DIGITAL BANKING Ue Ey iternational Financial CentreADGM - AN AWARD WINNING VO) AU FINANCIAL CENTRE Abu Dhabi Global Market, an International Financial Centre (IFC) in the capital of the United Arab Emirates, fully opened for business on 21st October 2015. A Financial Free Zone, ADGM is an independent civil and commercial law jurisdiction encompassing the entire 114 hectares (1.14 sq km) of Al Maryah Island, with rules and regulations aligned with international best practice. ADGM’s three independent authorities (Registration Authority, Financial Services Regulatory Authority and the ADGM Courts) provide a holistic environment enabling companies to conduct business and operate with confidence.PAVING THE FUTURE Over the past two decades, digital services have revolutionised the world and have had a profound impact on many sectors and industries, including banking and finance. As an innovative and progressive International Financial Centre, ADGM has been playing its part in this major change and responding to regional and international participants seeking ‘a proven and conducive jurisdiction that fosters innovation, opportunity and market development. ADGM's Financial Services Regulatory Authority (FSRA) launched its digital banking framework and began accepting applications from existing banks seeking to establish digital bank branches or subsidiaries, as well as from entities with innovative value propositions. ADGM also accepts applications from partnerships between technology companies and financial institutions that are looking for a digital bank licenceACCELERATE YOUR DIGITAL BANK'S POTENTIAL ADGM offers the ideal and most conducive regulatory and commercial environment to host digital banks and their innovative solutions. Meare accerece cet nt Sra aot a ee Rcuts us IN Riera eae aay business-friendly, responsive commercial Cael sale ADGM's technology first approach, world-class Ene Ree clemacse rosacea and support infrastructure, which is second to fiTol TELM RU Me ere CORTE) and operate a 21st-century digital bank eCPM nC eer cen anecl asec hae al TE gte et atecese CeO Mt Eons ecu Re on naa cnn ae c osu’ CaN Cee ene a ra ae CL RegLab”) wherein FinTech start-ups can test their innovative solutions in a well-controlled Cone In addition, ADGM set up a Digital Sandbox, a RnR mua eae eV mag FinTechs, financial institutions and a financial Reet em esc aA eee encame cau) Corse ae eel en mecrtar aus fcele ater RCT Rogers eR E rome OCE IU Ree RUE PO eee h ac ear enue fear rome ORO e here aed POP aela Mca Sauer ma eee ama ocak ees ee Oe and awarded ‘Best International Financial eae Pea eer ne area] Fy Eee era ea} revolutionising the FinTech and financial een ancl [ue Cea Rea a ee Pe fee ee Re eC RCo AEC Re financial agenda of Abu Dhabi and the United Arab Emirates (UAE). Digital banks can play a PRU acne and medium enterprise (SME) and corporate PO Me eee See cy Aer R cutee om Nac Ronee uN scores eee eA) Ue eee ams Cree kama cay the country’s banking and finan Col RON elu Tt Ma oe and sustainable,BENEFITS OF SETTING UP YOUR DIGITAL BANK IN ADGM Abu Dhabi and ADGM offer a holistically attractive environment and jurisdiction for digital banks choosing to operate and succeed Bere Cartan urery CaS Dn eC Cn Nea) Peete 4 Infrastructure and Accessibility err SC) Cie Bees pan ONE Tee I eeUC RECS Eu Perera |ADGM eves 0% corporate tax and 0% personal income tax, levies no \witnholdng taxes, and has one ofthe widest double taxation treaty networks In the world. ADGM | 8E?S complant and requires real substance for businesses ‘operating In its jursition, Several ofthe countries inthe region have a US dollar peg, reducing currency volatility and faciltang financial planning, |ADGM | the only jurisdiction in MENA to directly apply commen law. ADGM Cours are the wore frst fully data courts, with judges drawn from the most senior of Judlclary of the worl's leading common lav Jurisdctons. ADGM ‘Acbivation Conte offers state ofthe art hearing faites for alternate dispute resolution. ADGM is a member of 105CO, and the Basel Consultative Group of BIS. ADGM foffers an intenationaly recognised regulatory framework and is Basel 3 ‘compliant, ‘Abu Dhabi benefits from world-class infrastructure, In a centrally located te Zzone, and \salobally connected through Etihad ts natonal carer. ADGM has a premium realestate offering with state ofthe at systems and connect ‘Abu Dhabi has the highest sovereign credit rating in the region: + AA (Sable) SSP + 822 (Stable) Moody's ADGM offers aflexble, transparent and investor-ienaly gal framework and ‘an exceptional international business environment. ADGM is digital by default, making Setting up and maintaining you busines fast and efficent. ‘The UAE has a deep financal and legal talent pool Abu Dhabi is a farly-fiencly, attractive expatriate destination. ADGM asssts alls clents with sa processing by proving an online portal to faciltate and streamline talent recruitment. ‘With an estabshed commurity of leading international legal, tax, accounting ‘and consultancy firms, as well as access to local and Intemational banks for Payments needs, ADGM proves @ quay infrastructure of financial and professional services. ADGM also offers a wide range of legal stuctuces and vehicles to faitate your digtal bank's business. 