The scope of Exchange Business is defined in the “Regulations regarding Licensing and Monitoring of Exchange Business issued in January 2014” (the Regulations) and all Licensed Persons are expected to operate within the scope of their license. Exceeding the scope of their license, by carrying out any activity other than those permitted by the Regulations, will be taken seriously by the Central Bank of the UAE (“the Central Bank”). This chapter provides the details of requirements related to the scope of Exchange Business and permitted activities that every Licensed Person must comply with at all times.

1. 1.1.1Exchange Business can be carried out by a person, whether natural or juridical, only if such person is licensed in writing by the Governor of the Central Bank or by a person authorized by the Governor to do so in accordance with the Regulations and its subsequent amendments;
2. 1.1.2The Licensed Person must carry out its activities in an utmost professional manner and in full compliance with all applicable Laws, Rules, Regulations, Notices and the Standards; and
3. 1.1.3The Central Bank shall treat instances of non-compliance seriously and reserves the right to impose appropriate non-compliance charges in accordance with Appendix 4 of the Standards.

The scope of Exchange Business is defined under Article 1.1(c) of the Regulations, which is explained in Paragraphs 1.2.1 to 1.2.4 of this Chapter.

1.2.1Foreign Currency Exchange (Article 1.1.(c).1 of the Regulations)

1. a)The Licensed Person is permitted to buy and sell foreign currencies and traveller’s cheques from/to customers, whether natural persons or juridical persons, who are physically present in the UAE;
2. b)The Licensed Person is not permitted to import or export foreign currencies from/to foreign entities without obtaining a Letter of No Objection from the Banking Supervision Department. Please refer to Paragraph 4.17 of Chapter 4 for further information; and
3. c)The Licensed Person may open Hedge accounts with a well regulated financial institution, whether inside or outside the UAE, for hedging its foreign exchange positions as part of mitigating the risk of exchange rate fluctuations subject to the following conditions:
   • •A Letter of No Objection from the Banking Supervision Department must be obtained prior to opening Hedge accounts;
   • •The Licensed Person must submit a duly completed “Foreign Account Application (FAA) Form” (Refer to Appendix 5 for FAA Form) along with the required supporting documents to the Banking Supervision Department in order to obtain a Letter of No Objection to open a Hedge account with a foreign financial institution. The Licensed Person must use the same FAA Form to apply for the Letter of No Objection to open a Hedge account with a financial institution located within the UAE;
   • •The Hedge account must be used strictly for mitigating the foreign exchange risk and not for any type of activities that may result in speculation; and
   • •The accounting for hedge transactions must be in accordance with the requirements of applicable International Financial Reporting Standards and must be fully automated.

1.2.2Remittance Operations (Article 1.1.(c).2 of the Regulations)

1. a)The Licensed Person is permitted to execute remittance transactions in local or foreign currencies on behalf of its customers, whether natural persons or juridical persons, who are physically present in the UAE provided that the Licensed Person is in possession of either a Category B or Category C license (Refer to Paragraph 2.2 of Chapter 2 for various license categories);
2. b)The Licensed Person may enter into necessary arrangements with banks, licensed/regulated financial institutions (local or foreign) or instant money transfer service providers to execute remittances subject to the conditions of Paragraphs 1.2.2 (c) to (f) below;
3. c)A Letter of No Objection from the Banking Supervision Department must be obtained to open accounts with foreign banks or foreign financial institutions (including establishing remittance relationships with exchange houses operating outside the UAE) for executing remittances. The Licensed Person must apply for the Letter of No Objection by submitting a duly completed FAA Form (Refer to Appendix 5 for this Form) along with the required supporting documents to the Banking Supervision Department;
4. d)A Letter of No Objection from the Banking Supervision Department must be obtained, by submitting a duly completed FAA Form (Refer to Appendix 5 for this Form), to open accounts with financial institutions operating in the Financial Free Zones of the UAE (e.g.: DIFC, ADGM);
5. e)A Letter of No Objection from the Banking Supervision Department must be obtained, by submitting a duly completed FAA Form (Refer to Appendix 5 for this Form), to enter into a remittance arrangement with any instant money transfer service provider;
6. f)The Licensed Person, who is a Master Agent (i.e. Main or Principle Agent) of an instant money transfer service provider, must obtain a Letter of No Objection from the Banking Supervision Department in order to appoint another Licensed Person to act as its Sub-Agent to offer the products or services of such instant money transfer service provider;
7. g)The remittance transactions executed by the Licensed Person on behalf of entities operating in the Financial Free Zones of the UAE must be in accordance with relevant laws related to such Free Zones;
8. h)A Licensed Person is not permitted to execute remittance instructions received from other Licensed Persons without obtaining a Letter of No Objection from the Banking Supervision Department when the remittance instructions are made on behalf of such other Licensed Persons’ customers; and
9. i)The Licensed Person is not permitted to act as a routing agent between its foreign correspondents without obtaining a Letter of No Objection from the Banking Supervision Department.

1.2.3Payment of Wages using WPS (Article 1.1.(c).3 of the Regulations)

1. a)The Licensed Person is permitted to execute wage payments through the Wages Protection System (i.e. WPS) on behalf of legal entities operating in the UAE provided that the Licensed Person is in possession of a Category C license. Please refer to Paragraph 2.2 of Chapter 2 for various license categories;
2. b)The monthly turnover of wages paid using WPS by the Licensed Person shall be restricted against the value of its bank guarantee favouring the Central Bank and its risk grading awarded by the Central Bank. Please refer to Paragraph 2.4.5 of Chapter 2 for further information;
3. c)The monthly turnover of wages, in the context of Paragraph 1.2.3 (b) of this Chapter, means the total value of the Salary Information File (SIF) uploaded to and accepted by the System of Wages Protection during a month;
4. d)The Licensed Person must provide WPS services only to clients who are located within the same Emirate where the Licensed Person has branches. In this context, a client with multiple branches spread across different Emirates of the UAE may also utilise the WPS service offered by a Licensed Person who has branches in the same Emirate where the Main Office or Head office of such client is located;
5. e)The Licensed Person must cease the disbursement of wages in cash through WPS on or before 30^th September 2018. The disbursement of wages, thereafter (i.e., with effect from 1^st October 2018), must be executed only via payroll cards or through a bank account of the individual receiving the wages or salaries;
6. f)The Licensed Person may enter into arrangements with banks or other appropriate service providers in order to distribute payroll cards after obtaining a Letter of No Objection from the Banking Supervision Department;
7. g)The Licensed Person must arrange to deliver Payroll cards directly to each employee of its clients and obtain acknowledgements thereof at all times;
8. h)Payroll cards must not be reloaded with any value or money other than the salary/wages of the employee as per the Salary Information File (SIF) uploaded to and accepted by the System of Wages Protection;
9. i)The Licensed Person must comply with the Central Bank Rules in relation to the WPS (i.e. Rules of the UAE Wage Protection System issued by the Central Bank) at all times; and
10. j)The Licensed Person must carry out Enhanced Due Diligence, in accordance with Paragraph 16.11.2 of Chapter 16, for each legal entity before entering into any WPS arrangement.

1.2.4Special Products or Services (Article 1.1.(c).4 of the Regulations)

1. a)The Licensed Person must obtain a Letter of No Objection from the Banking Supervision Department if it intends to sell/offer any product or service which does not fall under various activities mentioned under Paragraphs 1.2.1 to 1.2.3 of this Chapter;
2. b)The Banking Supervision Department shall periodically issue the list of such products or services (called “the Special Product Matrix”) to all Licensed Persons;
3. c)The Licensed Person may choose any product or service from the Special Product Matrix and then request for the Letter of No Objection from the Banking Supervision Department prior to selling/offering such product or service;
4. d)The Licensed Person must seek the Letter of No Objection from the Banking Supervision Department for all its existing special products or services provided that they appear in the Special Product Matrix. The Licensed Person is not required to seek Letters of No Objection for those products or services in the Special Product Matrix on a condition that such products or services were approved by the Central Bank previously;
5. e)The Licensed Person must request a Letter of No Objection from the Central Bank in order to offer any new product or service that is not listed in the Special Product Matrix. The Licensed Person must submit below information/documents to the Central Bank in such cases:
   • •A request for the Letter of No Objection; and
   • •Description of the product or service, profile of the partner, a confirmation that the Enhanced Due Diligence has been carried out on the partner, detailed process flow, settlement process, targeted customers and a risk assessment report.
6. f)The Banking Supervision Department shall issue the Letter of No Objection for a special product or service, based on the merit of each application, subject to the following conditions:
   • •The Licensed Person must be in possession of either a Category B or Category C license. Please refer to Paragraph 2.2 of Chapter 2 for various license categories;
   • •The Licensed Person must fulfil the paid-up capital and bank guarantee requirements in accordance with the conditions contained in the Special Product Matrix; and
   • •The risk grading of the Licensed Person must be acceptable to the Central Bank. Please refer to Paragraph 5.3.5 of Chapter 5 for further details on risk grading.
7. g)The Licensed Person must not solicit its customers or any other party for selling loan products of local or foreign banks; and
8. h)The Licensed Person must not be involved in or assist its customers or any other party for opening bank accounts with local or foreign banks.

