Guide To The DIFC External Asset Manager License 

Article Summary

1. 2025 prudential changes: DFSA has simplified capital rules – most Cat 3C and Cat 4 firms that do not hold Client Assets, Client Money, Insurance Monies or EMPS assets no longer need EBCM and instead just maintain Liquid Assets equal to Base Capital.

2. Capital levels: Base Capital is US$ 140,000 for a Category 3C Asset Manager and US$ 30,000 for a Category 4 Investment Advisor; EBCM still applies (on simplified terms) where firms do hold client or fund assets.

3. Why DIFC: DIFC is a top-10 global financial centre, with 400+ wealth/asset managers, 70+ hedge funds, 850+ family businesses and ~700 foundations, giving access to over US$ 1.2 trillion in regional private wealth and deep sovereign capital.

4. EAM model options: External Asset Managers can either set up as a Cat 3C discretionary Asset Manager (full portfolio management) or start with a Cat 4 advisory licence and later upgrade, with both models authorised and supervised by the DFSA.

5. Activities & crypto: Core activities include Managing Assets, Arranging Deals in Investments, Advising on Financial Products/Credit and Arranging Credit; DFSA-regulated firms may also advise on recognised Crypto Tokens under the DIFC’s advanced digital-asset framework.

6. Setup, costs & support: Licensing involves the usual path of intro calls → RBP & financial model → DFSA application → reviews & IPA → entity setup & bank account → final FSP, with typical costs for DFSA/ROC, data protection, office space (including Funds Centre flexi-desks from ~US$ 27,000), visas and advisors—10 Leaves provides end-to-end support across licensing, outsourced CO/MLRO/FO/Risk, governance and documentation.

November 2025 — Updates

There have been major prudential and operational changes in 2025 impacting both Category 4 Investment Advisors/Arrangers and Category 3C Asset Managers setting up in the DIFC.

For Category 4 firms, the DFSA has set the Base Capital Requirement at US$ 30,000, and the Expense-Based Capital Minimum (EBCM) has been removed for firms that do not hold Client Assets, Client Money or Insurance Monies. These firms now only need to maintain Liquid Assets equal to their Base Capital Requirement.

For Category 3C Asset Managers, the Base Capital Requirement remains activity-based:

• Managing Assets (non-public funds) → US$ 140,000.
• Public / Credit Fund Managers → US$ 140,000.
• Exempt Fund / Qualified Investor Fund Managers → US$ 40,000.
• VC Fund Managers → US$ 0.

As with Cat 4 firms, EBCM no longer applies to 3C Asset Managers who control but do not hold client assets, significantly reducing ongoing prudential burdens. Where a firm does hold fund property, applicable EBCM ratios continue to apply, but with simplified, lower multipliers under the 2025 reforms.

Operationally, the DIFC has launched its new Funds Centre, the region’s first purpose-built ecosystem for fund managers, fund platforms, custodians and administrators. Flexi-desk spaces start at US$ 27,000 per year, with 3–4 visas, which meaningfully reduces setup and operating costs for both advisory firms and 3C fund managers.

DIFC continues to rank among the world’s top ten onshore financial centres, offering an independent common-law framework, an internationally respected regulator, and robust infrastructure. The Centre provides unmatched access to the fast-growing wealth, private capital, institutional and sovereign markets of the MENASA region, and bridges the timezone gap between London–New York and Hong Kong–Tokyo.

Why should you set up a financial services entity in the DIFC?

The DIFC stands as a premier financial center in the region, hosting over 400 wealth and asset management firms that collectively manage more than $750 billion in assets. This strategic location provides unparalleled access to the extensive private and sovereign capital available in the region.

The DIFC also offers an advanced regulatory framework for digital assets, encompassing investment and crypto tokens. It also features a dedicated Innovation Hub, supporting companies in the fintech, AI, and blockchain sectors.

Recently, there has been a notable and continuous influx of High-Net-Worth Individuals (HNIs) into the UAE. Dubai alone is home to over 72,500 HNWIs and Ultra-High-Net-Worth Individuals (UHNWIs), whose combined wealth exceeds $500 billion. The broader Middle Eastern region boasts over $3.5 trillion in HNWIs wealth and more than $4.8 trillion in financial capital managed by 40 state-owned investors.

