Legal Framework

Article 121 of the UAE Constitution enabled the Federation to create Financial Free Zones in the Emirates and to exclude the application of certain Federal laws in these zones. A number of laws established the DIFC and the necessary centre bodies, including ASMEC. These laws define the objectives, powers, and functions of these entities and set out exemptions and prohibitions applicable within the DIFC.

Federal Law No. 8 of 2004

Federal Law No. 8 of 2004 on “Financial Free Zones in the United Arab Emirates” (the Financial Free Zone Law) primarily:

• Allows the creation of a Financial Free Zone in any Emirate by Federal Decree.
• Exempts Financial Free Zones and Financial Activities from all Federal civil and commercial laws.
• Confirms the continued application of Federal criminal laws, including Anti-Money Laundering provisions.
• Prohibits authorised firms in DIFC from taking deposits from UAE markets or dealing in the Dirham.
• Restricts authorised insurers in the DIFC to re-insurance activities within the State.

The disapplication of Federal laws gives the DIFC its own independent regulatory and legal framework.

Cabinet Resolution No. 28 of 2007

This Resolution on “Implementing Federal Law No. 8 of 2004 on Financial Free Zones” further clarifies certain provisions and operational details of the Financial Free Zones Law.

Federal Decree No. 35 of 2004

Federal Decree No. 35 of 2004 formally created the DIFC as a Financial Free Zone in Dubai. Additional Cabinet Resolutions were later issued to define the geographical boundaries of the DIFC.

Dubai Law No. 5 of 2021

Dubai Law No. 9 of 2004 on “The Establishment of the Dubai International Financial Centre” was replaced by Dubai Law No. 5 of 2021. This law:

• Recognises the financial and administrative independence of the DIFC.
• Establishes the DIFC centre bodies, including ASMEC.
• Provides for ASMEC to operate independently from other DIFC centre bodies.
• Exempts the DIFC from Dubai laws and regulations, under specified conditions.

DIFC Law No. 1 of 2004 (Regulatory Law 2004)

DIFC Law No. 1 of 2004, also known as the “Regulatory Law 2004,” forms the cornerstone of ASMEC’s regulatory powers and objectives. It:

• Grants ASMEC the authority to create and issue Rules.
• Defines the powers and responsibilities of the Board and the Chief Executive.
• Establishes the Financial Markets Tribunal.
• Outlines the authorisation process for firms and individuals.
• Provides enforcement powers for supervision, investigation, and disciplinary actions.
• Allows the imposition of restrictions, suspensions, and sanctions, including financial penalties.
• Sets the framework for registering Auditors and Designated Non-Financial Businesses and Professions (DNFBPs).
• Specifies the decision-making procedures for key regulatory actions.

The law establishing the DIFC Court and the complete database of DIFC laws are maintained separately within the DIFC’s legislative records.