Combating Money Laundering (AML) in the UAE: Key Rules and Recommendations for Compliance with Legislation

The UAE remains one of the leading financial and business hubs in the Middle East. That is why combating money laundering here is not a formality but a strict and priority task of the state. Under growing international pressure and close scrutiny from FATF, every legal entity, whether a company, bank, or service provider, is required to demonstrate impeccable transparency and compliance with all AML requirements. Even a single violation can lead to serious sanctions, fines, and loss of licenses.

Our law firm provides a full range of services for AML legislation compliance: from auditing and implementing internal policies to defense during inspections and responding to requests from the Central Bank and FIU. We help companies minimize legal risks, maintain their license, and confidently operate within the legal framework.

Anti-Money Laundering is a set of legislative, regulatory, and institutional measures aimed at identifying, preventing, and suppressing the legalization of proceeds obtained through criminal means.

Money laundering is the process by which criminals attempt to conceal the illegal origin of funds, giving them the appearance of legitimate income. These funds may originate from corruption, drug trafficking, human trafficking, fraud, cybercrime, and other serious violations of the law. Without effective AML mechanisms, such assets easily infiltrate the economy, finance new crimes, and undermine trust in financial institutions.

One of the key tasks of AML is the prevention of terrorism financing. Despite the fact that technically these are different phenomena, most legal regimes combine these measures into a unified control system. Funds directed towards terrorist acts or extremist activities often pass through the same channels and methods of concealment as criminal proceeds, which makes AML control particularly relevant.

At the international level, the fight against money laundering is coordinated by FATF. Its recommendations serve as the basis for national laws in dozens of countries, including the UAE. States are required to implement effective procedures: from customer identification (KYC) and transaction monitoring to mandatory reporting of suspicious activity and sanctions for non-compliance with requirements.

The key legislative act regulating the fight against money laundering in the UAE is Federal Decree-Law No. 20 of 2018 “On Anti-Money Laundering, Combating the Financing of Terrorism and Financing of Illegal Organizations.” This regulatory document defines:

The UAE is a member of the FATF-style regional body — the Middle East and North Africa Financial Action Task Force (MENAFATF), and it is also undergoing an evaluation for compliance with FATF (Financial Action Task Force) recommendations. In February 2022, FATF placed the UAE on the “grey list” of countries requiring increased monitoring. This became an incentive for the Emirates to accelerate reforms and intensify efforts to improve their AML/CFT system. In particular, internal control procedures in banks were tightened, the powers of supervisory authorities were expanded, and new reporting systems were implemented. The UAE actively cooperates with FATF and other countries in investigating cross-border crimes.

The Central Bank of the UAE supervises commercial banks, insurance companies, and exchange offices. It establishes mandatory AML instructions for financial institutions and requires regular reporting on suspicious transactions. The Central Bank also conducts compliance checks and can impose sanctions.

Dubai Financial Services Authority (DFSA) regulates activities in the Dubai International Financial Centre (DIFC) — one of the two free financial zones in the UAE. DFSA has developed its own AML requirements framework, compatible with international standards, and actively cooperates with foreign supervisory authorities in investigating financial crimes.

Abu Dhabi Global Market is the second most important free financial zone. Its regulator, the Financial Services Regulatory Authority, has also implemented an independent AML system applicable to all licensed organizations in the ADGM zone. FSRA requires the implementation of internal AML policies, risk assessment, and immediate reporting of suspicious activities.

These fines may be imposed by the Central Bank of the UAE, the Ministry of Economy, DFSA (in DIFC), FSRA (in ADGM), and FIU (Financial Intelligence Unit) depending on the business jurisdiction.

Violations of AML rules entail not only financial sanctions but also serious legal consequences:

For example, in 2023, the UAE Ministry of Economy fined more than 1,300 companies over 75 million dirhams for non-compliance with KYC rules, lack of risk assessment, and failure to identify beneficiaries. This became the largest wave of AML fines in recent years.

In 2025, the United Arab Emirates continues to strengthen the legal and institutional framework for combating money laundering and terrorist financing. These measures are aimed at complying with international FATF standards, as well as removing the country from enhanced monitoring.

According to the new requirement of the Central Bank of the UAE, all financial institutions, including crypto providers (VASPs), are required to implement systems for instant tracking of suspicious transactions. This applies not only to large banks but also to small licensed payment providers. In several sectors, the reporting threshold has been reduced to 25,000 AED, which requires businesses to strengthen control over incoming and outgoing transactions. The introduction of automatic triggers and behavioral analytics is becoming a mandatory element of financial compliance.

The scope of AML legislation has been expanded to a number of categories of Designated Non-Financial Businesses and Professions (DNFBPs). Now the following are subject to control:

For all new entities, training employees in AML procedures, maintaining an internal transaction log, and a register of beneficiaries have become mandatory. Significant fines and license suspension are imposed for non-compliance.

The regulator Virtual Assets Regulatory Authority in Dubai has issued an updated set of regulations under the designation VARA 2.0. The main changes include:

Now any person providing services related to tokens and digital assets is required to comply with the AML regime, identify clients, and report suspicious activity to the FIU.

Companies registered in the UAE are required to update information about their Ultimate Beneficial Owners (UBO) in the government registry on a quarterly basis. Failure to provide or delay in submitting the information is subject to fines of up to 100,000 AED. These measures are aimed at combating the use of shell structures, offshore holdings, and nominee directors. The UBO registry is actively used by authorities in financial investigations and automatic data exchange.

In 2025, the UAE joined the international system of automatic exchange of financial information with the European Union and the Gulf states. This became part of the country’s commitments under a scheme similar to CRS (Common Reporting Standard), initiated by the OECD. Now banks and licensed financial institutions are required to transmit information about foreign residents to state authorities, which significantly limits the use of the UAE for tax evasion purposes.