AML RULES FOR DIGITAL ASSETS TO COME INTO EFFECT IN UAE

Last updated: June 19, 2025, 20:39 | Written by: Elizabeth Rossiello

The digital asset landscape in the United Arab Emirates (UAE) is undergoing a significant transformation, driven by the imminent enforcement of enhanced Anti-Money Laundering (AML) rules.These regulations, spearheaded by the Central Bank of the United Arab Emirates (CBUAE), are poised to reshape how Licensed Financial Institutions (LFIs) interact with virtual assets (VAs) and Virtual Asset Service Providers (VASPs).This move signifies the UAE's commitment to fostering a secure and transparent financial ecosystem, aligning with global standards set by the Financial Action Task Force (FATF). On the Central Bank of the United Arab Emirates (CBUAE) issued anti‑money laundering and combatting the financing of terrorism (AML/CFT) guidance rules for licensed financial institutions (LFIs) dealing with virtual assets (VAs), and for virtual asset service providers (VASPs).With the digital asset market's rapid growth, these measures are crucial to mitigating risks associated with illicit activities such as money laundering and terrorist financing.Understanding these evolving regulations is paramount for all stakeholders in the UAE's digital asset space. Under new rules from the Central Bank of the United Arab Emirates (CBUAE), licensed financial institutions (LFIs) would be required to verify the identities of all customers. The update will comeThis comprehensive guide delves into the intricacies of these new AML rules, exploring their implications for VASPs, LFIs, and the broader digital asset community, ensuring you're well-prepared for the future of finance in the UAE.

Understanding the New AML/CFT Guidance for Virtual Assets

The CBUAE's recent issuance of AML/CFT (Anti-Money Laundering and Combating the Financing of Terrorism) guidance marks a pivotal moment for the UAE's financial sector. AML rules for digital assets to come into effect in UAE arry . on LinkedIn: AML rules for digital assets to come into effect in UAE Agree Join LinkedInThis guidance specifically targets LFIs dealing with VAs and VASPs, providing a clear framework for identifying and mitigating the inherent risks associated with these emerging technologies. AML rules for digital assets to come into effect in UAE . PANews., . The licensed financial institutions would be required to identify and verifyIt goes beyond simply stating requirements; it offers detailed descriptions of VAs, VASPs, and various VASP business models, ensuring that institutions have a comprehensive understanding of the landscape.

This proactive approach acknowledges the potential vulnerabilities within the digital asset ecosystem and aims to establish a robust regulatory environment that fosters innovation while safeguarding against financial crime. The new guidance discusses the risks arising from dealing with virtual assets (VA) and virtual asset service providers (VASP) and sets out clear descriptions of VAs, VASPs and VASP business models.The guidance is not just a set of rules but a comprehensive toolkit designed to empower LFIs in navigating the complexities of the virtual asset world.

Key Compliance Requirements for VASPs in the UAE

For VASPs operating within the UAE, understanding and adhering to the new AML rules is not merely a matter of compliance; it's crucial for their long-term sustainability and legitimacy.The regulations impose several key requirements, including stringent customer identification and verification procedures, transaction monitoring, and reporting obligations.

Customer Due Diligence (CDD): VASPs must implement robust CDD measures to verify the identities of their customers. The Central Bank of the United Arab Emirates (CBUAE) has issued new rules for licensed financial institutions (LFIs) engaging with crypto in the UAE. LFIs, in Sunitha S en LinkedIn: AML rules for digital assets to come into effect in UAEThis includes collecting and verifying information such as names, addresses, and identification documents. The financial frontier in the UAE is evolving as the Central Bank pushes for tighter Anti-Money Laundering rules for digital assets. AML rules for digital assets to come into effect in UAEEnhanced Due Diligence (EDD) is required for high-risk customers and transactions.
Transaction Monitoring: VASPs are required to monitor transactions for suspicious activity, such as unusually large transactions, transactions with high-risk jurisdictions, or transactions that are inconsistent with the customer's profile.
Reporting Suspicious Transactions: VASPs must report any suspicious transactions to the relevant authorities, such as the Financial Intelligence Unit (FIU).
Record Keeping: VASPs must maintain detailed records of all transactions and customer information for a specified period, typically five years.
AML/CFT Program: VASPs need to establish and maintain a comprehensive AML/CFT program, which includes policies, procedures, and controls to prevent and detect money laundering and terrorist financing.

Failure to comply with these requirements can result in significant penalties, including fines, license revocation, and even criminal charges. Under new rules from the Central Bank of the United Arab Emirates (CBUAE), licensed financial institutions (LFIs) would be required to verify the identities of all customers. The update will come into effect within a month by the end of June. On May 31, the CBUAE published guidance for LFIs on risks related to virtual assets and virtual assets service providers. A 44-page documentTherefore, VASPs must prioritize compliance and invest in the necessary resources to implement effective AML/CFT programs.