The paid-capital of a Licensed Person and its bank guarantee favouring the Central Bank are calculated based on the category of its license, its legal form and the value of remittances. This chapter provides information about the minimum amount of paid-up capital to be maintained by a Licensed Person and the method of calculating its minimum bank guarantee to be provided in favour of the Central Bank.

1. 2.1.1Applicant applying for a new license for Exchange Business must specifically mention the details of the legal form of the proposed entity in the application for new license. Please refer to Paragraphs 3.1.8 (b) and (c) of Chapter 3 for further information.

1. 2.2.1There are three categories of license based on the scope of Exchange Business that the Licensed Person is permitted to carry out in accordance with Paragraph 1.2 of Chapter 1:
   1. a)Category A License:

      The Licensed Person, in possession of a ‘Category A’ license, is permitted to carry out only foreign currency exchange business in accordance with Paragraph 1.2.1 of Chapter 1;

   2. b)Category B License:

      The Licensed Person, in possession of a ‘Category B’ license, is permitted to carry out the following two activities only:

      • •Foreign currency exchange (Refer to Paragraph 1.2.1 of Chapter 1); and
      • •Remittance operations (Refer to Paragraph 1.2.2 of Chapter 1).
   3. c)Category C License:

      The Licensed Person, in possession of a ‘Category C’ License, is permitted to carry out the following three activities:

      • •Foreign currency exchange (Refer to Paragraph 1.2.1 of Chapter 1);
      • •Remittance operations (Refer to Paragraph 1.2.2 of Chapter 1); and
      • •Payment of Wages using WPS (Refer to Paragraph 1.2.3 of Chapter 1).
2. 2.2.2The Licensed Person, in possession of either a “Category B” or “Category C” license, may choose to sell/offer special products or services in accordance with Paragraph 1.2.4 of Chapter 1.

1. 2.3.1Category A License

   The Licensed Person’s minimum paid-up capital must be AED 2 million. In case the legal form is a Limited Liability Company, the minimum paid-up capital must be AED 50 million.

2. 2.3.2Category B License

   The Licensed Person’s minimum paid-up capital must be AED 5 million. In case the legal form is a Limited Liability Company, the minimum paid-up capital must be AED 50 million.

3. 2.3.3Category C License

   The Licensed Person’s minimum paid-up capital must be AED 10 million. In case the legal form is a Limited Liability Company, the minimum paid-up capital must be AED 50 million.

1. 2.4.1The Licensed Person must provide a bank guarantee favouring the Central Bank from a bank licensed in the UAE, provided that the value of the bank guarantee at any point in time shall not be less than the higher of the following:
   1. a)100% of the minimum paid-up capital for each category of license as detailed under Paragraph 2.3 of this Chapter; or
   2. b)5% of the monthly remittance average value of the previous financial year, with a maximum of AED 75 million (Seventy Five Million UAE Dirhams).
2. 2.4.2The Licensed Person must submit a Certificate of Remittance Value, issued by the External Auditor, to the Supervision & Examination Division of the Banking Supervision Department within two (2) months from the end of every financial year. This certificate must be submitted on the “Certificate of Remittance Value (CRV) Form” provided by the Central Bank (Refer to Appendix 5 for CRV Form);
3. 2.4.3The Licensed Person must increase the value of bank guarantee favouring the Central Bank as required under Paragraph 2.4.1 (b) of this Chapter upon receiving a letter from the Central Bank demanding an additional bank guarantee. The additional bank guarantee must be submitted to the Central Bank prior to the deadline stipulated in the letter;
4. 2.4.4The bank guarantee favouring the Central Bank must be in the prescribed format provided by the Licensing Division. All original bank guarantees must be delivered directly to ‘the Licensing Division, Banking Supervision Department, Central Bank of the UAE, Abu Dhabi’;
5. 2.4.5The monthly turnover of wages to be paid using WPS is restricted, as below, based on the value of the bank guarantee and the risk grading of the Licensed Person awarded by the Central Bank (Please refer to Paragraph 1.2.3 (b) of Chapter 1 for further information):
    

   a) Low risk	-	Thirty (30) times the value of the bank guarantee
   b) Medium risk	-	Twenty (20) times the value of the bank guarantee
   c) High risk	-	Ten (10) times the value of the bank guarantee
   d) Very High Risk	-	Not permitted to carry out payment of wages using WPS
   e) Unacceptable Risk	-	Not permitted to carry out payment of wages using WPS

6. 2.4.6The Central Bank reserves the right to determine the risk grading of the Licensed Person based on predefined parameters and findings contained in the Transmittal Letter issued after every examination. The decision of the Central Bank in this regard shall be final; and
7. 2.4.7The risk grading awarded to the Licensed Person and the details of predefined parameters, on which the risk grading is based, will be highlighted in the Transmittal Letter issued by the Central Bank after the examination (Refer to Paragraph 5.3 of Chapter 5).

1. 2.5.1The ownership in a Licensed Person by the UAE National(s) who is a/are natural person(s), directly or indirectly via a company, must be not less than 60% at any point in time.

1. 2.6.1An existing Licensed Person, who currently does not comply with the minimum paid-up capital and bank guarantee requirements as per Paragraphs 2.3 and 2.4.1 of this Chapter, must:
   1. a)increase its paid-up capital and bank guarantee to comply with the requirements of Paragraphs 2.3 and 2.4.1 of this Chapter on or before 29^th September 2019 in three (3) equal annual instalments subject to the conditions under Paragraphs 2.6.1 (c) and 2.6.2 of this Chapter;
   2. b)provide its action plan along with a letter of undertaking to the Central Bank within fourteen (14) calendar days from the date of issuance of the Standards confirming their binding commitment to comply with the requirements of Paragraph 2.6.1 (a) of this Chapter; and
   3. c)comply with the following deadlines in phased manner for increasing the paid-up capital and bank guarantee as required under Paragraph 2.6.1 (a) of this Chapter:
      • •1^st instalment of the increase (i.e. 33.33% of the amount to be increased) must be made on or before 29^th September 2017;
      • •2^nd instalment of the increase (i.e. 33.33% of the amount to be increased) must be made on or before 29^th September 2018; and
      • •3^rd instalment of the increase (balance of the amount to be increased) to be in full compliance must be made on or before 29^th September 2019.
2. 2.6.2If 5% of the monthly remittance average value based on the actual values during the financial year 2016 exceeds the value of its existing bank guarantee favouring the Central Bank, the Licensed Person must immediately comply with Paragraph 2.4.1 (b) of this Chapter regardless of the grace period granted and timelines set under Paragraphs 2.6.1 (a) and (c) of this Chapter. The Central Bank will advise the Licensed Person about the additional bank guarantee in writing. The additional bank guarantee must be submitted to the Central Bank in accordance with Paragraph 2.4.4 of this Chapter prior to the deadline stipulated in the correspondence from the Central Bank;
3. 2.6.3If the Licensed Person fails to or is unable to provide the additional bank guarantee in accordance with Paragraph 2.6.2 of this Chapter, the Licensed Person must limit its monthly remittance average value to twenty (20) times the value of its existing bank guarantee favouring the Central Bank;
4. 2.6.4Existing Licensed Persons who are not willing to increase the minimum paid-up capital and bank guarantee to comply with the requirements of Paragraph 2.6.1 of this Chapter must contact the Licensing Division of the Banking Supervision Department to confirm their license status within thirty (30) calendar days from the date of issuance of the Standards. The Central Bank reserves the right to direct such Licensed Persons to:
   1. a)seek the Central Bank’s approval to downgrade its Exchange Business license to a category where the minimum paid-up capital and bank guarantee requirements are lower; and/or
   2. b)seek the Central Bank’s approval to change the legal form where the minimum paid-up capital and bank guarantee requirements are lower; or
   3. c)surrender its Exchange Business license to the Central Bank.
5. 2.6.5In case the current paid-up capital or/and the value of existing bank guarantee is/are higher than the value required under Paragraphs 2.3 and 2.4.1 of this Chapter, the Licensed Person must obtain a Letter of No Objection from the Central Bank in order to reduce the respective value to the required minimum level;
6. 2.6.6Regardless of the grace period granted and timelines set under Paragraphs 2.6.1 (a) and (c) of this Chapter, the Licensed Person must comply with Paragraphs 4.1, 4.18 and 4.19 of Chapter 4 at all times; and
7. 2.6.7The Central Bank reserves the right to revoke the license to conduct Exchange Business in case the Licensed Person fails and/or shows inability to comply with Paragraphs 2.6.1 to 2.6.4 of this Chapter.

