Federal Decree-Law No. 6 of 2025: Reshaping financial and insurance regulation in the UAE

Authors: Irfan Basheer and Dhilna Dileep

On 8 September 2025, the United Arab Emirates enacted Federal Decree-Law No. 6 of 2025, titled Regarding the Central Bank, Regulation of Financial Institutions and Activities, and Insurance Business. Effective immediately, the law brings all financial and insurance supervision under the Central Bank of the UAE (CBUAE), replacing earlier frameworks and creating a single, integrated regulator for the financial sector.

This marks a major step in strengthening regulatory oversight, aligning financial and insurance standards, and reinforcing the UAE’s reputation as a stable, transparent, and globally competitive financial centre.

Centralised oversight under the CBUAE

The Federal Law designates the CBUAE as the sole authority responsible for licensing, regulating, supervising, and enforcing all Licensed Financial Activities (LFAs) — including banks, insurance and reinsurance companies, money-exchange businesses, and payment service providers.

Its key responsibilities include:

• Maintaining price and financial stability.
• Managing foreign reserves and monetary policy.
• Ensuring prudential soundness and market integrity.
• Protecting customers, insured persons, and beneficiaries - integrating insurance consumer protection with financial supervision.

This consolidation replaces the previous multi-agency model with a unified oversight framework, improving efficiency, consistency, and accountability across the sector.

Repeal of previous legislation

Under Article 185, the Federal Law repeals:

• Federal Decree-Law No. 48 of 2023, Regulating Insurance Activities; and
• Decretal Federal Law No. 14 of 2018, Concerning the Central Bank and the Regulation of Financial Institutions and Activities.

The former Insurance Authority, whose powers were previously absorbed by the CBUAE, is now formally dissolved.

To ensure a smooth transition, Article 183 preserves existing regulations and circulars until the CBUAE issues new ones - meaning financial institutions must remain compliant with both existing and evolving requirements during the transition phase.

This integration removes regulatory overlap, creating a streamlined reporting and supervisory framework under one authority.

Transformation of insurance regulation

The Federal Law introduces several reforms that align the insurance sector with banking-level governance and solvency standards:

• Solvency and technical requirements: Article 86 imposes strict solvency margins and technical provisions under the CBUAE’s oversight.
• Appointment of actuaries: Article 87 requires insurance companies to appoint a permanent actuary to assess policy values, reserves, and technical accounts.
• Corporate governance: Article 69 mandates that local banks and reinsurance companies operate as public joint-stock companies, ensuring greater transparency and accountability.
• Segmentation of activities: Article 80 prevents new licensees from combining life or fund-accumulation insurance with property or liability insurance, mitigating concentration risk.

These measures elevate the UAE’s insurance regulation to internationally recognised supervisory standards.

Unified AML / CFT framework

The CBUAE now applies Federal Decree-Law No. 20 of 2018 on Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) to all LFAs, including insurance entities. Firms must strengthen their KYC, CDD, and transaction-monitoring systems to match banking-sector expectations.

The CBUAE is empowered to investigate and sanction non-compliance, ensuring consistent enforcement across all financial services.

Digital assets and virtual currencies

Article 187 clarifies that the CBUAE regulates Virtual Assets (VAs) and Digital Currencies when used as payment or exchange instruments (for example, to buy goods or exchange for fiat currency).

However, assets used purely for investment or trading fall under separate UAE regulations. This distinction brings long-awaited clarity to the treatment of digital assets in the UAE’s financial landscape.

Expanded CBUAE powers

The Federal Law grants the CBUAE new supervisory tools to manage systemic risk:

• Systemically Important Financial Institution (SIFI) designation: Article 35 allows stricter oversight of large banks and insurance groups.
• Resolution powers: Articles 142–143 authorise the CBUAE to impose governance changes, restrict business, mandate mergers, or suspend insurance activities to stabilise distressed institutions.
• Enforcement mechanisms: Article 161 introduces penalties ranging from fines to removal of authorised individuals.

These expanded powers enhance the CBUAE’s ability to protect consumers and preserve financial stability.

Mandatory transition period

Under Article 184, all financial and insurance institutions must align with the Federal Law within one year of its enactment, unless extended by the CBUAE.

Key transition requirements include:

• Adopting public joint-stock governance models.
• Meeting revised solvency and capital standards.
• Enhancing AML / CFT systems and internal controls.

Non-compliance may attract penalties or corrective action. The transition phase is therefore crucial for ensuring long-term operational readiness.

Interpretive insight

This legislative reform mirrors leading international financial models - such as those of Singapore and the UK - where a single authority supervises both prudential soundness and market conduct.

For the UAE, it signals the next phase in regulatory maturity: a unified, risk-based, and forward-looking financial ecosystem that promotes investor confidence and global competitiveness.

Conclusion

Federal Decree-Law No. 6 of 2025 represents a transformative moment in the UAE’s regulatory landscape. By unifying financial and insurance supervision under the CBUAE, it creates a consistent, transparent, and globally aligned system that enhances market integrity and consumer protection.

All Licensed Financial Activities - including banks, insurers, and fintech providers - should act promptly to assess their readiness, adapt governance frameworks, and meet the one-year compliance deadline.