On 8 September 2025, the UAE President issued Federal Decree-Law No. (6) of 2025 Regarding the Central Bank, the Regulation of Financial Institutions, their Activities, and Insurance Business. This legislation marks a significant step in the UAE’s effort to modernize its financial regulatory environment and build trust in the financial system.
The Decree-Law improves the Central Bank’s independence and clearly outlines its main responsibilities, including monetary policy, oversight of licensed financial activities, and overall financial stability. It establishes a unified regulatory framework for banks, insurers, and other financial institutions, replacing the old framework under Federal Decree-Law No. (14) of 2018 and its amendments.
Enhanced Powers of the Central Bank as Resolution Authority
The new law significantly strengthens the Central Bank’s authority and enforcement mechanisms, particularly in managing financial distress and ensuring market integrity. Key features include:
- Expanded Role as Resolution Authority. Empowers the Central Bank to intervene decisively when financial institutions face distress, safeguarding systemic stability.
- Management and Operational Control. Authorizes the Central Bank to replace or change management, or even take over financial institutions when necessary to protect depositors and maintain confidence.
- Stronger Enforcement Framework. Introduces a more robust system for investigating and addressing regulatory breaches across the financial sector.
- Heavier Administrative Fines. Allows for penalties up to ten times the value of the violation, reflecting a stricter stance on non-compliance.
- Direct Penalty Collection. Grants the Central Bank the right to withdraw penalties directly from offenders’ accounts, expediting enforcement and minimizing evasion.
- Public Disclosure of Penalties. Mandates the publication of penalty decisions on the Central Bank’s official website, reinforcing transparency and promoting market discipline.
For the first time, the Decree-Law includes references to sustainable finance and governance principles, which aligns the UAE with international ESG standards and responsible financial practices. It also strengthens national goals on financial inclusion and literacy. The law requires licensed institutions to make their services accessible to all parts of society and to support financial awareness initiatives.
Additionally, the law sets up specialized judicial committees to handle financial disputes involving claims of up to AED 100,000. Their decisions are final and can be enforced directly. This change offers a faster and more efficient way to resolve lower-value financial disputes.
The UAE state news agency WAM formally announced the launch of the Decree-Law on 10 October 2025. This announcement highlighted its role in reinforcing the Central Bank’s independence, improving systemic stability, and aligning the UAE’s financial regulations with global best practices. It also emphasizes the government’s larger strategy to streamline and consolidate oversight in banking, insurance, and financial services.
Once in effect, Federal Decree-Law No. (6) of 2025 will provide a strong legal base for a resilient, transparent, and forward-looking financial system in the UAE.
For a deeper understanding of how these banking reforms may affect your regulatory obligations, risk management policies, or overall compliance strategy, our legal team stands ready to provide practical insights and tailored support. Please feel free to reach out to Feras Kalash at feras.kalash@alsuwaidi.ae