Regulatory Overview
The UAE’s anti-money laundering and counter-terrorism financing framework is anchored by Federal Decree-Law No. 20 of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organisations, along with its implementing regulations issued under Cabinet Decision No. 10 of 2019. This framework represents one of the most comprehensive AML/CFT regimes in the Middle East.
The legislative framework was substantially strengthened following the Financial Action Task Force mutual evaluation of the UAE, which identified areas requiring enhanced compliance. The UAE responded with an ambitious national action plan, allocating significant resources to regulatory reform, supervisory capacity building, and enforcement.
Multiple authorities share responsibility for AML/CFT oversight. The Central Bank of the UAE supervises financial institutions, while the Securities and Commodities Authority oversees capital markets participants. The Ministry of Economy supervises designated non-financial businesses and professions, including real estate agents, dealers in precious metals and stones, and corporate service providers. The Financial Intelligence Unit serves as the national center for receiving and analyzing suspicious transaction reports.
Key Provisions
The law criminalizes money laundering, terrorism financing, and financing of illegal organizations, establishing severe penalties including imprisonment and substantial fines. The law adopts a broad definition of predicate offenses, covering proceeds derived from any crime under UAE law or the law of a foreign jurisdiction.
Customer due diligence requirements form the backbone of the compliance framework. Regulated entities must identify and verify the identity of customers and beneficial owners, understand the nature and purpose of business relationships, and conduct ongoing monitoring of transactions. Enhanced due diligence is required for high-risk customers, including politically exposed persons, customers from high-risk jurisdictions, and complex or unusual transactions.
The law mandates the reporting of suspicious transactions and activities to the Financial Intelligence Unit. Failure to file a suspicious transaction report when grounds exist constitutes a criminal offense. Tipping off, or informing a customer that a suspicious report has been filed, is also prohibited.
Regulated entities must maintain records of all transactions and customer identification documents for a minimum of five years following the termination of the business relationship. These records must be available to competent authorities upon request.
Enforcement
Enforcement of the AML/CFT framework involves both criminal prosecution and administrative sanctions. The public prosecution has dedicated units for financial crime cases, and the UAE judiciary has developed specialized expertise in money laundering proceedings.
Administrative penalties vary by supervisory authority. The Central Bank may impose fines of up to AED 5 million for non-compliant financial institutions, revoke licenses, or appoint external auditors to conduct compliance reviews. The Ministry of Economy exercises similar authority over designated non-financial businesses and professions.
Criminal penalties for money laundering include imprisonment of up to 10 years and fines ranging from AED 100,000 to AED 5,000,000. Terrorism financing convictions carry even more severe penalties, including life imprisonment in cases involving the financing of terrorist acts.
The UAE has also strengthened its international cooperation mechanisms, entering into mutual legal assistance treaties and information-sharing agreements with counterpart jurisdictions worldwide. Asset freezing and confiscation powers have been expanded to enable rapid action on international requests.
Compliance Requirements
All regulated entities must establish an AML/CFT compliance program that includes documented policies and procedures, a designated compliance officer at the management level, ongoing employee training, and independent testing of the compliance program’s effectiveness.
Risk assessments must be conducted at both the institutional level and the customer level. Institutions are expected to identify, assess, and document the money laundering and terrorism financing risks they face, and to apply risk-based controls proportionate to the identified risks.
Politically exposed persons, whether domestic or foreign, require enhanced due diligence, including senior management approval for establishing or continuing business relationships, establishing the source of wealth and funds, and conducting enhanced ongoing monitoring.
Correspondent banking relationships are subject to specific requirements, including assessment of the respondent institution’s AML/CFT controls, documentation of respective responsibilities, and senior management approval. Shell bank relationships are prohibited.
Impact on Business
The strengthened AML/CFT framework has had a transformative effect on the UAE’s business environment. Financial institutions have invested heavily in compliance infrastructure, including advanced transaction monitoring systems, automated screening tools, and expanded compliance teams.
The real estate sector, long identified as a potential vulnerability, has seen significant compliance reforms. Real estate agents and developers are now subject to customer due diligence, suspicious transaction reporting, and record-keeping obligations that mirror those applied to financial institutions.
The gold and precious metals trade, another area of focus, has experienced increased regulatory scrutiny. Dealers must now conduct due diligence on counterparties, report cash transactions above prescribed thresholds, and maintain comprehensive transaction records.
For international businesses, the UAE’s enhanced AML/CFT framework has been a net positive, as correspondent banking relationships and cross-border transactions benefit from the increased transparency and reduced compliance risk that the reforms have delivered.
Vision 2031 Alignment
A robust AML/CFT framework is indispensable to the UAE’s Vision 2031 economic ambitions. The country’s aspiration to serve as a global financial hub requires the highest standards of financial integrity, and the AML/CFT framework provides the regulatory foundation for maintaining international confidence.
The UAE’s progress in addressing FATF recommendations has been essential to preserving the country’s access to global financial networks. Continued advancement strengthens the UAE’s candidacy for inclusion in preferred financial partner networks and supports the growth of its international banking and capital markets sectors.
The framework also supports the broader goal of economic diversification by ensuring that growth in emerging sectors such as fintech, digital assets, and cross-border e-commerce occurs within a well-regulated environment that deters illicit activity.
The integration of advanced technologies into AML/CFT compliance, including artificial intelligence-driven transaction monitoring and blockchain-based identity verification, positions the UAE at the forefront of regulatory innovation and supports its technology-driven economic vision.