A Guide for Businesses and Individuals

Understanding Banking, Financial, and Fraud Law in the UAE

The realms of banking, finance, and fraud are rapidly evolving, especially in dynamic economies like the United Arab Emirates (UAE). With its strategic location, advanced financial infrastructure, and progressive regulations, the UAE is a financial hub for the Middle East and beyond. However, as financial systems grow in sophistication, so do the risks—particularly in the realm of financial fraud.

Whether you’re a multinational corporation, an SME, or an individual investor, understanding the legal and regulatory framework governing financial activities in the UAE is crucial to safeguarding assets and ensuring compliance.

 
The Importance of Banking and Financial Law in the UAE

 Banking and financial law in the United Arab Emirates is governed by a dual structure: a robust federal legal framework and specialized regulations issued by financial free zones such as the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM). While federal laws are rooted in civil law traditions, the DIFC and ADGM operate under independent legal systems based on common law, offering an alternative yet complementary legal environment that caters to international business and financial institutions.

 

Key Legal and Regulatory Aspects

 

  1. Regulation of Financial Institutions

 

Financial institutions in the UAE are subject to stringent regulatory oversight aimed at maintaining the stability, integrity, and transparency of the banking sector. The Central Bank of the UAE (CBUAE) is the primary regulatory authority responsible for supervising and regulating banks and other financial institutions across the country. The key areas of regulatory focus include:

  1. Prudential Supervision
  2. Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT)
  3. Corporate governance and risk management

Several notable legislative instruments govern the operations of financial institutions, addressing everything from the handling of customer deposits to lending practices and financial transactions. These include:

  • New Banking Law: Federal Decree Law No. (14) of 2018 Regarding the Central Bank and Organization of Financial Institutions and Activities
  • CBUAE AML/CFT Guidelines, issued in alignment with Federal Decree-Law No. (20) of 2018 on Anti-Money Laundering
  1. Financial Products and Services

 

The United Arab Emirates (UAE) maintains a robust legal and regulatory framework governing a wide range of financial products and services, including lending, Islamic finance, securities, insurance, and investment advisory services. UAE banking and financial law provides comprehensive rules governing the creation, offering, distribution, and regulation of these products, ensuring a stable and transparent financial marketplace.

Regulatory oversight is primarily shared among the following authorities:

  1. Securities and Commodities Authority (SCA) – Regulates securities markets, investment funds, and financial advisory services.
  2. Central Bank of the UAE (CBUAE) – Supervises banking, lending, Islamic finance, and monetary policy.
  3. Insurance Authority (now merged into the CBUAE) – Previously regulated the insurance sector; its functions are now integrated within the Central Bank’s purview.

The applicable legal framework mandates that financial service providers must be duly licensed and in full compliance with applicable laws and regulatory guidelines. These include obligations related to:

  • Disclosure of product terms and risks
  • Suitability assessments to ensure offerings match client profiles
  • Risk management and internal controls
  • Consumer protection through transparent practices and fair dealing

This regulatory regime serves to foster market confidence, protect investors and consumers, and ensure the integrity and competitiveness of the UAE’s financial sector, both locally and internationally.

  1. Corporate Finance

 

Corporate finance transactions in the United Arab Emirates (UAE), including capital raising, mergers and acquisitions (M&A), and syndicated lending, are governed by a combination of commercial and financial laws that provide the legal infrastructure necessary for business growth, capital structuring, and transactional integrity.

Effective financial strategies are critical for supporting a company’s expansion, operational sustainability, and investment activities. The legal framework ensures that companies operate within a regulated environment when undertaking complex financial arrangements.

Key legislative instruments and regulatory regimes applicable to corporate finance in the UAE include:

  • Federal Law No. (32) of 2021 – Concerning Commercial Companies

This law governs company formation, governance, capital structuring, shareholder rights, and procedures related to mergers, acquisitions, and capital increases or reductions for onshore entities in the UAE.

  • DIFC and ADGM Company Regulations –

Companies incorporated within the Dubai International Financial Centre (DIFC) or the Abu Dhabi Global Market (ADGM) are subject to independent regulatory frameworks based on common law principles. These jurisdictions offer tailored regulations for corporate finance transactions that align with international best practices, facilitating cross-border investments and financing.

Entities involved in corporate finance transactions must ensure strict compliance with disclosure obligations, shareholder approvals, and regulatory consents where applicable, to ensure legality, enforceability, and risk mitigation throughout the transaction lifecycle.

  1. Insolvency and Bankruptcy

 

The UAE has established a comprehensive legal framework for insolvency and bankruptcy aimed at balancing the interests of debtors and creditors while preserving economic stability. The primary legislation governing bankruptcy in the mainland UAE is:

  • The New Bankruptcy Law (Federal Law Decree No 51 of 2023), which came into effect in the UAE on 1st May 2024, replacing the previous law (Federal Decree-Law No 9 of 2016).

This law provides structured procedures for the restructuring, preventive composition, or liquidation of financially distressed companies. It introduces modern insolvency tools that allow companies facing financial difficulties to either reorganize their debts under court supervision or proceed with an orderly liquidation process.

Key features of the UAE Bankruptcy Law include:

  1. Preventive composition procedures enabling debtors to negotiate with creditors while continuing business operations.
  2. Restructuring plans supervised by the UAE Civil Courts to help restore solvency and ensure business continuity.
  3. Liquidation proceedings for companies that are deemed irrecoverable.
  4. Protections for debtors against criminal prosecution for bounced cheques during restructuring processes.
  5. Creditor rights to initiate bankruptcy proceedings under certain conditions.

In addition to the UAE’s federal regime, separate insolvency frameworks apply within the UAE’s common law jurisdictions:

  • New Insolvency Law (DIFC Law No. 1 of 2019)
  • ADGM Insolvency Regulations 2015 (as amended)

Both the DIFC and ADGM offer modern, internationally aligned insolvency regimes that are creditor-friendly while allowing distressed companies structured pathways to rehabilitation or exit. These regimes promote transparency, procedural fairness, and commercial certainty, offering a legal safety net that supports business continuity, investor confidence, and economic resilience.