1. 2.7.1A Licensed Person, who is in compliance with the minimum paid-up capital and bank guarantee requirements as per Paragraphs 2.3 and 2.4.1 of this Chapter, is not required to further increase its paid-up capital or bank guarantee for obtaining the Central Bank approval to open additional branches;
2. 2.7.2The Central Bank reserves the right to instruct Licensed Persons, who do not comply with the minimum paid-up capital and bank guarantee requirements as per Paragraphs 2.3 and 2.4.1 of this Chapter, to increase their paid-up capital and bank guarantee prior to obtaining the Central Bank approval to open additional branches regardless of the deadlines set under Paragraph 2.6.1(c) of this Chapter;
3. 2.7.3In all cases, the Licensed Person must comply with Paragraphs 4.1, 4.18 and 4.19 of Chapter 4 at all times; and
4. 2.7.4The Central Bank approval to open additional branches shall be issued subject to its prevailing licensing policy and the risk grading awarded to the Licensed Person after the Central Bank Examination.

Exchange Business can be carried out by a person, whether natural or juridical, only if such person is licensed by the Central Bank in accordance with the Regulations and its subsequent amendments. This chapter provides information related to the process for obtaining an Exchange Business license from the Central Bank.

1. 3.1.1Any person, natural or juridical, may submit a new application to the Central Bank for any category of license mentioned under Paragraph 2.2 of Chapter 2 using “Licensed Person’s Application (LPA) Form” (Refer to Appendix 5 for LPA Form) and with necessary supporting documents;
2. 3.1.2All documents provided to the Central Bank as part of the application for a license must be in Arabic or English;
3. 3.1.3Documents in languages other than Arabic or English must be accompanied by Arabic or English legal translations;
4. 3.1.4All figures in the financial statements, business plans or other projected reports must be expressed either in AED or in US Dollars;
5. 3.1.5The applicant is permitted to appoint a duly authorised representative, such as a law firm or a professional consultancy firm, to prepare and submit the license application on behalf of the applicant. In such cases, the applicant continues to retain the full responsibility for the accuracy and completeness of information/documents provided and is required to certify the application form accordingly;
6. 3.1.6The Central Bank may liaise directly with the applicant or the applicant’s duly appointed representative when processing the application for seeking any clarification or information;
7. 3.1.7Applicants may contact the Licensing Division of the Banking Supervision Department for a pre-application meeting to discuss their business plans, application process and requirements;
8. 3.1.8The following forms and documents must be submitted to the Central Bank for obtaining a license:
   1. a)Formal application letter signed by the applicant(s) which must specifically state the category of the license for which they are applying (refer Paragraph 2.2 of Chapter 2 for various license categories);
   2. b)Duly completed LPA Form (Refer to Appendix 5 for this Form);
   3. c)Comprehensive business plan which must consist of the following information regarding the proposed entity:
      • •Name of the proposed entity;
      • •Legal form of the proposed entity;
      • •Initial amount of paid-up capital that will be injected into the business. Please refer to Paragraph 2.3 of Chapter 2 for the minimum requirements of paid-up capital;
      • •Name(s) of the Owner/Partners/Shareholders and the ownership structure;
      • •Justification and reasons for applying to obtain a license to conduct Exchange Business and the value it will add to the financial industry;
      • •Proposed number of branches and their locations that are planned to be opened during the first three (3) years;
      • •Projected financial statements (Balance Sheet, P&L and cash flow statements) for the first three (3) years with assumptions;
      • •Applicant's business strategy, business model, primary corridors if planning for remittance activity, description of proposed products/services and other marketing plans;
      • •An assessment report on the potential risks that may be faced by the proposed entity and suggested measures to mitigate such risks; and
      • •Emiratization plans in line with the Central Bank’s requirements.
   4. d)In case the proposed Shareholder(s) is/are a juridical person(s), a Board resolution from such juridical person(s), confirming the decision to become shareholder in the proposed entity;
   5. e)In case the proposed Shareholder is a juridical person, the certificate of incorporation issued by the competent authority in its country of incorporation, commercial license/registration or any other similar official document;
   6. f)In case the proposed shareholder(s) is/are part of a Group of Companies/Businesses, copies of the audited financial statements of that Group, for the immediately preceding three (3) years;
   7. g)A letter of undertaking from the Owner/ all Partners/ all Shareholders of the proposed entity to comply, in case the application is approved, with the paid-up capital and bank guarantee requirements stated under Paragraphs 2.3 and 2.4 of Chapter 2;
   8. h)Letter of undertaking as per Article 3 (d) of the Regulations;
   9. i)A Draft version of Memorandum and Articles of Association of the proposed entity;
   10. j)Duly completed “Authorised Person’s Appointment (APA) Form” (Refer to Appendix 5 for APA Form) for the Manager in Charge (detailed CV must be included with a brief description);
   11. k)List of proposed members of the Board (i.e. Directors on the Board) if it is applicable (detailed CV must be included with a brief description for each Board member);
   12. l)Paid-up capital certificate of deposit from a bank licensed in the UAE;
   13. m)Copy of the required initial approvals from the Department of Economic Development; and
   14. n)A copy of the tenancy agreement and the address of premises to carry out the business of the proposed entity.
9. 3.1.9The applicant must submit documents as per Paragraphs 3.1.8 (a) to (h) of this Chapter to initiate the application process;
10. 3.1.10The Central Bank, upon review of all documents as per Paragraphs 3.1.8 (a) to (h) of this Chapter, will notify the applicant if the initial approval has been granted or its application has been rejected by the Board of the Central Bank;
11. 3.1.11The applicant is required to submit documents under Paragraphs 3.1.8 (i) to (n) of this Chapter only after receiving the initial approval of the Central Bank;
12. 3.1.12The proposed Manager in Charge will be called in for an interview by a special committee of the Central Bank as part of a fit and proper test. The Central Bank reserves the right to issue or decline the approval for the appointment of the proposed Manager in Charge;
13. 3.1.13The Central Bank, upon review of all documents as per Paragraphs 3.1.8 (i) to (n) of this Chapter and the Bank Guarantee as per Paragraph 2.4 of Chapter 2, will notify the applicant in writing if the license to carry out the business has been granted or not;
14. 3.1.14After obtaining the license to carry out Exchange Business from the Central Bank, the Licensed Person must submit the following to the Banking Supervision Department before commencing the business:
    1. a)A copy of the notarized Memorandum and Articles of Association;
    2. b)Auditors certification that paid-up capital has been injected into the business;
    3. c)Undertaking letter from the Owner/Shareholders/Partners whereby the Licensed Person agrees to comply with paid-up capital ratio and liquidity requirements as per Paragraphs 4.1, 4.18 and 4.19 of Chapter 4;
    4. d)Duly completed APA Form (Refer to Appendix 5 for this Form) and an approval request for the appointment of the Compliance Officer and Alternate Compliance Officer. Please refer to Paragraphs 16.4.9 and 16.5.2 of Chapter 16 for further details;
    5. e)Contact details (such as mobile number, phone number, fax number and email) of the main/head office, Manager in Charge and Compliance Department or Officer;
    6. f)Application for a Letter of No Objection to appoint External Auditors as per Paragraph 7.3.2 (b) of Chapter 7;
    7. g)Business Continuity Plans;
    8. h)Copy of the insurance policy;
    9. i)Description of the IT systems, detailed back up and disaster recovery plans;
    10. j)Application for connectivity to the Central Bank reporting systems; and
    11. k)Any other information as may be specified by the Central Bank.
15. 3.1.15The Licensed Person must submit documents under Paragraphs 3.1.14 (a) to (b) of this Chapter to the Licensing Division and the remaining documents to the Supervision & Examination Division of the Banking Supervision Department; and
16. 3.1.16The Licensed Person must inform the Supervision & Examination Division and the FID (i.e. the Financial Intelligence Department which was formerly known as the AMLSCU) at least ten (10) days in advance about the date of commencement of its business.

