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.