The DIFC is witnessing high growth in the alternatives segment. It currently includes 70+ hedge funds, with over 45 of these managing over a billion dollars worldwide. As a result, the DIFC has emerged as one of the world's top ten locations for hedge funds, with ambitions to enter the top five in the near future.

The DIFC has been consistent in attracting family businesses as well, with over 850 family-owned businesses located in the centre, a growth of over 30% in 2024.

By the end of 2024, DIFC reported that the top 120 families and wealthy individuals in the community were managing over USD 1.2 trillion in wealth. The use of Foundations and associated structures also saw a 50+ percentage jump, reaching nearly 700 foundations by the end of 2024.

The Centre in the UAE is a cultural hub, featuring fine dining, retailers, and art galleries. Events like DIFC Art Nights and the Sculpture Park attract artists and enthusiasts. Art Dubai, backed by DIFC, remains the foremost global art event in the Middle East.   

Specific Advantages

Here are some specific advantages of establishing in the Dubai International Financial Centre.

LEGAL AND REGULATORY FRAMEWORK

• Legal framework supports cross-border activities.
• 100% foreign ownership permitted.
• No restriction on foreign talent or employees.
• No restrictions on capital repatriation.

TAX BENEFITS

•  0 percent corporate tax subject to certain qualifications.
•  Zero tax on employee income.

COUNTERPARTY CONFIDENCE

•  Highly regarded, independent regulator.
•  Independent, English-speaking, common law judicial system.
•  Distinct from the UAE legal system.
•  Risk-based regulatory approach.

DIVERSE ECOSYSTEM

• Central to regional deal making.
• High concentration of international firms, investment funds, wealth management firms, banks, and financial institutions.
• World-class regional and international law and auditing firms, and other professional services.
• The largest fund domicile in the region.

GEOGRAPHIC EPICENTRE

• Management offices, holding companies and family offices are located closer to the assets they own or manage.
• The Middle East, Africa and South Asia (MEASA) is increasingly the centre of gravity for the global economy.
• Dubai plays a central role in the growing South-South trade, principally between Asia and Africa.
• Well-positioned to harness the potential of emerging markets.

What is an External Asset Manager?

External Asset Managers, or EAMs, are relationship managers of traditional banks, who set up on their own and in some cases, continue to work with the same banks as external relationship managers. Leading Swiss, American and European private banks have embraced the rise of an independent advisory segment by providing EAM desk coverage with dedicated relationship managers and cutting edge EAM IT platforms.

Advantages of the EAM Model:

• EAMs can set up and operate their own businesses and build up a credible brand in a few years time.
• EAMs do not have to meet sales targets. This helps them to focus on the long-term aspects of a client relationship, rather than short-term selling.
• Clients tend to be more comfortable with EAMs, since the relationship is more stable.
• EAMs tend to focus on client needs, rather than pushing financial products, and this leads to more bespoke and quality advice.

Does the DIFC issue an External Asset Manager License?

 Individuals who wish to set up as an External Asset Manager, can choose one of two models:

• Setting up a Discretionary Asset Management License or
• Setting up as an Investment Advisor.

Case 1 is usually a Category 3C Asset Management License. In this case, the EAM has complete control on the relationship with his client, under a discretionary mandate. However, the DFSA requirements are a bit steeper in this case, with a base capital of US$ 140,000 required, among other things. You can read more here:

Requirements for a DIFC Category 3C Asset Manager License

Alternatively, you can start with an entry-level Category 4 Investment Advisory License, that allows you to set up in an easier manner, get a track record, and then apply for an upgrade. You can read more here:

Requirements for a DIFC Category 4 Investment Advisor License

In both cases, firms will have to apply to the DFSA for a Regulated License.

The DFSA has a relatively faster process for Fund Manager licenses, which also come under Category 3C. The Fund Manager, if approved, can manage domestic professional ( Exempt and Qualified Investor Funds) and Foreign Funds in other jurisdictions as well. In case the firm wishes to also engage in discretionary portfolio management services, it has to go through a full-fledged license process.