1. 3.2.1The Central Bank reserves the right, within sixty (60) days of receiving a license application, to:
   1. a)require the applicant to provide additional documents/information that the Central Bank deems necessary to evaluate the application; or
   2. b)reject incomplete applications.
2. 3.2.2The applicant may withdraw its application at any time during the process by notifying the Central Bank in writing;
3. 3.2.3After the review of a license application, the Central Bank may advise the applicant in writing whether:
   1. a)the license has been granted unconditionally; or
   2. b)the license has been granted subject to conditions; or
   3. c)the application has been rejected.
4. 3.2.4The Central Bank will notify the applicant of the outcome of the license application within a period not exceeding twenty (20) working days from date of issuing such decision by the Board of Directors of the Central Bank. Such notice shall include the following:
   1. a)content of the decision;
   2. b)reasons for the decision, if any; and
   3. c)requirement of additional documents or information, if any.
5. 3.2.5A license certificate is issued to the applicant once the Central Bank decides to grant the license stating the effective start date of the license. The name of the Licensed Person is then added into the “Central Bank Register of Exchange Houses”; and
6. 3.2.6The Licensed Person must obtain prior approval of the Central Bank if it intends to add any permitted activity or to discontinue the current permitted activities (Refer to Paragraph 1.2 of Chapter 1 for the list of permitted activities) by submitting an application at least sixty (60) days before the date of such change.

1. 3.3.1The Board of Directors of the Central Bank reserves the right, at any point in time, to reject an application for new license or an application from an existing Licensed Person to change the category of license considering the interest of the public or if the applicant/Licensed Person fails/refuses to fulfill the licensing conditions and requirements as set out in Paragraph 3.1 of this chapter;
2. 3.3.2The Board of Directors of the Central Bank reserves the right, before issuing the rejection decision, to request the applicant to fulfill the licensing requirements and conditions within a specified period of time; and
3. 3.3.3The applicant shall be notified in writing of the Board’s decision on its application, whether approved or rejected, within a period not exceeding twenty (20) working days from date of issuance of the Board of Director’s decision. Such notice shall include the following:
   1. a)Content of the decision; and
   2. b)Reasons for rejection if any.

1. 3.4.1The license shall be valid for a fixed period of time from its date of issue and renewed thereafter upon an application from the Licensed Person (Refer to Paragraph 4.14 of Chapter 4).

1. 3.5.1The Licensed Person must maintain adequate levels of financial resources in accordance with Paragraphs 2.3 of Chapter 2 and 4.1, 4.18 and 4.19 of Chapter 4 at all times;
2. 3.5.2The Licensed Person must maintain resources, systems and controls that are, in the opinion of the Central Bank, adequate for the scale and complexity of its activities and mitigating risks of financial crime;
3. 3.5.3The Licensed Person must appoint External Auditors, subject to obtaining a Letter of No Objection from the Central Bank in accordance with Paragraph 7.3.2 of Chapter 7;
4. 3.5.4The Licensed Person’s books of accounts and other records must be available within the UAE at all times and for examination by the Central Bank or persons appointed by the Central Bank;
5. 3.5.5The Licensed Person must comply with the minimum record-keeping requirements covered under Paragraph 16.24 of Chapter 16;
6. 3.5.6The Licensed Person must act in an open and cooperative manner with the Central Bank at all times;
7. 3.5.7The Licensed Person must comply with the regulatory reporting requirements covered in Appendix 3 of the Standards;
8. 3.5.8The Licensed Person must comply with any other specific requirements or restrictions imposed by the Central Bank on the scope of its license; and
9. 3.5.9When granting a license, the Central Bank specifies the regulated services that the Licensed Person is permitted to offer. The Licensed Person must operate within the scope of its license at all times. The Central Bank reserves the right to vary existing requirements or impose additional restrictions or requirements, to address specific risks associated with the business of a Licensed Person.

1. 3.6.1The Board of Directors of the Central Bank reserves the right to suspend or revoke a license issued to a Licensed Person by issuing a written notice in the following cases:
   1. a)If the Licensed Person ceased to comply with or has breached one or more of the conditions or restrictions imposed on its license;
   2. b)If the Licensed Person has breached applicable Laws, Rules, Regulations, the Standards or any Notice issued by the Central Bank;
   3. c)If the Licensed Person has failed to take any measures or procedures determined or prescribed by the Central Bank;
   4. d)If the Licensed Person did not commence its Exchange Business within six (6) months from the issue date of license;
   5. e)If the business or operations were ceased for a consecutive period exceeding three (3) months;
   6. f)If the Central Bank considers, at its own discretion, that the full or partial withdrawal, revocation or suspension of the license, was necessary for achieving its objectives and in discharging its functions;
   7. g)If the Licensed Person has submitted an application for full or partial withdrawal, cancelation or suspension of the license;
   8. h)If the Licensed Person’s liquidity or solvency is at risk or the Licensed Person becomes bankrupt;
   9. i)If the paid-up capital of the Licensed Person falls below the minimum amount required in accordance with the Regulations/the Standards issued by the Central Bank;
   10. j)If the Licensed Person has merged with another Licensed Person or institution without obtaining a Letter of No Objection from the Central Bank; and
   11. k)If the Licensed Person’s officers, employees or representatives refused to cooperate with Central Bank officers, Representatives, Examiners or abstained from providing unhindered access to information, statements, documents or records.
2. 3.6.2The Central Bank shall notify the Licensed Person, with reasons in writing, about its decision to withdraw, cancel, suspend or revoke the license within a period of not exceeding twenty (20) working days from date of issuance of the Board of Director’s decision. The notice shall include the following at a minimum:
   1. a)Content of the decision;
   2. b)Reasons for the decision, if any; and
   3. c)Effective date of the decision.

1. 3.7.1The Licensed Person is not permitted to open new branches without obtaining a license from the Central Bank;
2. 3.7.2The Licensed Person has to submit an application signed by its authorized signatory to the Licensing Division of the Banking Supervision Department in order to obtain licenses to open new branches; and
3. 3.7.3The Central Bank, at its sole discretion, shall issue licenses to open new branches based on the level of compliance of the Licensed Person with applicable Laws, Rules, Regulations, Notices and the Standards and based on the prevailing policy of the Central Bank in issuing such approvals.

1. 3.8.1The Licensed Person is not permitted to relocate its licensed premises without obtaining the Letter of No Objection from the Central Bank;
2. 3.8.2The Central Bank shall issue a Letter of No Objection to relocate the licensed premises based on the level of compliance of the Licensed Person with applicable Laws, Rules, Regulations, Notices and the Standards, and based on the prevailing policy of the Central Bank;
3. 3.8.3The Licensed Person must display a notice outside the current location two (2) weeks prior to the relocation of the licensed premises for the information to customers mentioning therein the address of the new location, proposed date of opening and the new contact number; and
4. 3.8.4The Licensed Person must operate its business from the existing location, unless otherwise agreed by the Central Bank in writing, until it receives all necessary licenses (such as the license issued by the Central Bank, Department of Economic Development etc.) for such relocation.

