VZCZCXRO2933
PP RUEHDIR
DE RUEHDE #0001 0020818
ZNR UUUUU ZZH
P R 020818Z JAN 08
FM AMCONSUL DUBAI
TO RUEHC/SECSTATE WASHDC PRIORITY 5797
INFO RUEHZM/GCC C COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHAD/AMEMBASSY ABU DHABI 2821
RUEHDE/AMCONSUL DUBAI 8958

UNCLAS DUBAI 000001 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV TC AE
SUBJECT: DIFC SIGNS MOU WITH FDIC, FEDERAL RESERVE AND OTHER US 
FINANCIAL REGULATING AUTHORITIES 
 
¶1. (U) On October 23 the Dubai Financial Services Authority (the 
DFSA is the regulating authority for the Dubai's self-governing 
financial "free zone" the Dubai International Financial Center, 
DIFC) entered into a comprehensive Statement of Cooperation with 
key U.S. federal banking supervision authorities: the Federal 
Reserve, the Office of the Comptroller of the Currency (OCC), 
the Federal Deposit Insurance Corporation (FDIC) and the Office 
of Thrift Supervision (OTS).  While there are currently less 
than ten banks and banking organizations chartered in the US 
with corresponding operations in the DIFC that would fall under 
the agreement, the memorandum of understanding opens the door to 
unprecedented cooperation between Dubai and US financial 
regulators. 
 
¶2. (U) Under the agreement, the DIFC, Fed, OCC, FDIC and OTS 
agree to cooperate with each other during the authorization of a 
financial institution in the other's jurisdiction, as well as in 
supervision of ongoing activities of cross-border banking 
businesses.  In a nutshell, if a financial institution is 
chartered in either the US or in the DIFC, and wants to open and 
maintain corresponding operations in the other location, the 
regulatory authorities of both locations agree to share 
information about the financial institution.  Thus, the 
initiative reflects each agency's commitment to cooperation in 
relation to prudent oversight and inspections.  It adopts the 
model for information sharing developed by the Basel Committee 
on Banking Supervision and follows similar arrangements the DFSA 
has with other significant banking bupervisors (such as the UK 
Financial Services Authority, FSA, and the German Financial 
Supervisory Authority, BaFin). 
 
¶3.  (SBU) Comment:  While the launch of the DIFC, initially 
triggered concerns that the center could become a haven for 
money laundering and other illicit financial dealings, their 
ongoing recruitment of talent from established US, UK, EU and 
Australian regulators, their internal jurisprudence system 
(predicted on UK common law and not subject to existing UAE 
commercial law) and their agreements with top international 
regulators (such as this one) only serve to visibly demonstrate 
the DIFC's commitment to becoming a world class financial 
center.  JP Morgan/Chase, Bank of New York, Merrill Lynch and 
AIG have established operations within the DIFC and with the 
pending joint venture between NASDAQ and Dubai International 
Financial Exchange (the DIFC based stock exchange), we 
anticipate the attraction of the DIFC as the domicile of choice 
for U.S. financial institutions in the Middle East will be 
further enhanced.  End Comment. 
 
SUTPHIN