Most of my latest projects are in the UAE. But here’s the twist – it’s not just about having the holding company or one founder living in Dubai anymore. Companies are going all-in, getting licenses in the UAE, and turning it into their global HQ for all things finance, planning to serve their global customers out of Dubai or Abu Dhabi. It’s like they’re saying, “Move over, world – we’re doing business from the UAE now!“

Because of this constant and growing demand, I actually had to update some of my templates within the Self-Starter package, so that they could fit more easily into the rulebooks and guidelines of VARA, ADGM, and the UAE Central Bank.

How did it happen?

Switzerland has been a neutral stable financial center, hosting investments and perceived as a safe haven for a long time, but it slowly surrendered to international pressures and became more transparent and “cooperating” with foreign governments and law enforcement agencies. 

• In 2009, under international pressure, Switzerland agreed to end the practice of ring-fencing for UBS account holder names and ultimately agreed to implement FATCA requirements. These measures allowed Swiss banks to disclose client names and account details to the United States government as part of a settlement in a tax evasion case. At the time, this step was described as a positive development, helping Switzerland to catch criminals, tax evaders, and money launderers, however, many Swiss banking veterans now privately talk about that moment as “the beginning of an end” in terms of Swiss legislative and jurisdictional independence.
• In 2015, Switzerland updated its banking laws, agreeing to implement CRS and common reporting standards, which was the next significant departure from the country’s traditional banking secrecy practices.
• In 2022, Switzerland joined the US, European Union, and other countries in imposing sanctions on Russia in response to the invasion of Ukraine. This was a significant move, as Switzerland had traditionally maintained a neutral stance in international conflicts. 

Today, the UAE is increasingly being seen as the new Switzerland of the Middle East because it has a long history of neutrality, and it often has played a role as a mediator in regional conflicts. Its economy has a budget surplus and low levels of debt, it has a low crime rate and it is seen as a major investment hub, with foreign direct investment (FDI) inflows exceeding $20 billion in 2022.

During the last years, Dubai and Abu Dhabi introduced a number of licensing regimes (too many and often overlapping, if you ask me, but still reasonably clear) and issued lots of rulebooks, guidelines, and circulars for all key areas of regulatory compliance, such as AML, InfoSec, customer protection, governance, etc.

Many Swiss SROs have relocated their businesses to the UAE during the last year.

The beauty of operating out of the UAE is that (unlike the EU or Switzerland) there is no bias against financial flows with African or Asian countries, and there is no default expectation that everything out of Ghana, Pakistan, or the Philippines must be categorized as a high-risk. Quite the opposite, instead of operating in a red European ocean of oversaturated and over-banked consumers, many UAE-based companies specifically target emerging countries and cross-border businesses.

There are two main operating issues with the UAE that I currently see:

• many banks are still skeptical and reluctant to partner with FinTech and open segregated accounts (same as in Singapore about 3-4 years ago), 
• many opportunistic consultants, introducers, and other intermediaries misrepresent their knowledge and the value of their connections: when a country becomes a financial hub, these financial hubs are seen as places where one can make a lot of money, and opportunistic “facilitators” prey on people’s greed, promising fast licenses, unrealistic returns or “VIP introductions”. I have seen something similar in Switzerland during the 2017 ICO hype. 
• VARA and ADGM are overloaded with hundreds of applications, so the waiting and handling times are extremely long.

Some of the useful strategies I have been able to re-deploy successfully in the UAE are to skip all local intermediaries and establish direct contacts with the regulatory bodies, read the laws, request meetings with the regulators, and ask direct questions. My current observation is that the local regulators are very competent and quite sophisticated, and it’s a good sign.

Are you doing any business in the UAE, and if so – how’s your experience thus far?

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P.S. Did you know that my “FinTech Startup Compliance Pro” Certification program provides you access to over 40+ compliance policies and documentation templates, 15 compliance project management training for all essential compliance projects any FinTech startup may need (including implementation plans for each of them), and 5 dedicated workshops and coaching sessions helping you navigate through the most critical decisions and uncertain times). Check it out! ✨