1. 3.9.1The Licensed Person may close its licensed premises in case of any unforeseen incidents (example: a fire, system failure, etc.), due to natural disasters or for some specific purposes (examples: to carry out repairs or any maintenance) subject to the following conditions:
   1. a)The Licensed Person must notify the Central Bank of the closure immediately upon closing the licensed premises with reasons thereof;
   2. b)The licensed premises shall not be closed for a period of more than one (1) month; and
   3. c)A notice must be displayed outside the premises stating the reasons for the closure, expected re-opening date, mobile number of the contact person and contact details of the nearest branch of the Licensed Person, if any.
2. 3.9.2The Licensed Person must obtain a Letter of No Objection from the Central Bank to keep the licensed premises closed for a period exceeding one (1) month subject to the following conditions:
   1. a)The maximum period of closure shall not exceed three (3) months;
   2. b)Liabilities towards customers must be cleared prior to the closure;
   3. c)A notice must be displayed outside the premises with the reasons for the closure, expected re-opening date, mobile number of the contact person and contact details of the nearest branch of the Licensed Person, if any.
3. 3.9.3The Licensed Person must discuss with the Central Bank about the status of its licensed premises before the expiry of the previously approved period of temporary closure (i.e. three months); and
4. 3.9.4The Licensed Person must obtain the Letter of No Objection from the Central Bank in order to close a licensed premises permanently.

The Licensed Person is expected to carry out its business in compliance with all applicable Laws, Rules, Regulations, Notices and the Standards. This chapter provides clarifications on some of the continuing obligations of a Licensed Person. The Licensed Person is advised to carefully review Article 9.1 of the Regulations and comply with all requirements at all times.

1. 4.1.1The total assets of the Licensed Person must not exceed ten (10) times the amount of its paid-up capital. In other words, the total assets to the paid-up capital ratio must not exceed 10:1 at any point in time; and
2. 4.1.2The Licensed Person must comply with the following standards in relation to the calculation of this ratio:
   1. a)Gross value of assets must be taken for the calculation, i.e. no netting-off of assets and liabilities will be permitted unless it is in accordance with International Financial Reporting Standards;
   2. b)Total assets must not include any post-dated-cheques and/or amounts held as unclaimed funds with the Licensed Person as per Paragraph 18.2.1 (e) of Chapter 18;
   3. c)Statutory reserve may be added to the paid up capital provided that the Licensed Person has the obligation to maintain such a reserve as per the prevailing Commercial Companies Law of the UAE;
   4. d)Accumulated losses, including current year losses, must be deducted from the paid-up capital; and
   5. e)Where there are subsidiaries or other foreign offices, the Licensed Person must also comply with Paragraph 4.1.1 of this Chapter based on the consolidated financial statements.

1. 4.2.1Appointment of the Manager in Charge must be made only after obtaining a Letter of No Objection from the Banking Supervision Department. Refer to Paragraph 6.4 of Chapter 6 for additional standards in this regard;
2. 4.2.2The Licensed Person must implement an appropriate Succession Plan to manage its business during the temporary absence, such as leave or vacation, of the Manager in Charge. The Succession Plan must also fulfil the requirements of Paragraph 6.4.7 (b) of Chapter 6;
3. 4.2.3The Manager in Charge must be an authorised signatory granted with Power of Attorney from the Licensed Person or its Owner/Partners/Board of Directors to manage its day to day business; and
4. 4.2.4The employment contract of the Manager in Charge must contain a clause for treating any violation on the part of the Manager in Charge as a criminal offence if it is proven that the Manager in Charge has signed or made any incorrect or misleading statement to the Central Bank.

1. 4.3.1The Licensed Person is not permitted to alter the following without obtaining a Letter of No Objection from the Banking Supervision Department with an exception provided under Paragraph 4.3.2 of this Chapter:
   1. a)Legal status of the business;
   2. b)Ownership or Ownership structure;
   3. c)Location of the licensed premises or offices;
   4. d)Paid-up capital; and
   5. e)Value of the bank guarantee favouring the Central Bank.
2. 4.3.2The Licensed Person may increase its paid-up capital and the value of bank guarantee favouring the Central Bank without obtaining the Letter of No Objection from the Banking Supervision Department in order to comply with the requirements of Paragraphs 2.6.1 (c) and 2.6.2 of Chapter 2. The Licensed Person must notify the Banking Supervision Department upon making such alterations.

1. 4.4.1A Letter of No Objection from the Banking Supervision Department must be obtained in order for the Licensed Person to merge, amalgamate or enter into a joint venture with any other person, whether natural or juridical;
2. 4.4.2The Licensed Person is not permitted to enter into any agreement to manage or to be managed by any other person, whether natural or juridical, without obtaining the Letter of No Objection from the Banking Supervision Department. All such management agreements must be in line with the UAE Laws and all applicable Regulations; and
3. 4.4.3The Licensed Person is not permitted to transfer, rent/lease out the license for a remuneration or otherwise to any other party, whether it is a natural or juridical person.

1. 4.5.1The Licensed Person is not permitted to carry out its activities including the KYC Process from any place outside the premises approved by the Central Bank apart from an exception under Paragraph 4.5.7 of this Chapter;
2. 4.5.2Paragraph 4.5.1 of this Chapter shall not deter the Licensed Person from conducting site visits as part of completing Enhanced Due Diligence in accordance with Paragraph 16.11.2 (d) of Chapter 16;
3. 4.5.3The Licensed Person is not permitted to carry out its activities from any temporary counters, extension counters or in a client’s office, client’s residence or from any place outside its approved premises;
4. 4.5.4The Licensed Person, who participates in WPS, may distribute salaries in cash outside its licensed premises (i.e. at client’s premises) until payroll cards are introduced in accordance with Paragraph 1.2.3 (e) of Chapter 1 provided that the Licensed Person:
   1. a)has obtained the necessary approvals from the police authorities in the respective Emirates; and
   2. b)complies with all applicable Laws, Rules, Regulations and Notices in relation to security and safety.
5. 4.5.5The Licensed Person is not permitted to engage in any business activities other than those in accordance with Paragraph 1.2 of Chapter 1;
6. 4.5.6The Licensed Person must not lease out or rent out its licensed premises to any other party; and
7. 4.5.7The Licensed Person may carry out the KYC Process for its customers, who are natural persons, outside the premises approved by the Central Bank subject to the following conditions:
   1. a)The KYC Process must be carried out directly by the employees of the Licensed Person;
   2. b)The Licensed Person must accept only Emirates ID of the customer as the identification document;
   3. c)Information of the Emirates ID must be extracted using a card reader obtained from the Emirates ID Authority; and
   4. d)A copy of the Emirates ID certified as “Original Sighted and Verified” under the signature of the employee who carries out the KYC Process must be retained. Alternatively, a print out of the extract of information obtained using the Emirates ID card and reader containing customer information must be retained. This print out must be certified as “Original Sighted and Verified” under the signature of an employee of the Licensed Person.

1. 4.6.1The Licensed Person’s legal/trade name/trade mark must always contain the word “Exchange”;
2. 4.6.2The legal/trade name must be approved by the Central Bank;
3. 4.6.3The Licensed Person must not alter its legal/trade name without obtaining a Letter of No Objection from the Central Bank;
4. 4.6.4The legal/trade name must not contain any undesirable word that will mislead the customers about the nature of business activities of the Licensed Person;
5. 4.6.5Some examples of undesirable words are listed below (the list is not exhaustive):
   • •Bank, Financial Institution, Finance, Financing;
   • •Real Estate, Insurance, Investment;
   • •Gold, Silver, Precious Stone, Commodity, Stock, Shares, etc.
6. 4.6.6The legal/trade name must not infringe the copyrights or intellectual property rights of any other natural or juridical person;
7. 4.6.7Full legal/trade name of the Licensed Person must be clearly and prominently displayed on the main signage of the licensed premises, letter heads, business cards, transaction receipts and all other marketing/branding materials; and
8. 4.6.8The name of business partners, such as correspondent banks, remittance partners or the management company must not appear on the main signage of the licensed premises.

