ESR on Banking and Insurance Business

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Banking Business

Economic Substance Regulation includes Banking Business that is in the business of accepting deposits of money which may be withdrawn, or that are repayable on demand or after a fixed period, or after notice, by cheque or otherwise. The use of such deposits, either in whole or in part, in the making or giving of loans, advances, overdrafts, guarantees or similar facilities; or the making of investments, for the account and at the risk of the Licensee.

Excludes

  • A Licensee that is part of a banking group and only provides advisory, arranging and other services to clients of the banking group;
  • Engaged in exchanging foreign currency and remitting money; and
  • Financial intermediaries in the sale and purchase of domestic and overseas stocks and bonds, currencies and commodities, and money market transactions.

Exceptional Cases

Licensees engaged in a Banking Business may also provide services or perform lease or financing activities as a part of their business operations. To prevent duplicate reporting such Licensees are not considered engaged in a separate Distribution and Service Centre Business or Lease-Finance Business. It will not need to separately demonstrate economic substance in respect of such ancillary Relevant Activities.

The main points for including Banking Business in the relevant activity of Economic Substance Regulation

  • The business of accepting deposits which are repayable on demand;
  • The use of such deposits, in the making or giving of loans, advances, etc. or the making of investments. ; and
  • Excludes a Licensee providing banking services, engaged in exchanging foreign currency and remitting money and, sale and purchase of domestic and overseas stocks and bonds, currencies and commodities, and money market transactions.

Insurance Business

Insurance Business means the business of accepting risks by effecting or carrying out contracts of insurance in both the life and non-life sectors, including contracts of reinsurance and captive insurance arrangements.

 

Excludes

Insurance brokers, agents, and other Dubai businesses providing insurance related services that do not involve assuming all or some of the insured risk, although they may conduct activities that fall into another Relevant Activity category.

Exceptional Cases

Licensees engaged in an Insurance Business may also provide other services. To prevent duplicate reporting Licensees providing captive insurance services are not considered engaged in a Distribution and Service Centre Business and will not need to separately demonstrate economic substance in respect of such ancillary Relevant Activities

The main points for including Insurance Business in the relevant activity of Economic Substance Regulation

  • The accepting of risks by carrying out contracts of insurance in both the life and non-life sectors;
  • Includes contracts of reinsurance and captive insurance arrangements; and
  • Excludes businesses providing insurance related services that do not involve assuming all or some of the insured risk.

 

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Address

Binary Tower, Marasi Drive,
Business Bay,
Dubai, UAE
Phone KSA: +966 58 264 5319
UAE: +971 567952590
Mail:info@aviaanaccounting.com

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