Beginner’s Guide to Establishing a DIFC Multi Family Office

Overview

The Dubai International Financial Centre (DIFC) is well-regarded for its structured framework supporting Single Family Offices, and it also offers robust provisions for Multi-Family Offices. While Single Family Offices serve only one family and can provide a wide array of services with minimal regulatory restrictions, a DIFC Multi-Family Office accommodates multiple families, which introduces a broader scope of services and a higher degree of regulatory oversight.

Understanding DIFC Multi-Family Offices

A Multi-Family Office (MFO) in the DIFC caters to the needs of multiple families, providing a consolidated platform for wealth management, governance, and strategic planning. Given the involvement of multiple family units, the regulatory requirements are more stringent compared to Single Family Offices. Specifically, a DIFC Multi-Family Office that engages in restricted financial activities—such as investment management or advisory services—must secure the appropriate licenses from the Dubai Financial Services Authority (DFSA). This ensures that MFOs operate within the financial regulatory framework, upholding transparency and compliance.

For families, the MFO model offers access to shared resources, often resulting in cost savings and efficient management of wealth, tax planning, and legacy preservation. The centralized structure also allows each family to benefit from high-quality, customized financial services while leveraging economies of scale.

Setting Up a DIFC Family Office: Key Steps

Establishing a Family Office in the DIFC requires thoughtful planning and adherence to regulatory processes. Here are the essential steps to consider:

• Determine the Family Office Structure
  The first decision is to determine whether the office will be a Single Family Office (SFO) or a Multi-Family Office (MFO). This choice impacts the regulatory requirements, licensing, and services offered. Single Family Offices benefit from fewer restrictions but are limited to serving a single family, while Multi-Family Offices, which serve multiple families, are subject to stricter regulatory scrutiny and must obtain the necessary DFSA authorizations for certain financial services.

• Engage a DIFC Corporate Services Provider and Other Advisors
  Partnering with a DIFC Corporate Services Provider, such as the Cavenwell Group, is essential for streamlining the application process. A Corporate Services Provider serves as a liaison with the DIFC Registrar, ensuring all necessary paperwork and documentation are in order. Additionally, engaging legal and tax advisors familiar with DIFC regulations helps customize the office structure to meet the unique financial goals and needs of the family or families.

• Prepare the Application Documentation:
  The application to establish a Family Office in the DIFC must include the following information:

1. The common ancestor of the family and details of the family members served.
2. Explanation of the family’s Source of Wealth.
3. Verification of the Source of Funds for the Family Office
4. Information on who controls the Family Office and its Ultimate Beneficial Owners.
5. Description of Family Entities, Structures, and Businesses served.
6. Identification of any family members considered Politically Exposed Persons.
7. Details on the specific Family Office Services offered.
8. Confirmation of adherence to DIFC regulations.
9. Proof that the family meets the Minimum Net Asset Requirement of $50 million USD

• Statement by the DIFC Corporate Services Provider
  The Corporate Services Provider, such as Cavenwell, must prepare an official statement verifying that:

1. The individuals listed are family members, and that they meet the Family Office’s definition.
2. The Family meets the minimum net asset requirement.
3. Due diligence has been completed to identify the Ultimate Beneficial Owner(s) and confirm the
4. Source of Wealth and Source of Funds.

• Establish Office Space
  The Family Office is typically required to have a physical presence within the DIFC. However, for families with an existing substantial presence in the UAE, it may be possible to use a registered office provided by a Corporate Services Provider instead of a dedicated space.

• Meet the Minimum Net Asset Requirement
  The family must meet the DIFC’s minimum net asset threshold of $50 million USD, which can be held by the Family Office or across other family structures.

• Submit the Application
  With all documentation in place, the completed application is submitted to the DIFC Registrar. The Registrar will review the application, and if all criteria are met, issue a license to operate the Family Office.

Establishing a Multi-Family Office in the DIFC offers families a platform for effective wealth management and governance, all within a structured and compliant environment. The DIFC framework provides a clear and systematic path for setting up a Family Office, facilitating growth and continuity for families across generations

Frequently Asked Questions

What is the minimum capital requirement for setting up a multi family office in DIFC?

There isn’t a specific amount of money needed to start a multi-family office. However, it is very important to show you have enough money to take care of the family wealth. You also need to manage asset management tasks well in the Dubai International Financial Centre’s financial services area.

Can a multi family office in DIFC invest internationally?

DIFC is a top player in financial services worldwide. It allows international investment and has no limits on foreign ownership or moving money back home. This way, families can spread their wealth and explore investment options around the world.

How does DIFC ensure the privacy and security of family offices?

DIFC focuses on the privacy and security of family offices. The DIFC Privacy Vault ensures that sensitive information stays confidential. Plus, a strong focus on regulatory compliance gives you peace of mind.

What are the tax implications for multi family offices in DIFC?

DIFC has a great tax setup. There are no taxes on corporate income, personal income, or capital gains. This makes it a good place in the Middle East for handling private wealth.

Are there any specific compliance requirements for multi family offices in DIFC?

Multi-family offices in DIFC need to follow the rules set by the government. This includes the Family Arrangements Regulations of 2023. These regulations help support the UAE Family Business Law. This ensures that there is legal stability and clear guidelines for compliance.

Also Read: Understanding DIFC Single Family Office Regulations