What are the activities that come with this license?

The primary activity of Managing Assets is for discretionary portfolio management. 

Managing Assets refers to discretionary portfolio management, where the manager is authorised to make investment decisions on the client’s behalf within an agreed mandate. The portfolio must contain at least one qualifying investment or rights under a long-term insurance contract (other than reinsurance), and the assets must belong to someone other than the manager. 

Advisory and arranging activities can include:

Arranging Deals in Investments

“Arranging Deals in Investments” refers to situations where you set up, organise, or facilitate arrangements that help someone else buy or sell an investment, virtual asset, or spot commodity, or subscribe for or underwrite an investment. This applies whether that person is acting for themselves or on behalf of someone else. It also covers cases where the person you are arranging the deal for is directly involved in the arrangement itself. In essence, if you play a role in bringing parties together or putting in place the steps that enable an investment transaction to happen—even if you are not the one executing the transaction—you are carrying out the regulated activity of arranging deals in investments.

Advising on Financial Products, Advising on Credit

A person is considered to be “advising on financial products” when they give someone guidance or recommendations on whether to buy, sell, subscribe for, underwrite, or exercise rights in an investment, virtual asset, or spot commodity, or whether to enter into a credit facility such as a loan or financing arrangement. This applies when the advice is provided to someone in their capacity as an investor, potential investor, borrower, potential borrower, or to a person acting on their behalf. In simple terms, if you tell someone whether they should enter into an investment or take on credit—beyond just giving factual information—you are performing a regulated advisory activity.

Arranging Credit 

“Arranging Credit” means setting up or facilitating arrangements that allow someone else to borrow money through a credit facility, whether they are acting for themselves or on behalf of another person. If you help put in place the structure, introductions, or steps needed for someone to obtain a loan or financing—without actually providing the credit yourself—you are carrying out the regulated activity of arranging credit.

The DFSA, for the purposes of authorisation and supervision, categorises investment advisory, credit advisory and insurance advisory activities under Category 4. While the Category 4 license allows firms to deal with Professional Clients only, it is possible to seek a Retail Endorsement during, or after the licensing process. 

Firms interested in carrying out arranging and advisory activities from the DIFC are required to submit applications to the Dubai Financial Services Authority, or DFSA. 

Can DIFC firms service clients outside the centre, and in the greater UAE?

Yes, they can. Sheikh Mohammed bin Rashid Al Maktoum issued Law No. (5) of 2021 relating to the DIFC, which brought further clarity to the rules governing the promotion and supply of services and products for firms registered in the centre.

The revised law clarifies that DIFC-registered entities are permitted to provide services and products outside the DIFC, provided that the primary services are offered from within the DIFC area. Additionally, marketing and promotional activities are allowed outside the center.

There may be additional rules to follow, for instance, when actively marketing funds from the DIFC. A passporting regime exists in this case, where the fund manager can register for a passport for the fund to be marketed in the UAE and the ADGM. Do get in touch for more information on this.

Can a DIFC-based Investment Advisor manage or advise on Crypto Assets?

Yes, a DFSA-regulated Investment Advisor can manage and advise on Crypto assets, provided that they are recognised Crypto Tokens. The DFSA has procedures for recognizing Crypto Tokens and maintains a list of such tokens. The current list of DFSA Recognised Crypto Tokens includes:

• Bitcoin (BTC).
• Ethereum (ETH).
• Litecoin (LTC).
• Toncoin (TON).
• XRP.
• ZetaChain (ZETA).
• EURC.
• USDC.
• Ripple (RLUSD).

What are the capital requirements for an EAM license?

The base capital requirement for a Category 3C Asset Manager license is US$ 140,000, down from US$ 230,000 a few months ago. 

The base capital requirement for a Category 4 Investment Advisor license is US$ 30,000, up from US$ 10,000.

Actual capital resources required will depend on the nature, quantum of business and forecasted annual expenditure, as per the financial model of the proposed firm.

Capital waivers may be available to the DIFC branch of a regulated financial institution having its head office in a recognized regulatory jurisdiction.