Impact of Article 15(a) and Article 16 of Cabinet Decision No. (111) of 2025

Cabinet Decision No. (111) of 2025 plays a critical role in regulating virtual assets in the UAE. Article 15(a) effectively prohibits any activity related to virtual currencies that falls under Article 16 without a license issued by the Virtual Assets Regulatory Authority (VARA).

Article 16 lists the specific activities that require a permit from VARA. Under the new rules from the Central Bank of the UAE (CBUAE), the licensed financial institutions (LFIs) would be required to identify and verify the identities of all customers. The update will AML rules for digital assets to come into effect in UAEThese activities encompass a wide range of virtual asset services, including:

Operating a virtual asset exchange platform
Providing virtual asset custody services
Offering virtual asset brokerage services
Managing a virtual asset portfolio
Providing virtual asset advisory services
Issuing virtual assets

This legal framework underscores the UAE's commitment to regulating the virtual asset sector and ensuring that only licensed and regulated entities can engage in these activities.

The Role of the Central Bank of UAE and SCA in Crypto Regulation

The regulatory landscape for crypto assets and security tokens in the UAE is shaped by two key entities: the Central Bank of UAE (CBUAE) and the Securities and Commodities Authority (SCA).The CBUAE primarily focuses on regulating virtual assets from a monetary and financial stability perspective, ensuring that they do not pose a threat to the traditional financial system.The SCA, on the other hand, focuses on regulating security tokens and other virtual assets that qualify as securities under UAE law.

This dual regulatory approach ensures comprehensive oversight of the virtual asset market, covering both monetary and investment aspects. AML rules for digital assets to come into effect in UAE . PANews ｜ . The licensed financial institutions would be required to identify and verify theThe regulations apply on a federal level, encompassing the UAE mainland and certain free zones, creating a unified regulatory framework across the country.While VARA oversees virtual assets in Dubai, these federal regulations provide a baseline for AML/CFT compliance across the UAE.

Examining the 44-Page Document on AML/CFT for Banking Institutions

The CBUAE's 44-page document on Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) for banking institutions dealing with crypto in the UAE provides a detailed roadmap for compliance. AML rules for digital assets to come into effect in UAE . The licensed financial institutions would be required to identify and verify the identities of all customers. 33 Total views Listen to articleThis document is crucial for understanding the specific requirements and expectations of the CBUAE. A 44-page document specifies the news rules on Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) for banking institutions, dealing with crypto in the Emirates. It takes into account Financial Action Task Force (FATF) global standards.The document is structured to align with the international standards set by the Financial Action Task Force (FATF), demonstrating the UAE's commitment to global efforts in combating financial crime.

The key aspects covered in the document include:

Risk Assessment: Banks are required to conduct thorough risk assessments to identify and evaluate the AML/CFT risks associated with virtual assets and VASPs.
Customer Due Diligence: The document provides detailed guidance on CDD requirements, including enhanced due diligence (EDD) for high-risk customers and transactions.
Transaction Monitoring: Banks are required to implement robust transaction monitoring systems to detect suspicious activity related to virtual assets.
Reporting Obligations: The document outlines the reporting obligations for banks, including the reporting of suspicious transactions to the FIU.
Internal Controls: Banks are required to establish and maintain effective internal controls to mitigate AML/CFT risks.

This comprehensive document serves as a critical resource for banking institutions seeking to navigate the complexities of the virtual asset market while maintaining compliance with AML/CFT regulations.

Practical Steps for LFIs to Ensure Compliance

To effectively comply with the new AML rules, LFIs in the UAE must take proactive steps to adapt their existing frameworks and implement new measures specifically tailored to address the risks associated with digital assets.These steps include:

Conduct a Thorough Risk Assessment: Identify and assess the specific AML/CFT risks associated with virtual assets and VASPs in your institution.
Update Policies and Procedures: Revise existing AML/CFT policies and procedures to incorporate the new requirements for virtual assets.
Enhance Customer Due Diligence: Implement enhanced CDD measures for customers engaging in virtual asset transactions, including verifying the source of funds and the purpose of the transactions.
Implement Robust Transaction Monitoring: Deploy transaction monitoring systems capable of detecting suspicious activity related to virtual assets.
Provide Training to Staff: Train staff on the new AML rules and the risks associated with virtual assets.
Establish Reporting Mechanisms: Establish clear reporting mechanisms for suspicious transactions and other AML/CFT concerns.
Conduct Regular Audits: Conduct regular audits to assess the effectiveness of your AML/CFT program.
Stay Informed: Stay up-to-date on the latest regulatory developments and guidance related to virtual assets.

By taking these practical steps, LFIs can ensure that they are well-prepared to comply with the new AML rules and mitigate the risks associated with digital assets.

The CBUAE Guidance of May 31: A Closer Look

The CBUAE's guidance published on May 31st provides specific instructions for LFIs on managing risks related to virtual assets and VASPs.This guidance is crucial for LFIs as it offers clarity on the CBUAE's expectations and provides practical advice on implementing effective AML/CFT controls.

