Entering 2026, the UAE’s financial sector is operating under a fundamentally different regulatory and market dynamic. The UAE’s exit from the FATF grey list, removal from the EU’s high-risk jurisdiction list, and AED 350 million in recent AML enforcement fines mark a decisive shift. The direction of travel is clear: enforcement is real, scrutiny is targeted, and differentiation has begun.
Under Federal Decree-Law No. 10 of 2025, regulators are focused on demonstrable effectiveness rather than formal compliance. As FATF’s 2026 mutual evaluation approaches in June, institutions with mature AML capabilities, evidenced through effective transaction monitoring, timely escalation, and high-quality suspicious transaction reporting, will benefit from faster market access, improved cross border flows, stronger correspondent relationships and participation in regional and international growth opportunities. Those unable to evidence effectiveness face increased operational friction, regulatory attention, and strategic constraints.
What the Fines Tell Us
Recent enforcement action by the Central Bank in 2025 makes regulatory priorities unmistakable.
It signals that regulators are focusing less on formal compliance frameworks and more on whether controls work in practice. Institutions with fragmented monitoring, weak escalation, or poor governance are under pressure. Those with demonstrably mature AML operations are increasingly differentiated by both regulators and counterparties.
The New Rules: What Changed and Why It Matters
Federal Decree-Law No. 10 of 2025, effective 14 October 2025, is not just another regulatory update. It is the enforcement mechanism behind the fines we have already seen and the framework that will determine which banks get access to the opportunities ahead.
Lower Prosecution Threshold: The law no longer requires authorities to prove “actual knowledge” of criminal intent. Banks can now be held liable if they “should have known” based on circumstantial evidence.
Extended Enforcement Powers: The Financial Intelligence Unit can now freeze funds for up to 30 days (up from 7) and suspend transactions for 10 working days without notice. For banks with weak screening systems or slow escalation processes, this means operational disruption. For those with automated controls and clear escalation protocols, it means being able to demonstrate rapid response capability.
Personal Liability for Senior Management: Senior managers and directors can now face personal criminal liability, from fines to imprisonment, if violations occur due to breach of duty or known negligence. Corporate fines have doubled to a range of AED 5 million to AED 100 million.
Expanded Scope: The law now criminalizes Proliferation Financing as a standalone offense, directly regulates Virtual Asset Service Providers (VASPs), and explicitly includes tax evasion as a predicate offense. Banks that have already integrated sanctions screening for proliferation risk and built VASP monitoring frameworks have a structural advantage.
What This Means in Practice
For Banks
For banks, AML maturity is now directly linked to speed, access, and credibility.
Banks with integrated monitoring systems, strong model governance, and clear escalation timelines will find cross-border transactions moving faster and relationships easier to maintain. Those that cannot evidence effectiveness may experience quiet friction — slower onboarding, enhanced reviews, and reduced appetite — even without formal regulatory action.
In this environment, AML is no longer a defensive function. It is an enabler of market access.
For Exchange Houses
Exchange houses sit at the sharpest edge of enforcement risk.
The scale and concentration of recent penalties indicate heightened regulatory sensitivity to cash-intensive activity, remittance corridors, and frontline control failures. For exchange houses, the issue is not just whether controls exist, but whether they scale with volume and velocity.
For VASPs
For VASPs, the regulatory transition is now explicit. They are expected to demonstrate the same seriousness of intent as traditional financial institutions — including transaction monitoring calibrated to blockchain risk typologies, sanctions screening, and meaningful STR engagement.
FATF 2026: The Evidence Test
All of this leads to a clear milestone. The FATF’s 5th Round Mutual Evaluation of the UAE is scheduled for June 2026. The methodology prioritizes effectiveness over form.
Assessors will ask whether laws produce outcomes: investigations, convictions, asset recovery, and high-quality financial intelligence. Banks, exchange houses, and VASPs will collectively form the UAE’s evidence base.
The Strategic Question
For regulated institutions in the UAE, the strategic question has shifted. It is no longer whether an institution can pass an audit. It is whether its AML framework produces evidence that regulators can rely on and counterparties can trust.
For leadership teams, now is an appropriate moment to step back and ask a simple question: If our AML framework were tested tomorrow, would it speak for itself?
That reflection, more than any single regulatory deadline, is what will shape market access in the years ahead.
Meet us at AMLC 3.0 Event on 5, February 2026, Dubai