The DFSA lists out multiple ways of calculating capital, and specifies capital requirements for a firm as the highest of the Base Capital, Risk-Based capital and Expense-Based Capital. In case of Lower Prudential Risk Firms, only Base Capital applies. There is no Expense-based Capital Minimum requirement for firms that do not hold client assets. 

These figures are calculated using the financial models that we make for the Regulatory Business Plan during the application process and so are mostly unique to the company that applies for the license.

Calculation of capital is a detailed process and involves many factors. We recommend that you contact us for more details on the application process and capital calculations.

What are the key staffing requirements in the DIFC?

As with other category firms, the DFSA expects that the firm be adequately staffed depending on the scale, scope and nature of the product portfolio that is proposed to be offered from the DIFC.

At a minimum, the DFSA would like to see the following appointments:

1. Board of Directors – a well-organized, diverse Board with Non-Executive and/or Independent Directors and robust governance policies. The Chair would have to be a non-executive Director.

2. Senior Executive Officer (SEO) – Senior finance professional with over 10-15 years of core experience, ordinarily resident in the UAE.

3. Finance Officer (FO) – Senior and suitably-qualified finance professional. In case of a group, the FO can be from the parent company and does not have to be resident in the UAE.

4. Risk Officer – Senior risk professional, can be from the parent entity in case of a group.

5. Compliance Officer (CO) - Senior compliance professional with over 10 years of experience, ordinarily resident in the UAE.

6. Money-Laundering Reporting Officer – Senior AML professional with over 10 years of experience, ordinarily resident in the UAE. This function can be combined with Compliance and one individual can carry out both responsibilities.

7. The Finance Officer, Compliance Officer and Money Laundering Reporting Officer roles can also be outsourced to a competent service provider, such as 10 Leaves.

8. Internal Auditor - Senior and suitably qualified internal audit professional. Usually outsourced to a professional firm.

9. External Auditor - Senior and suitably qualified external audit firm. The DFSA maintains a list of recognised auditors, and there are 16 such firms at present.

What is the process of setting up in the DIFC, and getting regulated by the DFSA?

The DIFC application process commences with formal introductions to the DIFC and the DFSA.

Following the introductory call, a detailed Regulatory Business Plan (RBP) is prepared, along with financial projections, for a quick review by the regulator.

The comments of the regulator are incorporated into the RBP, and a comprehensive application is compiled, comprising policies, processes and other related documentation. The KYC and associated forms of all key individuals are also prepared for submissions.

The formal application is then sent across to the DFSA, who reviews the pack over a period of 15-20 business days, and then accepts it. The detailed review process then commences, and this can take anywhere between 60 and 90 days to complete.

The regulator maintains communication with the applicant at all times during the review, reverting with an initial review 2 weeks into the application, and then follow-up reviews thereafter. The DFSA also meets with the SEO, FO and CO/MLRO designates, and conducts a detailed interview with them.

A key milestone is the issuance of an In-Principle Approval, or IPA, which is issued once the application is successful. The applicant then proceeds to satisfy the in-principle conditions, and this involves the setting up of a legal structure, opening a bank account, and depositing the share capital in the account. Other tasks include finalisation of auditors and obtaining professional indemnity insurance for the firm.

Once done, a final submission is made to the DFSA, following which the regulator issues the Financial Service Permissions and the process is then complete. The firm is now open for business.

What are the documents required for a DFSA asset manager license application?

The DFSA application is comprehensive and the application pack comprises detailed KYC forms and information, application forms, and policies and procedures including:

• Detailed Regulatory Business Plan.
• Detailed Financial model, including stress tested models.
• Risk Management Policy and framework.
• Compliance policies and procedures.
• AML policies and procedures.
• Business Continuity Plans.
• Process Flowcharts.
• Corporate Governance policies.
• Remuneration policies.
• Board Committees Terms of References.
• IT and Cyber Security Policies and procedures.
• Organisation and shareholding structure charts.

We assist with the preparation of all documentation as part of the authorisation process. 

What are the associated costs?

Setting up a DFSA Regulated Firm involves the following costs:

Dubai Financial Services Authority (DFSA)

The DFSA is responsible for reviewing and approving all applications for financial services. Costs depend on the activities applied for, which puts the applicant in one of five categories.

