UAE's New Financial Law: Massive Fines Possible

UAE's New Financial Law Expands Central Bank Powers, Up to 1 Billion Dirhams Fines Possible

The United Arab Emirates has introduced a new, comprehensive financial regulation that significantly increases the Central Bank's powers and tightens the requirements for institutions operating in the financial sector. Federal Law-Decree No. 6 of 2025 not only applies to traditional banking and insurance sectors but also encompasses fintech companies, technology platforms, payment system providers, and other financial actors. The aim of this new legislation is to ensure financial stability, strengthen consumer protection, and elevate the fight against money laundering and financial fraud to a new level.

Stronger Regulatory Intervention and Record Fines

Perhaps the most significant aspect of the new law is the extension of fining capabilities. In some cases, administrative fines can be as much as ten times the value of the violation, with a cap reaching 1 billion dirhams. This gives the Central Bank greater freedom than ever before in addressing regulatory breaches. Additionally, the regulatory authority can deduct the fine from the involved party's account even before a court judgment and, for the sake of transparency and market discipline, may also make the details of fines and settlements public.

"The Central Bank has been given long and sharp claws with this law," stated a legal expert. For financial institutions, this means that more robust compliance systems will be needed, particularly in preventing money laundering, enhancing customer identification (KYC), and strengthening accountability.

Opportunity for Early Intervention in Crisis Situations

The new regulation allows the Central Bank to intervene at early signs of trouble. If an institution shows signs of financial distress, the central bank may require corrective actions, capital replenishment, liquidity prescriptions, and may even replace board members or take full control if necessary. The goal is not just crisis management but prevention.

Additionally, the law reinforces the central bank's role as a national crisis management authority. This includes the power to replace management, recover assets, restructure capital frameworks, or sell assets—all aimed at ensuring the continuous operation of key financial services.

Unified Consumer Protection Platform: Sanadak

The new regulation not only tightens measures against financial institutions but also strengthens the rights of retail customers. The Sanadak platform, introduced in 2023, now operates as a unified consumer protection complaint center, covering not just banking but also insurance issues.

Sanadak (meaning "Your Support" in Arabic) enables consumers to lodge complaints relating to loans, credit cards, fees, insurance claim rejections, or administrative delays—either online or through a mobile app. The three-step dispute resolution process starts with institutional handling, followed by recourse to the Sanadak platform, and finally, a special judicial committee's decision. For disputes under 100,000 dirhams, the committee's decision is final and binding.

Incorporating ESG Principles into Central Bank Operations

The Central Bank now has legal authorization to integrate ESG (Environmental, Social, and Governance) principles into its operations, in alignment with global sustainability guidelines. Under the new law, the central bank's objectives include promoting and supporting sustainable financial practices—whether in environmental protection, social responsibility, or corporate governance standards.

One Year for Compliance—But the Clock is Ticking

From the enactment of the law, financial institutions and market participants have one year to comply with the new requirements—although extensions may be granted in some cases. Lawyers emphasize that unlicensed participants need to quickly clarify whether they now fall under central bank regulation. Banks must review their anti-money laundering systems, KYC processes, and reporting mechanisms.

This compliance obligation affects digital financial service providers, virtual asset service providers, as well as Islamic financial institutions, which now must adhere to the oversight of the Higher Sharia Authority.

Summary

The 2025 financial law ushers in a new era for the UAE's financial system. The expansion of administrative tools, the opportunity for early intervention, the unification of consumer complaint handling, and the integration of sustainability goals all serve to make the country's financial system more stable, transparent, and secure—not only for market participants but also for the public. The new law's message is clear: the UAE is ready for modern financial challenges, and regulation not only reacts but thinks ahead.

(Source: Extension of the supervisory powers of the central bank.)