The guidance covers a wide range of topics, including:

Risk Assessment Methodologies: Detailed methodologies for assessing the AML/CFT risks associated with virtual assets.
CDD and EDD Procedures: Specific procedures for conducting CDD and EDD on customers engaging in virtual asset transactions.
Transaction Monitoring Techniques: Advanced transaction monitoring techniques for detecting suspicious activity related to virtual assets.
Reporting Requirements: Detailed information on reporting suspicious transactions to the FIU.
Best Practices for AML/CFT Compliance: A collection of best practices for implementing effective AML/CFT programs for virtual assets.

LFIs should carefully review this guidance and incorporate its recommendations into their AML/CFT programs.

Impact on the Broader Digital Asset Ecosystem in the UAE

The introduction of stricter AML rules will undoubtedly have a significant impact on the broader digital asset ecosystem in the UAE.While these regulations may present challenges for some VASPs and LFIs, they are ultimately aimed at fostering a more sustainable and trustworthy environment for digital assets. The licensed financial institutions would be required to verify the identities of all customers. Under new rules from the Central Bank of the United Arab Emirates (CBUAE), licensed financial institutions (LFIs) would be required to verify the identities of all customers. The update will come into effect within a month by the end of June. On May 31, the CBUAE published guidance for LFIsBy enhancing transparency and reducing the risk of illicit activities, these regulations can help to attract more institutional investors and mainstream adoption of virtual assets.

Furthermore, the UAE's commitment to AML/CFT compliance can help to position the country as a leading hub for digital asset innovation.By demonstrating a strong commitment to regulatory oversight, the UAE can attract reputable VASPs and investors who are seeking a safe and regulated environment for their activities.

Addressing Common Questions about AML Compliance for Digital Assets

Here are some common questions about AML compliance for digital assets in the UAE, along with their answers:

What is the definition of a virtual asset under UAE law?

Article 1 of Cabinet Decision No. (111) of 2025 defines virtual assets broadly, encompassing digital representations of value that can be digitally traded or transferred, and can be used for payment or investment purposes.The exact definition is subject to interpretation by VARA.

Who is considered a Virtual Asset Service Provider (VASP)?

A VASP is an entity that provides one or more of the following services related to virtual assets: exchange between virtual assets and fiat currencies, exchange between one or more forms of virtual assets, transfer of virtual assets, safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets, and participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset.

What are the potential penalties for non-compliance with AML rules?

Non-compliance with AML rules can result in a range of penalties, including fines, license revocation, and criminal charges.The specific penalties will depend on the severity of the violation and the applicable regulations.

How often should VASPs update their AML/CFT programs?

VASPs should regularly review and update their AML/CFT programs to ensure that they remain effective and compliant with the latest regulatory requirements. Under Article 15 (a), the effect of the Virtual Assets Law is to prohibit, in lieu of a licence issued by VARA, any activity in respect of virtual currencies (among other operations) that falls under Article 16. The activities requiring permits listed at Article 16 include:A formal review should be conducted at least annually, or more frequently if there are significant changes to the VASP's business model or the regulatory landscape.

The Future of AML Regulations in the UAE's Digital Asset Space

The AML regulations for digital assets in the UAE are likely to continue to evolve as the virtual asset market matures and new risks emerge. The licensed financial institutions would be required to identify and verify the identities of all customers. Continue reading AMLThe CBUAE and other regulatory authorities are expected to continue to refine their regulatory frameworks to keep pace with the rapid pace of innovation in the digital asset space.Furthermore, the UAE is likely to continue to work closely with international organizations such as the FATF to ensure that its AML/CFT regime is aligned with global standards.

The future of AML regulations in the UAE's digital asset space will likely involve greater collaboration between regulatory authorities, industry participants, and technology providers.By working together, these stakeholders can help to create a more secure, transparent, and sustainable ecosystem for digital assets in the UAE.

Conclusion: Key Takeaways and the Path Forward

The implementation of new AML rules for digital assets in the UAE signifies a crucial step towards fostering a secure and regulated virtual asset environment.These regulations, spearheaded by the CBUAE and aligned with FATF standards, aim to mitigate the risks of money laundering and terrorist financing while encouraging innovation and growth within the digital asset sector.For LFIs and VASPs, understanding and adhering to these rules is paramount for long-term success and sustainability. Key takeaways include the importance of robust customer due diligence, transaction monitoring, and reporting obligations. By prioritizing compliance and investing in effective AML/CFT programs, stakeholders can contribute to the UAE's vision of becoming a leading hub for digital asset innovation.

The path forward requires continuous learning, adaptation, and collaboration.Staying informed about regulatory updates, engaging with industry experts, and embracing technological solutions are essential for navigating the evolving landscape of AML compliance in the UAE's digital asset space.As the UAE continues to refine its regulatory framework, a proactive and collaborative approach will be crucial for ensuring a thriving and trustworthy digital asset ecosystem.