Generally, there are two components of DFSA fees. One – an application processing fee, and the other, an annual licensing fee.

Application fee: US$ 25,000 for an Asset Manager/ US$ 15,000 for an Investment Advisor license application. The DFSA may charge an additional 100% fee for complex structures.

License fee: US$ 25,000 for an Asset Manager/ US$ 15,000 for an Investment Advisor license. From 2025, an additional US$ 4,000 is charged as an annual fee per additional activity.

Registrar of Companies (DIFC ROC)

The ROC helps to set up the legal structure of the DIFC Regulated Firm. Shareholders can be individual, or corporate. There are many options available, such as ‘Private Company Limited by Shares’ and ‘Limited Liability Partnerships’. In case of Private Company Limited by Shares, the costs for setting up include:

1. Application for reserving a name (2 working days): US$ 800.

2. Application for Incorporation of a Private Company Limited by Shares (5 working days): US$ 8,000.

3. Commercial License on Incorporation (5 working days): US$ 12,000 (annual fee).

Data Protection

The data protection notification is part of the process of registering a new entity in the DIFC. The costs involved are as follows:

1. Registration - US$ 1,250.

2. Annual renewal – US$ 500.

Office spaces

Every entity registered in the DIFC is required to lease a physical office. You can choose from the Gate and surrounding buildings, or other buildings within the DIFC, such as Emirates Financial Towers, Central Park, Park Avenue, Burj Daman and Currency House.

Prices vary, depending on the space availed and the building. Here is an indication of the prevailing rates:

1. New DIFC Funds Centre – US$ 27,000 per annum for a Flexi Desk, US$ 42,000 per annum for a fixed desk and approximately US$ 50,000 per annum for a 2-desk private office.

2. DIFC Business Centre – from a one-desk office at US$ 30,000.

3. DIFC Fitted Offices – from US$ 55 per square foot.

4. Other buildings – from US$ 50,000 per annum.

Visas

1. Establishment Card Application – US$ 630.

2. PSA Deposit – US$ 682.

3. Visas (per visa) – from US$ 1,500.

4. PSA Deposit (per visa) – US$ 682.

Our Services

How can we at 10 Leaves assist you?

We provide turnkey services for  DIFC Financial Service Licenses. From initial consultations to assistance in authorisations, to assistance in preparation of the legal documentation, 10 Leaves helps you navigate the DFSA Rulebook and submit an application that is comprehensive, complete and compliant.

Our services include assistance in:

Pre-Licensing

1. Reviewing the business model and advice on the applicable regulatory framework;

2. Preparation of the Regulatory Business Plan and comprehensive financial projections;

3. Preparation of all policies, processes and manuals required;

4. Provision of Outsourced services, including outsourced Compliance Officer, outsourced Finance Officer and outsourced Risk Officer services;

5. Assistance in recruitment of senior management;

6. Provision of well-qualified and experienced Non-Executive Directors;

7. Finalising the legal structure, including holding company setup and customisation of Memorandums; and

8. Finalisation of leased space, bank account opening and obtaining Financial Services Permissions.

Post-Licensing

1. Compliance, Finance and Risk outsourced and support services.

2. VAT and Corporate Tax services.

3. Secretarial services.

4. Variation of Permissions.

5. Compliance remedial measures.

6. Compliance audits.

7. Training.

8. Senior-level recruitment services.

Our solution focuses on comprehensive training for Directors, Senior Executive Officers, Finance Officers, and Compliance Officers. We equip them with the knowledge and skills needed to successfully clear interviews conducted by the DFSA during the authorisation process and for ongoing compliance.

A lot of our Category 4 clients are startups, where experienced investment bankers set up their own shop. In these cases, we also assist such teams with corporate and commercial documentation through our legal consultancy - 10 Leaves Legability. We assist in the drafting of:

1. Founder agreements.

2. Shareholder agreements.

3. Investor agreements.

4. Share vesting/ESOP plans.

5. Client/Supplier/Distributor agreements.

6. Employment agreements.

We also provide services in Luxembourg, Saudi Arabia, India and Mauritius.

Get in touch today!