The UAE’s financial landscape is undergoing a transformation. With its position as a rapidly expanding and internationally integrated market, the UAE has introduced Federal Decree-Law No. (6) of 2025 to modernise its regulatory framework for financial institutions, fintech, and insurers. The country’s economic diversification and global competitiveness requires constant adaptation to remain competitive and attract investors. The UAE serves a large multicultural market, and the relationship is based on confidence hence the need to ensure that the legislation aligns with global standards.
The new banking law (Federal Decree-Law No. 6 of 2025) replaces the Federal Decree-Law No (14) of 2018, which governed the CBUAE and financial institutions’ activities and Federal Decree-Law No (48) of 2023, which governed insurance activities across the UAE. The new banking law not only brings banking, fintech, and insurance regulation under one framework but also widens the applicability scope. The law applies to all financial institutions, insurance businesses, and individuals engaging in financial activities within the UAE, whether incorporated locally or operating as branches of foreign entities. However, consistent with the 2018 law, it excludes entities operating within the UAE’s financial free zones, such as the DIFC and ADGM. Individuals engaging in financial activities in the UAE have until 16 September 2026 to ensure compliance.
Definition of Financial Activity
Article 61 of the Act gives the definition of what counts as a financial activity. Among the activities, are providing open finance services and providing payment services using virtual assets which have been recently introduced to reflect the introduction of the CBUAE financial regulation and the payment token services regulation. Article 62 emphasizes that any person carrying out, offering, issuing or facilitating a licensed financial activity is regulated by the CBUAE regardless of the medium, technology or form used. This widens the scope of applicability as the previous 2018 framework had a narrower application and focused mainly on traditional financial institutions like banks and finance companies. For example, blockchain-based platforms and digital wallet operators may now fall within the CBUAE’s regulatory perimeter. The CBUAE is expected to issue implementing regulations to help clarify what this will mean for the affected service providers.
Pre-emptive rights and resolution powers of the CBUAE.
In the 2018 law, the CBUAE could only intervene when a financial institution was already distressed and there was no formal resolution regime. Now, articles 142 to 146 of the new law create a structured pre-emptive rights allowing the CBUAE to impose corrective action upon first sight of instability. Additionally, the CBUAE can now appoint management, restructure or liquidate a financial institution as part of its resolution authority. According to the IMF, good regulatory governance is the key to achieving and preserving financial stability. The new banking law reflects a clear commitment to strengthening regulatory governance and not only enhances systemic stability but also aligns with international regulatory standards. This is a welcomed and necessary reform for an ever-growing market that continues to attract foreign investors.
Sanctions, Penalties and Fraud Prevention
The new banking law significantly strengthens the sanctions and penalties framework by explicitly extending CBUAE’s oversight to fintech firms, virtual asset service providers and any entity licensed to facilitate financial activities. An expansion on the administrative and financial penalties and an increase of the highest financial penalty fine to one billion dirhams emphasises the CBUAE’s commitment to uphold integrity within the nation’s financial system. Notably, the actual fine for a particular breach depends on the CBUAE’s discretion and the severity of the violation. Additionally, an introduction of specific obligations to implement robust fraud prevention and detection systems by financial institutions to align with global standards and to assist in the maintenance of a robust and resilient financial system. Modernising fraud prevention obligations ensures that in the constantly advancing financial environment, consumers and investors are protected and secures the UAE’s position as a financial hub.
Conclusion
Other key obligations of the new law are to enhance consumer protection, maintain the stability of the national currency and ensure that licensed financial institutions obtain and keep adequate guarantees for all types of facilities. Businesses need to conduct a compliance assessment and stay on the lookout for any regulations that might be released to offer more guidance on the implementation of the new rules.
With the evolving nature of the financial environment, legislation must not only respond to current risks but also anticipate those yet to emerge. With the new reforms brought about by Federal Decree no.6 of 2025, hopefully the UAE’s new framework will rise to the occasion and help maintain the UAE’s revered status.
REFERENCES
CMS, “The new UAE Central Bank law: Expanding the regulatory perimeter for a digital era” (Law-Now, 13 October 2025) The new UAE Central Bank law: Expanding the regulatory perimeter for a digital era
Emirates News Agency, “UAE President issues Federal Decree-Law on Central Bank, regulation of financial institutions, insurance activities” (Emirates News Agency, 10 October 2025) UAE President issues Federal Decree Law on Central Bank, regulation of financial institutions, insurance activities
Federal Decree-Law No. 6 of 2025 Regarding the Central Bank, Regulation of Financial Institutions and Activities, and Insurance Business
Federal Decree-Law No. 14 of 2018 Regarding the Central Bank and Organization of Financial Institutions and Activities.
Gulf Business, “UAE enacts new law to reinforce CBUAE’s financial oversight” (13 October 2025) UAE enacts new law to reinforce CBUAE's financial oversight
Pinsent Masons, “New UAE Banking Law revamps financial regulatory framework” (Out-Law News, 16 October 2025) New UAE Banking Law revamps financial regulatory framework
The National, “New UAE Central Bank law further boosts financial stability and customer protection” (10 October 2025) New UAE Central Bank law further boosts financial stability and customer protection | The National
Udaibir S Das and Marc Quintyn, Crisis Prevention and Crisis Management: The Role of Regulatory Governance (IMF Working Paper WP/02/163, 2002) Crisis Prevention and Crisis Management: The Role of Regulatory Governance