04ALS OPPORTUNITIES IN ADGM COTM ne ee Me cue eg ta Ont Om ec R emt ie TRADE FINANCE c9 Operating a digital trade finance bank from | i Pen Mt eanetcne peek center ac i { Men eentee S en eco | | ary reducing costs and risks in a well-regulated o Cooney i A a SME LENDING i | s Pee eteteal cack crnrl| Cems esteem ee a data management and analytics enable more eee Ru eet cones eM mcote Ey Lac) Perec Re tench payments and treasury services to fl Sure SER Te ac) emer mone tangSETTING UP A DIGITAL BANK IN ADGM ike CER aa ee you should apply for a Category 1 licence (Accepting Deposits). Rae REUSCH Rele cll al ace} CO Seen een asst ene Sere ue Rd uc kkee areca h Rte cen h Me eusiem an ctt applicants will need to articulate their business eS RU A eee eke how they will meet prudential, conduct, AML and governance obligations, and describe their Oreste VEER ERROR TARO ARIE orderly way in the event of failure. All digital banks setting up in ADGM must be physically eee ucuee eats KEY REQUIREMENTS FOR THE CATEGORY 1 LICENCE ARE: Prudential Requirements pine Conduct Requirements Business Plan Governance and People cones stableAPPLICATION PROCESS While adhering to international standards, Re Yen ol ieee cee Merl} market-oriented. The first step in the application ec Seca neuen y Insurance Authorisation team to discuss your ERR eee uenem el) this, and ahead of a formal application, the FSRA Peugeot aan) which it will provide feedback in around two Raa Once you have submitted a complete application Mec IEMRUciace ee aea Rte) application forms and documentation, the FSRA eta eae cee Maral anal ead weeks to review it, carry out due diligence, EI eee naa ae nr maken ee Oe g finally granting a financial services permission. ly Evy Sei) rn Years* Be Pepe Kur ODE II Dennis eeu ee cs ress " eee tal peer) Ce baal ead rarer Ceca) oes Pa EKu ORE en eee eee ei Cy] eee) pepe: een ees In pence oe) Ea ED) eK eatenDIGITAL WALLETS AND MONEY SERVICES LICENCE If you do not need a digital banking licence, KEY REQUIREMENTS but wish to facilitate the transmission of money and e-money, including offering products FOR THE 3C LICENCE ARE: that provide stored value for your clients, ADGM''s category 3C licence (providing money DT aS services) could be the answer. Given the lower eee cee regulatory risk impact, this licence needs rie less capital commitment, and has no specific liquidity requirements, compared to a digital Core ane banking (Category 1) licence. The 3C licence allows an entity to provide Crea money services from ADGM, and including ern payments, exchange and transmission of 3 money, e-money and stored value. The licence is different from a banking licence in that the amounts stored for clients must remain ring-fenced from the entity's own assets, and 5 or strict client money rules apply. However, the . smn provision of credit and maturity transformation are prohibited under this licence. The firm would also need to work with a local bank to gain access to the UAE clearing system. EU La) 08DIGITAL BANKS IN ADGM: SUMMARY OF REQUIREMENTS * Adequate and appropriate resources, including financial, and fitness propriety * Capability of being supervised effectively * Compliance and risk management arrangements Alla Rena * Must be credible and comprehensive + Effectively describes the proposal’s rationale CEC) * Viable and sustainable * Regulated activities to be conducted * Branch or ADGM company — ADGM premises * Parent bank or satisfactory ownership, governance and senlor manageme GY controllers + Natutl persons or enttes holding more than 10% eo * Controlled Functions: a, Licensed Directors ~ the FSRA will take a holistic view of the Board's composition b, Senior Executive Officer ~ must be resident in the UAE + Recognised Functions: nT] a. Compliance Officer (must be UAE resident) b, MLRO (must be UAE resident) . Finance Officer * Senior management positions such as business heads, Chief Risk Officer and Chief Technology Officer should be addressed * Operational structure should apportion significant responsibilities between the board and senior management ca DOE eS ay * Adequate mix of individuals with relevant knowledge, skills, and Controls expertise and capacity * Clearly defined roles 09DIGITAL BANKS IN ADGM: SUMMARY OF REQUIREMENTS ry Coe * Responsibility cannot be outsourced * Clearly defined role allocations += Experience and capacity of the outsourced provider + Evidence awareness of relevant rsks * Controls in place to identify, measure, monitor and manage * Some risks, such as IT and operational, may be enhanced + IRAP * Systems must be robust, and tested prior to launch * Policies and procedures in relation to cyber security + Independent review and testing * Financial crime, AML, CFT and fraud are key risks, requiring comprehensive policies and procedures * No requirements for branches, aside from liquidity * Requirement for ADGM incorporated companies is higher of: ‘+ Base Capital Requirement: USD10 million ‘= Risk-based requirement based on the totality of risks ‘= CET1, 6%; Tier 1, 8% + ICAAP * All conditions to be satisfied prior to launch 10Pee Per LiCiee ‘The FSRA Banking & insurance Authorsation team is available CONTACT US 10 provide more information and assist you in understanding Otte ne OE haa en ers Cee eee ae ee ee Eee ay understand the anpleation process Leer \While the Abu Onabi Global Marke Financial Services Regulatory Authorty (FSRA) makes every effort to ensure the accuracy and completeness of Ca eer eee eee eee eer eee em te Peete eee ee ee ee re eee eer eee ‘and shouldbe readin conjunction with the relevant ADGM and FSRA Regulations and Rules, which may change overtime without note. These materials are not to be deemed, considered or reed upon as financial andor legal advice and should not be treated asa substtute for spect Perera i ma Press ce rc EM ed ers Sea Por)