1. 4.7.1The official receipts must be given to customers for all types of transactions;
2. 4.7.2The legal name of the Licensed Person, contact details (address, phone, email ID) of the branch that carries out the transaction, phone number for lodging customer complaints, website address (if any), etc. must be printed on all receipts;
3. 4.7.3The below information must be printed on all transaction receipts at a minimum:
   1. a)The date and time (UAE local time) of the transaction;
   2. b)Product name (e.g.: Foreign currency buy or sell, outward remittance, inward remittance, WPS or the name of the special product or service, etc.);
   3. c)Relevant customer information as per Paragraphs 16.8.5, 16.9.10, 16.10.3 or 16.11.5 of Chapter 16, whichever is applicable;
   4. d)Foreign currency conversion rates against the local currency, if applicable;
   5. e)Transaction fees or charges, if applicable;
   6. f)The total value of the transaction in AED;
   7. g)Where it is a remittance transaction, the beneficiary details such as name of the beneficiary, beneficiary bank account details (account number and branch name) where applicable, destination country; and
   8. h)Where it is a remittance transaction, the name of the correspondent bank/correspondent financial institution/exchange house or the name of the instant money transfer service provider through which the remittance is routed.
4. 4.7.4The terms and conditions related to the following must be printed on all receipts at a minimum:
   1. a)Cancellation and refund of the transaction including related charges and conversion rates applicable for the same;
   2. b)Charges and conversion rates that will be applied for amendments or re-issuance of money transfers;
   3. c)Back-end charges or any other bank charges at foreign correspondent banks for money transfers must be disclosed if it is deducted from the amount payable to the beneficiary; and
   4. d)Maximum period available for a customer to lodge a complaint from the date of transaction.

1. 4.8.1Rates must be displayed during working hours in a prominent place of the licensed premises and clearly visible to customers. The following rates must be displayed at a minimum:
   1. a)Buy and sell rate against the local currency (i.e. AED) for US Dollars, Euro, Pound Sterling, Japanese Yen and other major foreign currencies that the Licensed Person deals in; and
   2. b)Rates for major foreign currencies that the Licensed Person deals in against the local currency for remittances.

1. 4.9.1The SMS service must be integrated in the systems of the Licensed Person to notify parties involved in the money transfer transactions about the status of transactions as follows:
   1. a)SMS notifications must be sent to remitters of all outward remittances at the time of processing the payment instructions for transmitting to correspondents (such as foreign banks, exchange houses, etc.);
   2. b)SMS notification must be sent to remitters of all outward remittances in the case of outward instant money transfers;
   3. c)Two SMS notifications must be sent to beneficiaries of the agent specific inward remittance transactions. The first SMS at the time of receiving the payment instruction from the correspondent and the second SMS at the time of actual payment to the beneficiary;
   4. d)One SMS notification is sufficient, i.e. at the time of payment, in the case of inward instant money transfers which are not agent specific; and
   5. e)The Licensed Person must maintain a log in the system that shows the status of SMS notifications for each transaction.

1. 4.10.1The Licensed Person is not permitted to encumber any of its assets without obtaining a Letter of No Objection from the Banking Supervision Department;
2. 4.10.2The Licensed Person must obtain the Letter of No Objection from the Banking Supervision Department before providing deposits to be held under a lien or encumbrance or as collateral deposits to banks/financial institutions in order to:
   1. a)obtain bank guarantees favouring the Central Bank for licensing purposes;
   2. b)obtain remittance arrangements with local or foreign institutions (via cash deposits or guarantees); and
   3. c)obtain any other type of facilities from financial institutions or banks.
3. 4.10.3Deposits for labour guarantee or utility services do not require the Licensed Person to obtain the Letter of No Objection from the Banking Supervision Department;
4. 4.10.4Deposits of excess cash with a bank or financial institution for a fixed term/period by the Licensed Person must be available for liquidation immediately on demand; and
5. 4.10.5The Licensed Person must not act as a guarantor or a facilitator of any other person, natural or juridical, to avail any credit facility for such person.

1. 4.11.1Distribution of net annual profit for any financial year to the Owner/Partners/Shareholders must be made only after the audit of financial statements for that year, subject to the conditions under Paragraphs 4.11.2 to 4.11.5 of this Chapter;
2. 4.11.2The distribution of net annual profit among Partners/Shareholders must be in accordance with the agreed profit sharing ratio;
3. 4.11.3The annual audit of such financial statements must be carried out by an External Auditor appointed in accordance with the Paragraph 7.3.2 of Chapter 7;
4. 4.11.4The Licensed Person must ensure sufficient liquidity in the business at all times in accordance with Paragraph 4.18 of this Chapter; and
5. 4.11.5The share of profit must be paid off to the Owner/Partners/Shareholders within fifteen (15) calendar days from the date of decision to distribute such profit. If not, the Central Bank reserves the right to treat such amounts as the current account balance of the Owner/Partners/Shareholders (Refer to Paragraph 4.12 of this Chapter).

1. 4.12.1The Licensed Person is not permitted to borrow from or lend money to or maintain a current account in the name of its owners, shareholders, partners, directors, managers, controllers, group companies, subsidiaries or customers; and
2. 4.12.2Salary advance by a Licensed Person to its employees is permitted subject to the following conditions:
   1. a)The maximum advance must not exceed the total of immediately preceding six (6) months’ gross salary of the employee; and
   2. b)Such advance must be made only towards employee’s housing expenses, medical expenses, education/training fees, air tickets or on other humanitarian grounds such as death/illness of an immediate family member.

1. 4.13.1“Designated Remittance Intermediate Account” with a Bank:
   1. a)A Licensed Person who is in possession of a Category B or C license must maintain an account with a Bank licensed by the Central Bank of the UAE to be used exclusively as a “Designated Remittance Intermediate Account”;
   2. b)The Licensed Person who conducts remittance business must deposit the funds received from its remittance customers directly into the “Designated Remittance Intermediate Account” before the end of banking hours on the next business day (i.e. the next business day following the day on which the funds were received); and
   3. c)The Licensed Person must use the funds available in the “Designated Remittance Intermediate Account” solely for the purpose of settling the customers’ remittances with the foreign correspondents (i.e. correspondent banks, exchange houses, financial institutions or instant money transfer service providers).
2. 4.13.2Accounting Treatment:
   1. a)All outward remittance transactions must be initially recorded in a separate ledger account (in the General Ledger) titled as “Remittance Intermediate Account”;
   2. b)The Remittance Intermediate Account must be a separate control account in the General Ledger. The Licensed Person may maintain multiple sub accounts (either currency wise, country wise or correspondent wise at the discretion of the Licensed Person) under the above stated control account;
   3. c)Outward remittance transactions must be transferred to the respective ledger accounts of foreign correspondents (in the General Ledger) as and when the remittance instructions are issued (i.e. upon payment order transmission) to foreign correspondents;
   4. d)The remittance instructions must be issued to foreign correspondents only after prefunding the account, if the settlement is on a prefund basis; and
   5. e)An amount equal to the liabilities towards the remittance customers (i.e. the balance in the Remittance Intermediate Account in relation to unprocessed transactions) must be available at all times in the form of local currency, balances in the Designated Remittance Intermediate Account and foreign banks to cover the liabilities towards the remittance customers.
3. 4.13.3Agreed-Upon Procedures (AUP) on the Remittance Intermediate Account:
   1. a)External Auditors must perform Agreed-Upon Procedures (AUP) on the Remittance Intermediate Account and report their findings on a monthly basis to the Board of Directors (or to the Owner/Partners where there is no Board of Directors). Please refer to Appendix 6 for the minimum required Agreed-Upon Procedures to be performed by the External Auditor in this regard.
4. 4.13.4Exception:
   1. a)Standards related to the Remittance Intermediate Account are not applicable to remittance arrangements through instant money transfer service providers who do not require any prefunding by the Licensed Person to pay beneficiaries at the destination.

1. 4.14.1Application for the renewal of a license must be submitted to the Licensing Division of the Banking Supervision Department at least two (2) months prior to the date of expiry of the license; and
2. 4.14.2In case, the Licensed Person exhibits major non-compliance with applicable Laws, Rules, Regulations, Notices and the Standards, then the Central Bank reserves the right to refuse the renewal of the license or to renew it for a period shorter than one (1) year.

1. 4.15.1A copy of the license issued by the Central Bank must be displayed in all licensed premises at a prominent location in addition to the commercial or trading license issued by the competent authority of the respective Emirate; and
2. 4.15.2The Licensed Person must also visibly display a list of its permitted activities (i.e. whether the Licensed Person offers Foreign Currency Exchange, Remittance Operations or Payment of Wages using WPS) at a prominent location inside as well as outside (closer to the main door) of all licensed premises.

