The capital of the Emirate of Dubai, Dubai has grown to be a regional and international business centre. In 2004, a special economic zone known as the Dubai International Financial Centre was established in the city (DIFC). The Dubai Financial Services Authority (DFSA), a financial regulatory body for the area, was then established.
Notably, the DFSA only has authority over the grounds of the Dubai International Financial Center, offering a legal framework that meets international standards.
Asset management, banking and credit services, securities, mutual funds, custody and trust services, commodities futures trading, Islamic finance, insurance, an international stock exchange, and an international exchange for commodities derivatives are all subject to DFSA regulation. The DFSA is in charge of overseeing and executing anti-money laundering (AML) and counter-terrorist financing (CTF) regulations that apply in the DIFC in addition to regulating financial and auxiliary services.
Dubai only permits DFSA Forex brokers to carry out financial transactions throughout the UAE. However, Dubai does provide a chance for investors to establish a business in the DIFC to offer services to a worldwide clientele. Brokers can therefore establish their brokerage in Dubai without being subject to DFSA regulation. Investors are not safeguarded in this situation by any regulatory regulations or oversights that are ordinarily accessible with DFSA-regulated brokers. As a result, a number of investors experienced issues with brokers based in Dubai and had fallen prey to several frauds and financial scams. In order to avoid legal repercussions from the DFSA and authorities, all DFSA-regulated Forex brokers refrain from engaging in any frauds, thus it should be noted that the issue only affects unregulated brokers.