UAE’s 2025 Legislative Overhaul Reshapes Banking, Crypto, Tax and Compliance

The United Arab Emirates has enacted a wide slate of major federal decree-laws throughout 2025, marking one of the most substantial regulatory shifts in recent years. The new legislation spans banking, insurance, virtual assets, anti-money-laundering rules and the country’s VAT framework, signalling a coordinated push to modernise supervision, enhance financial integrity and align with global standards.

Central Bank Law Resets the Regulatory Architecture

In September, the UAE issued Federal Decree-Law No. 6 of 2025 governing the Central Bank, financial institutions and insurance activities. The law replaces earlier banking and insurance statutes and consolidates regulatory authority under a unified framework. It formally elevates the Central Bank’s mandate, granting wider powers across monetary policy, prudential supervision, licensing and oversight of emerging financial services.

The reform brings payment-service providers, fintech operators and virtual-asset payment platforms directly into the regulatory perimeter for the first time. By formally recognising these players within the financial-services ecosystem, the UAE has effectively transitioned from optional oversight to mandatory supervision of digital-finance activity.

A key feature of the decree is its strengthened resolution regime. The Central Bank may now intervene early when a financial institution shows signs of distress, including by restructuring capital, replacing management, imposing enhanced liquidity or capital requirements, or facilitating asset transfers. These measures are designed to prevent systemic risk from escalating and to enhance resilience across the sector.

Penalties for regulatory breaches have also increased significantly. Administrative fines may reach up to several multiples of the financial gain obtained through violations, and the Central Bank may debit fines directly from institutional accounts. The law also reinforces consumer protection through more rigorous dispute-resolution mechanisms and mandates that financial institutions offer accessible services aligned with digital-inclusion goals.

The combined effect of these changes is a clearer, stronger and more internationally aligned financial-regulatory environment -- one that increases supervisory precision, improves governance and promotes financial stability.

AML/CFT Law Brings Crypto and Proliferation Financing Under Tight Control

A major shift in the legal landscape arrived with the introduction of Federal Decree-Law No. 10 of 2025 on Anti-Money Laundering, Combating the Financing of Terrorism and the Financing of Proliferation. The law replaces the 2018 AML legislation and introduces a broader, more stringent framework addressing both traditional and emerging financial-crime risks.

The new law expressly brings virtual-asset service providers -- including exchanges, custodians, wallet providers and platforms facilitating crypto transactions -- under statutory AML/CFT obligations. These firms must now conduct full customer due diligence, ongoing monitoring, sanctions screening and suspicious-transaction reporting. The move aligns the UAE with global expectations around digital-asset oversight and closes previous regulatory gaps.

The legislation also criminalises proliferation financing as a standalone offence, capturing activities connected to the acquisition, development or transfer of weapons-related materials. The expansion reflects enhanced international cooperation on national-security-related financial controls.

Another significant change is the reduction of the evidentiary threshold required for money-laundering prosecutions. Authorities may rely on circumstantial or inferential evidence rather than proving knowledge beyond doubt. This shift aims to accelerate enforcement, particularly in cases involving complex financial structures.

Supervisory institutions have also been strengthened. A restructured national AML/CFT governance system enhances coordination among regulators, while the Financial Intelligence Unit receives broader powers to freeze assets, delay transactions and coordinate international cooperation.

For businesses, the tightened requirements mean reassessing compliance programs, updating risk assessments, revising onboarding frameworks and implementing more robust monitoring systems. The law’s expanded scope and tougher penalties place heightened responsibility on financial institutions, designated non-financial professions and virtual-asset-sector participants.

VAT and Tax-Procedure Amendments Aim to Simplify Compliance

In November, the government issued Federal Decree-Laws No. 16 and 17 of 2025, introducing amendments to the VAT Law and the Tax Procedures Law, effective from January 2026. These measures form the most notable adjustments to the tax framework since VAT was introduced in 2018.

The VAT amendments streamline administrative processes, including removing the requirement for taxable persons to issue self-invoices under the reverse-charge mechanism. Instead, taxpayers may rely on supplier invoices, reducing operational burden and documentation workload.

The new rules also introduce a five-year limit for reclaiming excess refundable VAT, bringing greater certainty to refund cycles and encouraging more timely reconciliation. After the five-year period lapses, taxpayers lose the right to reclaim accumulated balances — a move intended to improve the efficiency of the refund system.

Additionally, the legislation allows the tax authority to block input-tax deductions where a supply forms part of a suspected evasion scheme. The measure increases scrutiny on supply-chain integrity and places greater due-diligence responsibility on businesses, particularly those engaging in high-volume or cross-border transactions.

Meanwhile, amendments to the Tax Procedures Law clarify timelines for tax assessments, refunds and appeals, providing a more uniform procedural framework. By codifying specific administrative processes, the government aims to reduce ambiguity and ensure consistent implementation across industries.

Taken together, the tax reforms aim to simplify compliance for lawful businesses while strengthening deterrence against evasion, forging a balance between efficiency and enforcement.

A Year of Consolidation, Modernisation and Digital Alignment

Across the three major decrees, several trends emerge. The UAE is consolidating regulatory authority, expanding supervision to capture new business models, and placing digital-asset and fintech activities squarely under official oversight. The country is also strengthening its defences against financial crime, tax evasion and illicit flows through tougher enforcement tools and more precise statutory definitions.

For companies, the implications are immediate and material. Financial institutions must reassess governance frameworks, risk models, capital planning and customer-protection structures. Virtual-asset firms must transition from loosely regulated operations to full compliance regimes. Meanwhile, businesses across sectors will need to upgrade invoicing, refund management and supply-chain documentation before the 2026 tax-rule changes come into effect.

Altogether, 2025 will be regarded as a watershed year in UAE regulatory history -- one that marks the beginning of a more mature, transparent and globally aligned financial and economic governance model.

 

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