Up to Dh1 billion fine as UAE boosts Central Bank powers under new financial law

The UAE has enacted sweeping financial sector reforms that significantly raise the stakes for non-compliance and expand the Central Bank’s supervisory authority. Federal Decree Law No. (6) of 2025 introduces sharper penalties and early intervention powers for failing institutions and regulates emerging financial technologies.

A legal expert said the shift equips the Central Bank with stronger tools to ensure stability and protect consumers. The law now regulates a wide segment of the UAE’s financial ecosystem, including banks, insurers, fintech enterprises, tech platforms, payment system providers and other financial service players.

“This law gives the regulator the authority to act pre-emptively, decisively and directly,” said Ali Dakhlallah, Senior Associate at Habib Al Mulla & Partners. He added that the changes raise the stakes for banks, insurers and other licensed entities, with the regulator now able to intervene earlier and more intrusively when required.

Ali Dakhlallah

Stay up to date with the latest news. Follow KT on WhatsApp Channels.

Bigger fines, auto debits and public naming

One of the most consequential elements of the new law relates to penalties. Administrative fines for violations have been significantly increased and can in some cases reach up to 10 times the value of the violation.

The Central Bank may also withdraw penalties directly from accounts held by violators before a final judicial ruling.

The law also allows the Central Bank to publish penalties and settlement decisions online to enhance transparency and market discipline, Dakhlallah said.

The law raises the ceiling for administrative fines up to Dh1 billion, giving regulators substantial enforcement leverage. “While the detailed fine schedule for each violation is not yet fully available, there are minimum fines specified for unlicensed or promotional activity (example activities requiring a licence but carried out without one). The Dh1-billion fine threshold gives the Central Bank long and sharp nails to enforce against banking and insurance institutions. This high threshold also incentivises more strict compliance processes to prevent money laundering and financial crime violations.”

Early interventions

The legislation enables the Central Bank to act much earlier when institutions show signs of distress. The regulator can compel corrective action, impose liquidity or capital requirements, replace board members or senior management, transfer assets, or take control of the institution if needed.

Dakhlallah added that the regulator is also authorised “to directly step into the shoes of the institution’s senior management".

Resolution authority

The decree confirms the Central Bank’s role as the national Resolution Authority with powers to manage crisis situations. This includes removing and appointing management, recovering funds from responsible individuals, restructuring capital and transferring or selling assets to preserve critical functions.

The law also enables the Central Bank to establish temporary entities to ensure continuity of essential services and carry out organised liquidation if required.

Unified consumer complaints

The law strengthens consumer protection by consolidating the financial complaints process under the Sanadak platform.

“This is one of the most people-facing changes in the new law and is designed to make the financial system feel simpler, fairer, and more accessible to average consumers,” said the legal expert.

The Central Bank had rolled out Sanadak (Arabic for “Your Support”) in 2023 for banking consumer complaints. Under the new law, Sanadak becomes the unified dispute-resolution platform for both banks and insurance complaints.

Dakhlallah explained that customers can now file complaints online or via mobile app platforms covering:

• Banking services (loans, credit cards, payments, fees, etc.)

• Insurance claims and coverage disputes

• Mis-selling, delays, or non-responsiveness by financial institutions

The three-stage dispute resolution process begins with internal complaint handling, followed by escalation to Sanadak and finally a specialised judicial committee. For disputes up to Dh100,000, the committee’s ruling will be final and enforceable.

He summarised the change as “one law, one regulator, one complaint platform (Sanadak) and enforceable resolutions".

ESG objectives

In a move that aligns with global sustainability trends, the Central Bank now has a statutory mandate to integrate ESG principles into its activities and operations.

Dakhlallah pointed out the regulator’s expanded role in having “a sustainable finance mandate, as its principle objectives now include integrating environmental, social and governance principles into the Central Bank’s activities and operations".

One year to comply

Financial institutions and market participants have one year to comply with the new requirements, though extensions may be granted. Dakhlallah noted that unlicensed entities must determine whether they now fall under Central Bank licensing rules and that banks will need to reinforce AML screening, KYC processes and reporting.

Virtual asset service providers and Islamic finance institutions will also need to align with the new supervisory structure, including oversight by the Higher Sharia Authority.

UAE President issues new law on Central Bank, financial entities UAE Central Bank imposes Dh600,000 fine on a finance company UAE Central Bank suspends licence of YAS Takaful over regulatory breaches UAE: Exchange house fined Dh10.7 million for violating anti-money laundering law