DFSA Category 3C vs Category 3D: a complete comparison

Financial services firms considering the DIFC as a base face an early decision in the licensing process: whether their intended activities fall under Category 3C or Category 3D of the DFSA's Prudential Investment, Insurance Intermediation and Banking (PIB) module. The two categories are often confused because both can involve Money Services, but they cover different segments of financial services and carry different regulatory obligations.

Check the current Rulebook. The DFSA changed the PIB capital and insurance rules with effect from 1 July 2025 and 1 July 2026. We could not read the current Rulebook text directly when we updated this article, so figures that we could not confirm against it have been removed or flagged below. Confirm the current rule text on the DFSA Rulebook before you rely on any figure here.

What is a Category 3D licence?

Under the PIB Module, an Authorised Firm is classified as Category 3D if its licence authorises it to Provide Money Services and it engages in one or more of the following activities: providing or operating a Payment Account; executing a Payment Transaction on a Payment Account provided or operated by another person; or issuing a Payment Instrument.

To be classified under Category 3D, the firm must not meet the criteria for Categories 1, 2, 3A, 3B, or 5. This exclusion shows that Category 3D is designed for firms focused on defined Payment Services rather than asset management, custody or trust activities. The business model is transactional: clients use the firm to initiate, execute or settle payments and do not enter into ongoing fiduciary or investment management relationships.

What is a Category 3C licence?

Under Section 1.3 of the PIB module, an Authorised Firm is in Category 3C if its licence authorises it to carry on one or more of the following Financial Services:

• Managing Assets
• Managing a Collective Investment Fund
• Providing Custody, other than for a Fund and other than in relation to Crypto Assets
• Managing a PSIA (PSIAr, a restricted Profit Sharing Investment Account)
• Providing Trust Services, where the firm acts as trustee in respect of at least one express trust
• Providing Money Services, specifically where it issues Stored Value

Like Category 3D, a Category 3C firm must not meet the criteria of Categories 1, 2, 3A, 3B, or 5. The scope is broader: asset management, custody (with carve-outs for funds and crypto assets), trust services and one form of Money Services, issuing Stored Value. That is the main distinction between 3C and 3D on Money Services: 3C covers stored value issuance, and 3D covers payment account operation, transaction execution and payment instrument issuance.

Tip. A firm that issues both Stored Value and Payment Instruments needs to assess which activities are primary and whether a single licence category covers its full scope. Where activities span both categories, talk to the DFSA before you submit a formal application so the classification question is settled early.

Capital requirements

The PIB module sets Base Capital Requirements by category under Rule 3.6.2. For Category 3C the requirement depends on the activities on the licence, and the DFSA reduced base capital for some fund managers in its 2025 prudential amendments. We have not confirmed the current Category 3C figures against the Rulebook, so check Rule 3.6.2 for your activities. For Category 3D, published guidance from advisers puts the base capital at US $200,000, which is the figure we have kept:

The Expenditure Based Capital Minimum (EBCM) in Section 3.7 of PIB can also apply. Since 1 July 2025, the DFSA has limited the EBCM for Category 3 and 4 firms to those that hold Client Assets or are licensed for certain services, including custody, money services, acting as trustee of a fund and managing a collective investment fund other than a venture capital fund (DFSA letter to Senior Executive Officers, 17 June 2025). The EBCM formula was also revised in the 2025 amendments, so the 18/52 fraction that applied earlier should not be relied on. Check Section 3.7 for the current calculation.

Common mistake. The fund manager capital exceptions under Category 3C are narrow. They apply only where Managing a Collective Investment Fund is the sole Financial Service conducted. A firm that manages a fund and also provides custody or trust services falls back to the standard Category 3C requirement. Plan capital around the full scope of authorised activities, including those outside the primary line of business.

Operational risk requirements

PIB sets operational risk requirements for Authorised Firms in the lower prudential categories, and both Category 3C and Category 3D firms are in scope according to their authorised activities. We could not confirm the current section and appendix references against the Rulebook, so check the operational risk provisions of PIB for your activities.

Professional indemnity insurance (PII) rules also changed. Adviser summaries of the DFSA's 2025 amendments report that PII is no longer required for Categories 3C and 3D from 1 July 2026, while firms still need appropriate systems and controls. Confirm this against the Rulebook. In practice, a Category 3D firm should still expect the DFSA to focus on transaction security, system resilience and fraud controls.

Notification and reporting obligations

PIB Rule 3.2.6 requires Authorised Firms in the lower prudential categories to notify the DFSA if their Capital Resources fall close to their Capital Requirement. The threshold we have seen cited is 120% of the requirement, and notification must be immediate and confirmed in writing. We have not confirmed the current threshold, so check Rule 3.2.6. The obligation continues for as long as the firm is authorised.

Section 2.3 of PIB sets out general reporting requirements, including deadlines for annual and other regulatory returns. Check the current deadlines in Section 2.3 and in the DFSA's Prudential Returns module.

Conduct of Business obligations

The Conduct of Business (COB) module applies to every Authorised Firm with respect to carrying on any Financial Service in or from the DIFC. The specific obligations differ between Category 3C and 3D because the client relationships are different.

Key differences summary

Industry note. A common misclassification is to assume that any Money Services activity defaults to Category 3D. The DFSA framework separates issuing Stored Value (Category 3C) from operating Payment Accounts or issuing Payment Instruments (Category 3D). A prepaid card issuer that also holds balances on behalf of users may find its activities fall under both definitions, so speak to the DFSA before the authorisation application is submitted.