Entire Section

  • GEN 2.6 GEN 2.6 Providing Money Services

    • GEN 2.6.1 GEN 2.6.1

      (1) In GEN Rule 2.2.2Providing Money Services means:
      (a) providing currency exchange;
      (b) providing Money Transmission;
      (c) providing or operating a Payment Account;
      (d) executing Payment Transactions on a Payment Account provided or operated by another Person;
      (e) issuing Payment Instruments; or
      (f) issuing Stored Value.
      (2) In this Rule:
      (a) “Money Transmission” means the transmission of money or monetary value, without a Payment Account being created in the name of the payer or the payee, where funds are:
      (i) received from a payer for the sole purpose of transferring a corresponding amount to a payee or to another Payment Service Provider acting on behalf of the payee; or
      (ii) received on behalf of, and made available to, the payee.
      (b) “Payment Account” means an account held in the name of one or more Users which is used to execute Payment Transactions;
      (c) “Payment Instrument” means a:
      (i) personalised device; or
      (ii) personalised set of procedures agreed between the User and the provider,
      that is used by the User to initiate a Payment Order;
      (d) “Payment Order” means an instruction by a payer or payee to their respective Payment Service Provider requesting the execution of a Payment Transaction;
      (e) “Payment Service” means an activity referred to in (1)(b),(c),(d) or (e);
      (f) “Payment Service Provider” means a Person providing a Payment Service;
      (g) “Payment Transaction” means an act initiated by the payer or payee, or on behalf of the payer, of placing, transferring or withdrawing funds, irrespective of any underlying obligations between the payer and payee;
      (h) "Stored Value" means any electronically (including magnetically) stored monetary value as represented by a claim on the issuer which is issued on receipt of funds or other assets for the purpose of making Payment Transactions, but does not include monetary value that can be used only to pay for goods or services referred to in GEN Rule 2.6.4.
      Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]
      [Amended] from DFSA RMI266/2020 (Made 26th February 2020). [VER48/04-20]

      • GEN 2.6.1 Guidance

        1. The following diagram illustrates the different types of Money Services:

        2. A particular service provided by an Authorised Firm may involve only one of the above activities e.g. Money Transmission, or a combination of activities e.g. issuing Stored Value, issuing Payment Instruments and operating a Payment Account.
        3. The term “Payment Service” is used to describe all or any of the activities in GEN Rule 2.6.1(1) other than providing currency exchange or issuing Stored Value.
        4. A Payment Account is an account that is used to execute Payment Transactions. Funds are usually expected to remain in a Payment Account only for a short period. A provider of such an account is prohibited from paying any interest or other return on funds in the account (COB Rule A7.2.16). This is because paying interest or any other return on the account is likely to result in the account being a Deposit or a Profit Sharing Investment Account (PSIA).
        5. A “User” means a user of a Money Service and, in relation to a Payment Service, includes a person acting in the capacity of payer, payee or both (see the definition in GLO).
        6. The reference in the “Stored Value” definition in GEN Rule 2.6.1(2)(h) to receipt of “other assets” includes, for example, the receipt of digital currencies or any other form of assets that may be accepted by an issuer of stored value. Stored Value does not, however, include a loyalty programme where a person earns points that can be redeemed directly for goods or services of the loyalty programme provider.
        7. COB Rule A7.3.3 limits the total amount of Stored Value that may be issued to an individual User at any point in time to $5,000 and the total value of a single Payment Transaction to $1,000.
        Derived from RMI266/2020 (Made 26th February 2020). [VER48/04-20]

    • Exclusions

      • GEN 2.6.2 GEN 2.6.2

        A Person who is an Authorised Firm does not Provide Money Services for the purposes of GEN Rule 2.2.2 if it does so in relation to the carrying on of another Financial Service where Providing Money Services is in connection with and a necessary part of that other Financial Service.

        Derived from DFSA RM01/2004 (Made 16th September 2004). [VER1/09-04]
        [Added] DFSA RMI266/2020 (Made 26th February 2020). [VER48/04-20]

        • GEN 2.6.2 Guidance

          1. Examples of activities that are likely to be excluded under GEN Rule 2.6.2 include, for example, Money Service activities carried on in connection with, and as a necessary part of, Providing Credit, Dealing in Investments (as principal or agent), Operating an Exchange or Clearing House, Managing Assets or Providing Custody.
          2. A Bank or an Islamic Financial Institution Managing a PSIA will also be able to provide many of the Money Service activities under the exclusion in GEN Rule 2.6.2, as they will be activities provided in connection with, and as a necessary part of, other Financial Services the Bank or Islamic Financial Institution usually provides to its customers. However, if a Bank or Islamic Financial Institution wishes to provide a discrete service, such as selling a type of Payment Instrument, it will need additional authorisation for Providing Money Services.
          Derived from RMI266/2020 (Made 26th February). [VER48/04-20]

      • GEN 2.6.3

        A Person does not Provide Payment Services if the Person carries out a Payment Transaction for their own account.
        Derived from RMI266/2020 (Made 26th February 2020). [VER48/04-20]

      • GEN 2.6.4 GEN 2.6.4

        (1) A Person does not Provide Money Services where the Person issues electronically stored monetary value that can be used only to pay for goods or services, other than Money Services, provided by that Person or another entity in the Person’s Group.
        (2) Where a portion of electronically stored monetary value issued by a Person can be used only to pay for goods or services referred to in (1), then the Person does not Provide Money Services in respect of that relevant portion if the conditions in (3) are met.
        (3) The conditions in (2) are that the relevant portion:
        (a) is discrete and clearly identifiable; and
        (b) can be used only to pay for goods and services referred to in (1) and cannot be used for any other purpose.
        Derived from RMI266/2020 (Made 26th February 2020). [VER48/04-20]

        • GEN 2.6.4 Guidance

          1. GEN Rule 2.6.4 is intended to exclude monetary value issued by a merchant that is accepted only by the merchant itself (i.e. a ‘closed loop’ system). Examples of services that will be excluded under this Rule include cards that can be used only to pay for goods purchased from a specific store or chain of stores or that can be used only to pay for a particular service (such as a taxi or other transport service) or to pay for goods or services offered by a specific club or organisation. However, if a card is more generally accepted, and can be used with other third parties, it will not fall within the exclusion.
          2. Where monetary value on a card or wallet can be used for a combination of purposes, all of that monetary value is likely to constitute Stored Value unless the issuer can demonstrate that there is a clear separation between amounts that can be used only for the issuer’s goods and services and amounts that can be used for mixed purposes.
          Derived from RMI266/2020 (Made 26th February 2020). [VER48/04-20]