ADGM Custody Services and ADGM Fund Trustee License

Category 3B

Protecting Assets, Protecting Investors - Custody and Trustee Services Fully Regulated.

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What Is an ADGM Category 3B Licence?

ADGM Category 3B License is intended for licensees who will engage in custody and trustee services for collective investment schemes and other fund structures. This category of licence is relevant where the licensed firm will engage in asset safeguarding on behalf of third parties and may also engage in fiduciary obligations through trustee activities.

Category 3B is a specialist regulatory category within ADGM’s financial services framework. It is distinct from brokerage, investment dealing, or banking licences and is intended exclusively for firms whose primary function is asset safeguarding and fiduciary oversight.

A firm licensed under Category 3B is also permitted to engage in other connected financial services under Category 3C and Category 4 but is not permitted to engage in activities under Category 1, Category 2, or Category 3A.

ADGM Custody Services License: Scope and Purpose

A custodian license in ADGM enables authorised firms in ADGM to provide custody services in relation to fund assets, ensuring that all investments are kept, recorded, and protected from any form of abuse or misappropriation.

Custody services may include:

  • Safekeeping of financial instruments and assets
  • Maintenance of accurate asset records and ownership records
  • Settlement support and corporate action processing
  • Segregation of client assets from the custodian's own assets
  • Reconciliation and reporting to fund managers and regulators

FSRA places much emphasis on custody arrangements as the custodians offer a vital line of defense to investors. Lack of proper control in this field is a major cause of loss to investors and may endanger the integrity of the financial system in Uganda.

Authorized Activities for Category 3B Licensees

With a Category 3B license, entities are authorized to:

1
Offer Custody of assets for a fund
2
Act as Trustee of a collective investment scheme
3
Offer ancillary fiduciary and asset-protection services
These activities are critical for asset management arrangements that demand safekeeping of assets and independent monitoring for investors and supervisory authorities.

ADGM Fund Trustee License: Fiduciary Oversight

An ADGM Fund Trustee License authorises firms to act as trustee of a collective investment scheme or fund structure. In this capacity, the trustee owes fiduciary duties to investors and is responsible for monitoring the fund manager’s compliance with:

Constitutional documents of the fund

Laws and regulations that apply

Investment and borrowing limits

Valuation and pricing requirements

Trustee services form a cornerstone for investor protection. Trustees are supposed to operate independently of the fund manager and to challenge any breaches, escalate any concerns, and take action if investors' interests are in jeopardy.

For companies applying for a trustee services license in Abu Dhabi, ADGM provides a highly credible legal and regulatory environment with clarity of fiduciary standards and enforceable rights.

ADGM Fund Trustee License: Fiduciary Oversight

An ADGM Fund Trustee License authorises firms to act as trustee of a collective investment scheme or fund structure. In this capacity, the trustee owes fiduciary duties to investors and is responsible for monitoring the fund manager’s compliance with:

ADGM Category 1 licence enables the holder to:
01

Constitutional documents of the fund

02

Laws and regulations that apply

03

Investment and borrowing limits

04

Valuation and pricing requirements

Trustee services form a cornerstone for investor protection. Trustees are supposed to operate independently of the fund manager and to challenge any breaches, escalate any concerns, and take action if investors' interests are in jeopardy.

For companies applying for a trustee services license in Abu Dhabi, ADGM provides a highly credible legal and regulatory environment with clarity of fiduciary standards and enforceable rights.

ADGM Asset Custody Regulations: Regulatory Expectations

Key regulatory expectations include:
01

Clear segregation of client assets

02

Strong internal controls and dual control mechanisms

03

Independent reconciliation and audit procedures

04

Transparent reporting to clients and regulators

05

Effective oversight of sub-custodians and third-party service providers.

The firms have to demonstrate that custody risks are identified, monitored, and mitigated at both operational and governance levels.

The ADGM asset custody regulations are also based on international best practices, as they are guided by the principles outlined by various standard-setting bodies around the world. FSRA requires Category 3B licensees to have appropriate systems and controls to ensure the safety of their assets at all times.

Capital and Regulatory Requirements

Given that Category 3B licensees are involved in the custody of assets and act as trustees, the FSRA maintains stricter prudential requirements:

Risk-based capital: to be set by the FSRA according to the risk profile of the firm
Capital and risk strategies are to be included in the firm’s Internal Capital Adequacy Assessment Process (ICAAP) report
Strict governance, compliance, and custody practices are required

These minimum requirements are necessary due to the critical role of asset protection and safeguarding in custodial activities.

Governance and Control Functions

Strong governance is central to the FSRA custody services authorization framework. Applicants must appoint experienced and suitably qualified individuals to key roles, including:

Senior Executive Officer (SEO)

Compliance Officer

Money Laundering Reporting Officer (MLRO)

Finance Officer

Risk Officer

Directors and senior management must demonstrate experience in custody, trustee services, fund administration, or related fiduciary functions. All key individuals are subject to FSRA fit and proper assessments, covering competence, integrity, and financial soundness.

Custody Operations and the Safeguarding of Assets

Applicants must demonstrate thorough operational readiness to include:

Asset segregation frameworks

Reconciliation and reporting processes

Accounting and recordkeeping controls, access controls

Business continuity and disaster recovery arrangements

Where sub-custodians are utilized, due diligence by the FSRA requires clarity in contractual protections and ongoing monitoring.

Why Choose ADGM for Custody and Trustee Services?

ADGM provides an attractive opportunity for custody and trustee service providers because:

A Directly Applied Common Law Framework

Independent, Internationally Aligned Regulation

English Language Courts and Enforceable Fiduciary Rights

Strong Regional/Global Reputation

Thus, in terms of institutions looking to gain a custodian license in ADGM, these factors will translate into a more confident investor.

How Finjuris Can Help

Finjuris offers customized advisory support for companies seeking an ADGM Category 3B license, including:

Analysis of the custody business model

Preparation of FSRA-compliant documentation and policies

Development of governance and risk management structures

Support in preparing and submitting applications

Advisory support on compliance and post-licensing requirements

Finjuris’ knowledge and expertise will assist you get licensed and operational faster.

The ADGM Custody Services and Fund Trustee License is a critical regulatory authorisation for firms entrusted with protecting assets and acting in a fiduciary capacity. As an ADGM Category 3B License, it imposes extremely high standards of capital adequacy, governance, and operational integrity - reflecting the importance of asset safeguarding in the financial system.

With Finjuris as your regulatory partner, you gain clarity, confidence, and a structured pathway to FSRA authorisation, from initial strategy through to ongoing supervision.

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