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New Compliance Regime in DMCC – Unreasonably

(Dubai, 30/08/2014) Since June/July this year, licensees of Dubai’s DMCC start to rub their eyes when it comes to their annual license renewal. Out of the blue, the Free Zone Authority hands out a “DMCC Inspection Form” to its clients.

DMCC ViewSince its establishment in 2002, the former Duplex Free Zone DMCC (Dubai Multi Commodities Centre) / JLT (Jumeirah Lake Towers) – in 2014 merged simply to DMCC – was known for serious practice of KYC and initial Compliance when it came to company registrations. One of its renewal requirements was and is to submit audited financial reports for the prior fiscal year. So far, so good.

 

The DMCC Inspection Form

But meanwhile an outstanding “new procedure” took place: The request for a duly filled out “DMCC Inspection” Form along with the renewal application – in addition to the submission of audited financial reports! Taking a deeper look in all required information, one may conclude that this newly practiced compliance goes far beyond tax authority audits, as they are common practice in most of the world’s countries under a tax regime (UAE fortunately doesn’t belong to this country group).

The DMMC Inspection Form can be downloaded and reviewed here.

 

Some of the required information

To summarize its critical elements, here some “highlights” of the requested information, many or some of them to be seen as truly confidential corporate information:

  • List of Clients
  • List of Suppliers
  • Main Quotations & Proposals to Clients
  • Main Products & Services provided
  • Main Sales & Purchase Contracts with Clients and Suppliers

Furthermore, the DMCC Inspection Form lists a huge number of required documents:

  • Bank Statements of the last 2 years including all attachments like in/out TT’s, LC’s,
    Cheques etc. (standing in the list as “optional” . . .)
  • Company Brochures
  • Invoice Copies of the last 2 years
  • Consultation Proposal Report samples
  • AML (Anti-Money Laundering) / CFT (Counter-Terrorist Financing)
    Policy & Process documentation
  • Copy of the internal Controlling System

This may be seen by many as a full Corporate Striptease!

Corporate Striptease x

x


MCI’s Principal Criticism

Even if parts of these requirements might be common in Banking, this new Compliance Procedure should create massive headache – thus for both sides!

There is nowhere any statement or disclaimer from the DMCC Free Zone Authority,

  • what will happen with the collected data and document copies
  • how the data will be stored in the Free Zone
  • how confidentiality and non-disclosure requirements will take place
  • who will have access to these details

If you disclose such confidential details to your bank or tax authority, your interest is protected by laws or special mutual agreements – from DMCC such kind of agreements are not given! Provocatively, you could eventually also glue these details on your office door or at the wall in front of your basement parking lot. Additionally, it is not understandable why a Free Zone Authority in a No-Tax Jurisdiction is aiming to get such details on top of so or so submitted Audited Financial Reports.

 

What to do at least?

Maybe DMCC itself is aware about the contained “dynamite” in this new procedure – the footer of the DMCC Inspection Form is: “For more information, please email compliance@dmcc.ae for clients’ comments regarding on this requirements.”

Non DisclosureAnyone, confronted with this form, should question first of all the sense and need of this procedure! We would not be surprised if the demanded answers are only something like “this is our procedure”, “required by concerned departments” etc., which should be questioned then again!

If a proper explanation will be given, you should demand a Confidentiality & Non-Disclosure Agreement, duly signed by a DMCC manager – containing also a regulation of penalty in case of agreement breaches!

It could be expected that in case of a sufficient number of such kind of check backs and complaints, the dubious desire of DMCC will be silently buried.

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