On 12th May 2025, the Central Bank of the UAE (CBUAE) issued administrative and financial sanctions against five insurance brokers operating in the UAE. The action was taken under Article 14 of Federal Decree Law No. (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organizations. Two of the entities received financial penalties, while three others were issued official warnings for failures to comply with Anti-Money Laundering/ Counter-Terrorism Financing (AML/CTF) requirements (CBUAE, 2025).
This enforcement action serves as a clear warning to all participants in the insurance industry: the regulatory environment in the UAE is intensifying, and compliance is not negotiable.
Legal Foundation: AML/CTF Requirements
The UAE’s Federal Decree Law No. (20) of 2018 mandates that all financial institutions—including insurance brokers—implement comprehensive AML and CTF frameworks. These include:
- Customer Due Diligence (CDD) and Enhanced Due Diligence for high-risk clients.
- Ongoing Monitoring of client transactions.
- Prompt Reporting of suspicious transactions to the UAE Financial Intelligence Unit (FIU).
- Maintenance of proper documentation for at least five years.
Failure to meet these obligations exposes institutions to enforcement under Cabinet Resolution No. 7 of 2019, which prescribes fines ranging from AED 10,000 to AED 250,000 for regulatory violations in the insurance sector. (https://rulebook.centralbank.ae/en/rulebook/cabinet-resolution-no-7-2019-concerning-administrative-fines-imposed-insurance-authority)
Global Expectations and FATF Standards
The UAE, being a member of the Financial Action Task Force (FATF)-style regional body MENAFATF, is under increasing scrutiny to demonstrate effective enforcement of AML/CTF laws. FATF emphasizes the “risk-based approach”, expecting insurance intermediaries to identify, assess, and mitigate financial crime risks. In its 2022 Mutual Evaluation Report, FATF specifically noted the need for stronger supervision in DNFBPs and non-bank financial sectors. By strictly enforcing AML/CTF rules, the CBUAE is aligning national enforcement with international best practices—a move essential to maintain the UAE’s status as a transparent, secure financial hub.
Consequences of Non-Compliance
Insurance companies and brokers who fall short of regulatory expectations face serious repercussions:
- Financial Penalties: As evidenced by the recent sanctions.
- License Suspension or Revocation: Especially for repeated or wilful violations.
- Reputational Damage: Regulatory breaches can undermine client confidence and investor trust.
- Legal Liability: Individuals in management positions may face personal accountability, including civil and criminal charges.
In the long run, non-compliance may lead to restricted market access, difficulty in establishing correspondent relationships, and increased scrutiny from global regulators.
Proactive Compliance
Insurance sector players should adopt a compliance-first mindset, recognizing that it is both a legal requirement and a competitive advantage. Steps to ensure ongoing compliance include:
- Developing robust internal controls and risk assessments tailored to the insurance business model.
- Training staff regularly on red flag indicators and reporting protocols.
- Conducting internal audits to ensure procedures align with regulatory updates and international standards.
Conclusion
The recent actions by the CBUAE should serve as a serious reminder that enforcement is real, and expectations are rising. Regulatory compliance is no longer a box-ticking exercise—it is a strategic necessity. By remaining informed, proactive, and compliant, UAE insurance sector stakeholders can contribute to safeguarding the national financial system, mitigate risk, and enhance their reputation in global markets.
