The United Arab Emirates (UAE) has introduced a significant legislative update to its financial sector with the issuance of Federal Decree Law No. (6) of 2025 on the Central Bank, governing financial institutions, activities, and insurance operations. The decree was issued by President His Highness Sheikh Mohamed bin Zayed Al Nahyan, reinforcing the UAE’s position as a leading global financial hub.
Strengthening Monetary and Financial Stability
The new law enhances the Central Bank of the UAE’s (CBUAE) independence and reaffirms its core mandate of ensuring monetary and financial stability. Among its defined responsibilities are:
- Establishing and implementing monetary policy in line with international standards.
- Supervising licensed financial institutions and activities.
- Managing foreign reserves to cover the monetary base and ensure resilience.
- Overseeing the infrastructure of financial markets and ensuring sound governance.
By formalizing these duties, the decree positions the Central Bank as a stronger Resolution Authority capable of managing crises, safeguarding the national currency, and reinforcing the UAE’s competitiveness.
Consumer Protection and Financial Inclusion
Consumer rights are a central focus of the decree. Licensed institutions are now required to provide broad access to financial services, supporting the UAE’s wider agenda of digital transformation and financial innovation.
Key consumer-related provisions include:
- Unifying the complaints process under Sanadak, an independent entity that resolves disputes between customers, banks, and insurance companies.
- Establishing specialised judicial committees to adjudicate financial disputes, with rulings up to AED100,000 deemed final and enforceable.
- Aligning credit facilities with customer income to prevent irresponsible lending.
These measures ensure greater transparency, accountability, and protection for consumers, while also encouraging financial inclusion.
Early Intervention and Crisis Management
To safeguard the system against financial instability, the law mandates early intervention procedures when institutions show signs of financial deterioration. Measures include:
- Recovery plans and adjustments to capital or liquidity.
- Replacement of management or direct intervention by the Central Bank.
- Mergers, acquisitions, or liquidation if necessary.
The Central Bank is empowered to restructure institutions, transfer assets, recover funds from responsible parties, and establish temporary entities to ensure the continuity of critical financial services.
Higher Administrative Fines and Market Discipline
In a bid to strengthen accountability, the decree raises the ceiling for administrative fines. Provisions include:
- Fines of up to ten times the value of the violation or unjust enrichment.
- Automatic debiting of fines from accounts at the Central Bank or licensed institutions.
- The right to reconcile before a final judicial ruling.
- Publication of penalties on the Central Bank’s website to promote transparency and discipline.
This ensures that violations are met with proportionate consequences, discouraging misconduct and reinforcing market confidence.
Key Objectives of the New Decree
According to the UAE Government Media Office, the law sets out several strategic objectives:
- Access to financial services for all members of society.
- Enhanced consumer protection through unified dispute resolution.
- Early intervention measures to address institutional deterioration.
- Proportional administrative fines to reflect transaction volumes and severity.
- Automatic reconciliation and transparency through published penalties.
- Safeguarding financial stability and prudent management of foreign reserves.
- Adequate guarantees for credit facilities to protect individuals and sole proprietors.
The Federal Decree Law No. (6) of 2025 represents a major milestone in the UAE’s financial legislation. By reinforcing the Central Bank’s independence, strengthening consumer protections, and aligning the nation’s financial framework with global standards, the UAE has positioned itself to remain resilient, competitive, and innovative in an evolving global economy.
This reform not only strengthens the UAE’s financial infrastructure but also builds trust among consumers, investors, and international partners — reaffirming the country’s role as a leading financial and business hub in the region and beyond.