1. 4.16.1The working hours of branches/Head Office or Management Office must be visibly displayed at a prominent location inside as well as outside (closer to the main door) of the respective licensed premises.

1. 4.17.1The Licensed Person must obtain a Letter of No Objection from the Banking Supervision Department for establishing relationship with any foreign institution for importing and/or exporting of banknotes;
2. 4.17.2The Banking Supervision Department shall issue the Letter of No Objection based on the merit of each application from the Licensed Person provided that the following requirements are satisfied:
   1. a)Minimum paid-up capital of the Licensed Person and the bank guarantee favouring the Central Bank is:
      • •AED 50 million in case of Limited Liability Companies; and
      • •AED 10 million in other cases.
   2. b)The risk grading awarded to the Licensed Person by the Central Bank must be either Low or Medium.
3. 4.17.3The Licensed Person must provide the following information/documents along with the application for the Letter of No Objection:
   • •The full legal name and address of the foreign institution;
   • •Draft copy of the bilateral agreement;
   • •Nature of the intended business, whether it is import or export of banknotes or both;
   • •Purpose of importing banknotes from the respective foreign institution;
   • •Source of banknotes exported to the respective foreign institution;
   • •Separate list of currencies to be imported and/or exported from/to the respective foreign institution and the projected annual value for each currency for next three (3) years;
   • •Expected number of shipments (separately for import and export) per year and projected value of each shipment in local currency for next three (3) years;
   • •Confirmation that the Enhanced Due Diligence has been carried out on the respective foreign institution; and
   • •List of similar existing arrangements and the current yearly volume and value of business in each currency for each entity.
4. 4.17.4Import or export of banknotes must be made only from/to an institution which is a licensed financial institution from a well regulated jurisdiction;
5. 4.17.5The Licensed Person must carry out the Enhanced Due Diligence, in accordance with Paragraph 16.11.2 of Chapter 16, on such foreign institutions before requesting for the Letter of No objection from the Banking Supervision Department;
6. 4.17.6The Licensed Person must have appropriate agreements with such foreign institutions containing suitable clauses to cover all risks associated with importing and exporting of banknotes;
7. 4.17.7The Licensed Person must complete the settlement for each shipment, whether import or export, within a period of seven (7) business days from the date of receiving/dispatching the shipment;
8. 4.17.8The validity of the Letter of No Objection issued by the Banking Supervision Department is for a maximum period of three (3) years. The Central Bank reserves the right to restrict the validity of such Letter of No Objection for a period less than three (3) years depending on the risk grading of the Licensed Person; and
9. 4.17.9The Central Bank reserves the right, if it deems appropriate, to restrict the use of imported banknotes to be sold via own branches of the Licensed Person to its retail customers and not for supplying to other Licensed Persons or Financial Institutions that are operating inside or outside the UAE.

1. 4.18.1Current assets of a Licensed Person must be at least 1.2 times of the current liabilities at all times;
2. 4.18.2Current assets in this context consists of the following items from the Balance Sheet:
   1. a)Cash in hand (i.e. local and foreign currency stocks);
   2. b)Balances with banks (i.e. local and foreign bank balances);
   3. c)Receivables from the other financial institutions (local and foreign);
   4. d)Cheques which are within the validity period of six (6) months from the date of issue (i.e. valid cheques) received from the customers; and
   5. e)Unencumbered fixed deposits with banks or financial institutions with a remaining maturity period of less than three (3) months.
3. 4.18.3Item (c) of Paragraph 4.18.2 of this Chapter must be recoverable and are not dormant or inactive during the past thirty (30) calendar days;
4. 4.18.4For the computation of the current assets, the following items must not be considered:
   1. a)Post-dated cheques;
   2. b)Pre-payments;
   3. c)Mandatory deposits such as deposits for utility services, labor guarantee, etc.;
   4. d)Deposits under lien of any kind;
   5. e)Deposits which cannot be liquidated upon demand; and
   6. f)Debit balances in the current account of the owners, directors, controllers, managers, employees, customers, etc., if any (Refer to Paragraph 4.12 of this Chapter).
5. 4.18.5Current liabilities in this context consists of the following items from the Balance Sheet:
   1. a)Liabilities towards customers for any outward remittances (local and foreign including the amount of unclaimed funds);
   2. b)Sundry Creditors;
   3. c)Accruals;
   4. d)Liabilities towards the beneficiaries of the inward remittances if the funds are received by the Licensed Person;
   5. e)Liabilities related to WPS;
   6. f)Amounts payable to banks and other financial institutions upon demand or payable within three (3) months - local and foreign;
   7. g)Any valid cheques issued by the Licensed Person which is not netted off against the bank balance; and
   8. h)Credit balances in the current account of the owners, directors, controllers, managers, employees, customers, etc., if any (Refer to Paragraph 4.12 of this Chapter).
6. 4.18.6For the computation of current liabilities, the following items must not be considered:
   1. a)Post-dated cheques;
   2. b)Any kind of provisions including the provision for gratuity, leave salary, air tickets for the employees, annual maintenance contracts, etc.; and
   3. c)Amounts payable after three (3) months to banks and other financial institutions - local and foreign.

1. 4.19.1Total Equity of the Licensed Person must not fall below the minimum required paid-up capital as stipulated in Paragraph 2.3 of Chapter 2;
2. 4.19.2Total Equity includes:
   1. a)Paid-up Capital;
   2. b)Statutory/Legal Reserves;
   3. c)General Reserves or any other Reserves of similar nature;
   4. d)Current year profits or losses (i.e. profits to be added and losses to be deducted); and
   5. e)Retained earnings/accumulated profits or losses (i.e. retained earnings/profits to be added and losses to be deducted).
3. 4.19.3Debit balance in the current account of the owner/partners/shareholders, if any, must be deducted from the Total Equity;
4. 4.19.4Where the Total Equity falls below the minimum required paid-up capital, the Licensed Person must inject additional paid-up capital to balance the equity position after obtaining a Letter of No Objection from the Banking Supervision Department. Such injection of additional paid-up capital must be made within six (6) months from the date when the equity falls below the minimum required paid-up capital; and
5. 4.19.5In the case of a newly established business, the Licensed Person is entitled for a grace period of one (1) year from the date of commencement of the business before being required to inject additional paid-up capital to comply with the requirements of Paragraph 4.19.4 of this Chapter, unless specifically instructed by the Central Bank to do so.

1. 4.20.1The authorized signatory who signs correspondence (i.e. letters, requests for various purpose etc.) with the Central Bank must possess a Power of Attorney (PoA) from the Licensed Person or its Owner/Partners/Shareholders with exemptions under Paragraphs 4.20.3 and 4.20.4 of this Chapter, unless such person is the sole owner of the Licensed Person;
2. 4.20.2The Central Bank will not act on or respond to any correspondence signed by parties other than authorized signatories having Power of Attorney in accordance with Paragraph 4.20.1 of this Chapter;
3. 4.20.3The Compliance Officer of the Licensed Person may sign responses to ‘Search’ or ‘Search and Freeze’ notices from the Central Bank. The Suspicious Transaction Reports (STR) must be signed by the Compliance Officer at all times;
4. 4.20.4The Licensed Person or its authorized signatory may delegate the authority to other employees of the Licensed Person to sign the periodical returns/reports (such as monthly, quarterly, bi-annual or annual returns) to be submitted to the Central Bank. The Licensed Person and its authorized signatory shall retain the responsibility for the accuracy of all such returns even after the delegation;
5. 4.20.5The Licensed Person or its Board of Directors (or the Owner/Partner where there is no Board of Directors) must not grant a Power of Attorney of any kind to any party other than a full time employee, Director of the Board, Partner or a Shareholder of the Licensed Person; and
6. 4.20.6The Licensed Person or its Board of Directors (or the Owner/Partner where there is no Board of Directors) must not authorize any party other than a full time employee, Director of the Board, Partner or a Shareholder of the Licensed Person to act as an authorized signatory of its local or foreign bank account.

1. 4.21.1The Licensed Person may refer to Appendix 3 of the Standards for the list of returns/reports to be submitted to the Central Bank;
2. 4.21.2The Licensed Person must submit all returns/reports to the Central Bank on or before the reporting deadlines; and
3. 4.21.3The Licensed Person must obtain access to the Central Bank reporting portals, such as Daily Remittances Reporting System, IRR System (Integrated Regulatory Reporting System), Suspicious Transaction Reporting System, etc. for the submission of periodical online reports.

