senior Executive Officer – Must be based in the UAE.
  3. Compliance Officer – A UAE residency requirement applies.
  4. Money Laundering Reporting Officer – Required to reside in the UAE.
  5. Finance Officer – A key financial role.
  6. Senior Management Positions – Includes roles such as Business Heads, Chief Risk Officer, and Chief
  7. Technology Officer, ensuring comprehensive oversight and management.

ADGM Digital Banking License Costs

Obtaining an ADGM Digital Banking License entails costs associated with:

FSRA Interactions

  1. Application Fee: Starting at US$ 30,000.
  2. Annual Fee: Beginning at US$ 30,000.

Registration Authority (RA) Setup

  1. Name Reservation: US$ 200.
  2. Incorporation of a Private Company: US$ 1,500.
  3. Commercial License Fee: US$ 4,000 (annual).
  4. Business Activity Fees: US$ 9,000 (annual).

Data Protection Costs

  1. Initial Registration: US$ 300.
  2. Annual Renewal: US$ 100.

Office Space Requirements

  1. Business Center Options: Starting at US$ 19,000 for a one-desk office.
  2. Fitted Office Spaces: From US$ 55 per square foot.

Visa-Related Expenses

  1. Establishment Card: US$ 273.
  2. E-Channel Registration: US$ 1,100 (one-time) plus a deposit of US$ 1,360.
  3. Visa Costs per Individual: Starting from US$ 1,500.

ADGM Category 3C Asset Manager License

Entities interested in ‘Asset Management’ can seek an ADGM category 3c license, enabling them to manage client portfolios on a discretionary basis, per client agreements. This license also permits:

  • Non-discretionary investment advisory.
  • Arrangement services upon application.

Increasingly, investment bankers and financial advisors from large asset management firms are establishing independent practices as External Asset Managers using the ADGM Category 3C License, which is perfect for targeting the Abu Dhabi market.

Application Process

Applications are processed by the Financial Services Regulatory Authority (FSRA).

Fast-Track for Fund Managers

Category 3C includes a streamlined approval for Fund Managers to oversee domestic professional and foreign funds. Discretionary portfolio management requires a comprehensive licensing procedure.

Capital Requirements

Base capital: $250,000, with actual requirements varying based on business scope and financial projections.


Why choose ADGM for financial services?

ADGM is favored for its independent regulatory oversight, modern legal framework, superior infrastructure, and significant tax advantages. It is a prime location for fintech and business services, highlighted by its tax-free benefits on profits and employee income for 50 years from 2004.

Who is eligible for an ADGM Digital Banking License?

Eligibility extends to existing banks and innovative financial firms aiming to offer digital banking services. Applicants must showcase their capability to provide digital financial services, emphasizing innovative solutions for customers and transactions.

What is the base capital requirement for a Category 1 Digital Banking License at ADGM?

A minimum of $10 million in base capital is required for this license, with potential increases based on a risk assessment that considers various financial ratios and a Capital Conservation Buffer.

What are the setup costs for a digital bank in ADGM?

Setup involves an application fee and annual fee, both starting from US$ 30,000. Other costs include RA legal structure setup fees, name reservation, incorporation, commercial licensing, and business activity fees, alongside data protection registration, office space leasing, and visa processing fees.

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