His Highness Sheikh Mohamed bin Zayed Al Nahyan, President of the UAE, has issued Federal Decree Law No. (6) of 2025 concerning the Central Bank and the regulation of financial institutions, activities, and insurance operations. This comes as part of the UAE’s ongoing efforts to modernize the legislative and regulatory framework of the financial sector, enhance its stability, efficiency, and competitiveness, align the national system with the highest international standards, and reinforce the Central Bank’s independence and pivotal role in achieving financial and monetary stability.

The decree law aims to maintain the stability of the national currency, enhance and protect the stability of the financial system, and ensure the prudent management of the state’s foreign currency reserves. It defines the Central Bank’s core tasks, foremost of which are setting and implementing monetary policy, regulating licensed financial activities and supervising them according to international standards, issuing systems and standards to ensure fair and effective financial practices, maintaining sufficient foreign reserves to cover the monetary base, supporting sustainable finance and integrating governance principles, monitoring and analyzing systemic risks, and developing and supervising the financial market infrastructure.

In the area of consumer protection and financial inclusion, the decree law establishes an integrated system obliging licensed financial institutions to enable all segments of society to access appropriate banking and financial services, keeping pace with digital transformation and innovation in financial services. It also sets frameworks for national awareness programs in cooperation with the financial sector and community institutions, and confirms the continuation of positive practices previously applied, especially those related to aligning credit facilities with clients’ income and protecting them from irresponsible practices.

The decree law enhances the customer protection and dispute resolution system by unifying the complaint process for bank and insurance customers under an independent umbrella (Sanadak) to receive and resolve complaints, and by establishing specialized judicial committees to adjudicate disputes arising from financial activities, with committee decisions being final and binding on licensed financial institutions within a limit of AED 100,000.

It also includes proactive measures for early intervention to address any signs of financial deterioration in licensed institutions to ensure financial stability and protect customers. These measures include activating recovery plans, imposing additional capital and liquidity requirements, modifying strategy and administrative and operational structures, appointing temporary committees or direct management of the institution, taking merger, acquisition, or liquidation actions if necessary, and applying special procedures to insurance companies if they fail to rectify their conditions.

According to the decree law, the Central Bank, as the resolution authority, plays a key role in managing financial crises by isolating and appointing new management, recovering bonuses, appointing trustees to manage the institution and its assets, amending or terminating contracts, transferring or selling assets and liabilities, canceling shareholder rights, restructuring capital, establishing temporary entities to manage assets or continue vital services, and executing organized liquidations or rescue operations to ensure continuity of vital activities.

Regarding administrative penalties, the decree law stipulates raising the ceiling of administrative fines proportionate to the severity of violations and transaction volumes, allowing the Central Bank to impose proportional fines up to ten times the value of the violation or illicit enrichment, automatically deduct fines from offenders’ balances at the Central Bank or financial institutions, enabling reconciliation with offenders before final judicial decisions, and publishing penalties on the Central Bank’s official website to enhance transparency and market discipline.