1. 4.22.1A short term business plan, called the “Budget”, must be agreed and approved by the Board of Directors (or by the Owner/Partners where there is no Board of Directors) at the beginning of each financial year;
2. 4.22.2A comparison of actual performance against budgets must be performed at the end of every financial year, at a minimum, and variances must be analysed to identify the events that led to the actual performance deviating from the budget; and
3. 4.22.3The Licensed Person must also have a long term business plan, preferably for a period of three to five (3 to 5) years, approved by the Board of Directors (or by the Owner/Partners where there is no Board of Directors).

1. 4.23.1The Licensed Person must ensure that the number of their UAE National employees is not less than 10% of the total number of employees or one UAE national employee in each office/branch, whichever is higher;
2. 4.23.2All UAE National employees must be registered with Ministry of Labor and General Pension and Social Security Authority;
3. 4.23.3The Licensed Person may deduct the number of ancillary staff (such as drivers, office boys, cleaning staff, security staff, etc.) from the total number of employees for the computation of 10% of the total number of employees; and
4. 4.23.4The Central Bank reserves the right to issue Regulations regarding Emiratisation in the Financial Industry from time to time. The Licensed Persons must comply with such future Regulations as and when the same are issued.

1. 4.24.1The Licensed Person must obtain a Letter of No Objection from the Banking Supervision Department to invest in or to open subsidiaries or offices of any kind, whether outside or inside the UAE; and
2. 4.24.2The paid-up capital of the Licensed Person after netting off investments in such subsidiaries or offices must not fall below the minimum required paid-up capital as stipulated in Paragraph 2.3 of Chapter 2.

1. 4.25.1The Licensed Person must immediately inform the Banking Supervision Department if it becomes aware that the Licensed Person or its Owner/Partners/Shareholders, Director of the Board, employees or subsidiaries is/are the subject of an investigation of criminal nature by a local or foreign investigating agency;
2. 4.25.2The Licensed Person must immediately inform the Banking Supervision Department if it becomes aware that it is a party to any litigation whether civil or criminal in nature; and
3. 4.25.3The Licensed Person must maintain appropriate registers and records related to such investigations and litigations.

1. 4.26.1The Licensed Person must comply with all applicable Laws (examples: Labor Law, Commercial Companies Law, etc.), Rules and Regulations of the UAE in addition to the Standards and Notices issued by the Central Bank at all times.

1. 4.27.1The Licensed Person must respond to the ‘Search’ or ‘Search and Freeze’ notices from the Central Bank and other Enforcement Authorities within the time frame provided in such notices; and
2. 4.27.2Appropriate evidence must be held in a separate file in order for the Central Bank Examiners to confirm the status of compliance with this requirement.

1. 4.28.1The Licensed Person must settle all transactions within the UAE in AED only via UAEFTS;
2. 4.28.2The Licensed Person may request the Banking Supervision Department for access to UAEFTS; and
3. 4.28.3The Central Bank will provide access to UAEFTS only if the systems of the Licensed Person meets the UAEFTS requirements.

1. 4.29.1The Licensed Person, its Owner/Partners/Shareholders, Directors on the Board, management or employees must not offer gifts (whether in cash or in kind) and entertainments to or attempt to influence employees of the Central Bank in any manner.

1. 4.30.1The Licensed Person must seek a Letter of No Objection from the Central Bank and provide a solid business case to support the pricing initiative prior to introducing new pricing or increasing pricing for products related to their licensed activities.

The Central Bank reserves the right to undertake an examination at a Licensed Person at any time when it deems it appropriate. This chapter provides information on the Central Bank examinations and responsibilities of the Licensed Person in relation to such examinations.

1. 5.1.1The type and scope of an examination will be determined by the Central Bank on a case by case basis. There are three types of examinations and they are discussed under Paragraphs 5.1.2 to 5.1.4 of this Chapter:
2. 5.1.2Full Scope Examination
   1. a)A full scope examination is primarily meant to cover all aspects of the business of a Licensed Person such as financial and non-financial in addition to the compliance with all applicable Laws, Rules, Regulations, Notices and the Standards;
   2. b)The time frame to complete a full scope examination is usually between seven to fourteen (7 to 14) business days depending on the nature, size and complexity of the business of the Licensed Person; and
   3. c)Findings of a full scope examination will be communicated to the Licensed Person through an appropriate Transmittal Letter.
3. 5.1.3Fast Track Examination
   1. a)A fast track examination is a quick examination which will be completed within a short period of two to three (2 to 3) business days depending on the nature, size and complexity of the business of the Licensed Person;
   2. b)A fast track examination is meant to assess the level of compliance of a Licensed Person with high level requirements of all applicable Laws, Rules, Regulations, Notices and the Standards; and
   3. c)Findings of a fast track examination will be communicated to the Licensed Person through an appropriate Transmittal Letter.
4. 5.1.4Special Examination
   1. a)The Central Bank reserves the right to undertake special examinations or surprise examinations at any time, if it deems necessary;
   2. b)The scope and the timeframe of special examinations will be decided by the Central Bank on a case by case basis; and
   3. c)The Central Bank reserves the right to decide whether findings of such examinations need to be communicated to the Licensed Person or not.

1. 5.2.1The ultimate responsibility to prepare for the Central Bank examination lies with the Manager in Charge of the Licensed Person;
2. 5.2.2The Licensed Person must give special attention to Paragraphs 5.2.2 (a) to (d) of this Chapter in relation to the preparation for an examination:
   1. a)The Licensed Person must prepare and keep all information or documents ready within the timeline provided by the Central Bank;
   2. b)The Licensed Person must provide appropriate work space within its premises and full assistance to the Central Bank Examiners in order to carry out the examination;
   3. c)The Manager in Charge or any other authorized person of the Licensed Person must be available at all times to answer the queries of the Central Bank Examiners; and
   4. d)The Compliance Officer and the Accountant must be present at the time when the Central Bank Examiners review their respective functions.

1. 5.3.1The Transmittal Letter is the official communication from the Central Bank to the Licensed Person which contains all findings of an examination;
2. 5.3.2The objective of issuing a Transmittal Letter is to inform the Licensed Person about the areas of non-compliance noted by the Central Bank Examiners during an examination;
3. 5.3.3Transmittal Letters are issued after full scope or fast track examinations provided that there are observations related to non-compliance with applicable Laws, Rules, Regulations Notices and the Standards;
4. 5.3.4The Transmittal Letter is normally divided into several sections, such as, (a) Major Issues (b) Violations under the Regulations and the Standards (c) Violations under AML/CFT Regulations (d) Reporting Issues (e) Operational and Control Issues and (f) Other Issues; and
5. 5.3.5The risk grading awarded to the Licensed Person, whether it is low, medium, high, very high or unacceptable, and details of predefined parameters based on which the overall risk grading is calculated will be indicated in the Transmittal Letter.

1. 5.4.1The Licensed Person must provide its response in writing for each finding in the Transmittal Letter within the time frame provided by the Central Bank;
2. 5.4.2The response from a Licensed Person must include the detailed plan of action on how and when the findings of a Transmittal Letter will be resolved;
3. 5.4.3If no specific time frame is provided by the Central Bank, then the Licensed Person must submit its response within thirty (30) calendar days from date of issue of the Transmittal Letter; and
4. 5.4.4The response to the Transmittal Letter must be submitted in original hard copy under the signature of the authorized signatory of the Licensed Person to the Supervision & Examination Division of the Banking Supervision Department.

1. 5.5.1The Central Bank shall review responses and action plans received from the Licensed Person; and
2. 5.5.2The Central Bank reserves the right to conduct follow up examinations in order to assess the progress of the Licensed Person in resolving the examination findings.

1. 5.6.1The Central Bank reserves the right to call the Manager in Charge, Compliance Officer, Functional Heads, Directors of the Board or Shareholders/the Owner/Partners of the Licensed Person for a meeting to discuss the examination findings;
2. 5.6.2Such meetings may be held either before the issue of Transmittal Letters (known as Exit Meetings) or after the issue of Transmittal Letters (known as Follow-up Meetings); and
3. 5.6.3The Licensed Person must attend such meetings without fail.