Sunday, 23 June 2024

DIFC’s Salmaan Jaffery: “Family Wealth Centre aims to capture the inflow of $8 trillion in private wealth”

5 min read

The Dubai International Financial Centre, home to 330 asset and wealth companies and 55,000 wealthy individuals, aims to develop Dubai as a centre for global wealth with its Family Wealth Centre

  • DIFC is one the leading financial centres in the Middle East, Africa and South Asia
  • Becoming a global wealth hub through Family Wealth Centre
  • Maintaining top-level regulatory compliance 

In 2022, the United Arab Emirates (UAE) saw an unprecedented influx of affluent migrants, with over 5,000 millionaires flocking to the country, making it the largest net inflow of millionaires in the world.

Salmaan Jaffery, chief business development officer of Dubai International Financial Centre (DIFC) attributes this to the country’s safe and stable environment, business-friendly policies, and strategic location.

Salmaan Jaffery, Chief Business Development Officer, DIFC

UAE has become a magnet for global wealth managers and high-net-worth individuals (HNWI) who possess investable assets in excess of $1 million. DIFC, a special economic zone and the lynchpin of UAE’s financial industry, is now home to 55,000 HNWI and 330 asset and wealth companies, including Edmond de Rothschild Group, Nomura and EnTrust Global.

The DIFC Family Wealth Centre was launched in March 2023 to capture the inflow of private wealth and family businesses as well as ultra-HNWI.

Commenting on Dubai’s wealth management landscape and prospects, amid global competition, Jaffery said: “Dubai is a safe haven. We have a stable government and institutions, and zero taxes so, it’s a very attractive proposition for families who want to preserve their wealth.”

He added: “The $8 trillion in private wealth across the Middle East, Africa and South Asia (MEASA) region provides wealth and asset management firms with a compelling reason to establish in the UAE, specifically in DIFC.”

DIFC is one of the leading financial centres in MEASA

Established in 2004, DIFC is one of the leading financial centres in the MEASA region. This region comprises 72 countries with a combined population of approximately three billion and a nominal gross domestic product of $7.7 trillion.

DIFC is regulated by the Dubai Financial Services Authority and operates within the English common law framework.

According to Jaffery, the development of DIFC can be divided into three phases. The first phase focused on traditional commercial and investment banking, with global brands like Goldman Sachs, Morgan Stanley, and Merrill Lynch to build trust and credibility. This phase has led to the development of a $200 billion balance sheet business.

The second phase involved the development of financial markets, including funds and asset management, which has attracted over 330 global asset managers.

The third and current phase, that began four years ago, involves digitalising and innovating financial services. DIFC is actively promoting the use of advanced technologies such as blockchain, artificial intelligence, and cloud computing to enhance the efficiency and security of financial transactions.

Becoming a global wealth hub through Family Wealth Centre

As families are the driving force behind regional economies, wealth has become a critical piece of DIFC’s development. The Middle East and Africa (MENA) region alone has roughly $6 trillion in private capital, with intergenerational wealth transfers in the trillions, making DIFC’s role in wealth management increasingly important.

Jaffery emphasised that DIFC aims to attract top global financial experts and technology talents to increase its competitiveness. He said: “We’re in the middle of the largest inflow of hedge fund portfolio managers in our history and that’s leaking into our broader investment community. In technology, we’re seeing depth and quality in not just founders and fundraisers but people who code or do product development.”

The Family Wealth Centre was launched to specifically engage and credit global and regional families, as well as ensure their connectivity with ecosystem providers. Jaffery said: “The launch of the Family Wealth Centre conveys a sense of seriousness and purpose for Dubai as a centre for global wealth.”

Maintaining top-level regulatory compliance

DIFC recognised the importance of maintaining top-level regulatory compliance to minimise risks. While Dubai has made significant strides in its wealth management landscape, concerns remain over transparency and regulatory measures.

This has led to accusations of money laundering and terrorism financing, especially in the wake of the Russia-Ukraine conflict, with the UAE facing accusations of helping Russia evade sanctions. The UAE Central Bank recently cancelled the Abu Dhabi licence for Russia’s MTS Bank, citing the sanctions risks associated with the lender.

Jaffery said: “For a place like Dubai, it will be very easy for the DIFC to open its floodgates and say everyone can come in. But we’ve taken a very measured approach because the reputational and other financial risks to our system are high if we don’t maintain top-level regulatory compliance and corporate governance.”

Despite the challenges, Dubai remains an attractive destination for HNWI and family offices, with initiatives like Family Wealth Centre enhancing its appeal. To maintain its competitive edge, the city must continue to strengthen its regulatory and compliance framework and expand its product offerings.

Institution: SentinelOne
People: Liz Drysdale
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