How important are family offices to the Middle East region?
While there are no official statistics published, based on various reports, the Gulf Cooperation Council is poised for the second fastest growth in family offices after Asia. The region is dominated by single family offices with a small number of multi-family offices with deep pools of wealth supporting economies across the Middle East.
At Abu Dhabi Global Market (ADGM) specifically, although we are established as a broad based international financial centre, for the first phase we are centering on what we view are Abu Dhabi’s natural strengths of wealth and asset management.
Therefore we are ensuring that we deliver an ideal platform for wealth management with trust and custodian services forming an important element of the entire eco-system. So the family office community, both in our region and internationally, is one key component of our overall wealth management focus.
How important is the role of governance?
Governance is becoming increasingly important in the Middle East as family offices better appreciate the fact that accountability and continuity — a priority for family offices— are achieved through proper governance. Traditionally, this meant the majority of family offices were established in places such as London and Geneva.
However, with the emergence of regional financial centres, which provide regulation, governance and infrastructure based on international guidelines, we are seeing more interest from family offices that are looking for structures that allow them to have their assets managed closer to sources and concentrations of wealth.
What steps is ADGM taking to encourage families to set up single family offices and formulate the procedural and legislative landscape?
Family offices are a key focus for us at ADGM. This is clearly demonstrated in our efforts when drafting our commercial regulations, which went through open market consultation at the start of the year. These introduce a form of vehicle referred to as a Restricted Scope Company that is specifically targeted at single family offices.
This provides a structure which has limited public disclosure while maintaining full compliance with Anti-Money Laundering and Financial Action Task Force requirements and has been specifically developed with the requirements of single family offices in mind. Under our draft regulations we are also looking at succession planning and the open inheritance structure to providing for both Shariah and non-Shariah succession options.
Overall the regulations are being drafted in such a way that will provide the ideal operating environment for family offices, with a framework that is both risk-focused and responsive to changing market needs and requirements. If ADGM is to be successful, it is critical that we take a long-term view and retain the ability to be flexible and nimble.
We welcome direct discussion with these families and their advisors to ensure that we better understand their requirements and work together to provide them with an ideal platform that is in line with international best practice. We also look forward to their input into our draft regulations once they are issued for open market consultation in the next couple of months.
How important is the guidance provided by Sir Hector Sants?
Sir Hector has a wealth of private and public sector experience, and, having recently led one of the world’s pre-eminent regulatory authorities, is ideally placed to advise ADGM on the development of its regulatory framework.
He is also highly respected throughout the global financial arena and has an extensive network of contacts among the world’s leading regulators and financial institutions given his previous roles as Chief Executive of Credit Suisse EMEA and Head of Compliance, Governance and Regulatory Relations at Barclays Bank.
Sir Hector is working closely with the CEO of ADGM’s Regulator, Richard Teng, so that together they can ensure that ADGM becomes a financial centre that is truly compatible with the world’s best regulatory regimes.
How will ADGM set itself apart as a hub for family offices compared to other regional financial centres and regulation?
Abu Dhabi already has a sophisticated financial services sector that it has developed over the past 45 years and has a portfolio of investible assets in excess of $1 trillion. Globally it has the financial heritage, relationships and expertise in wealth and asset management and private banking. Family offices play a big and important role in our economies and therefore it is a natural step in our growth.
It is this, combined with Abu Dhabi’s safe and secure environment and the ease of access it offers to the economies of Africa, the Middle East and Asia that has prompted the establishment of ADGM, a broad-based financial centre that will appeal to family offices from the region and around the world.
In collaboration with international financial centres, global institutions and regulators, ADGM will develop and provide family offices with the regulatory framework, legal jurisdiction and attractive business environment they need to manage their assets and protect the future of their family estates. All this is within a zero-tax environment and with the support of an internationally-recognised legal jurisdiction.
