UAE Trends and Developments Contributed by: Stuart Paterson, Janine Mallis, Tania Forichon and Elif Eren Ozenir, Herbert Smith Freehills Kramer LLP
Overview The UAE continues to position itself at the forefront of regulatory innovation, technological advance - ment, and financial crime enforcement. Over the past year, the authorities have taken significant steps to strengthen compliance frameworks, support emerg - ing technologies, and align with international stand - ards. This update highlights key developments across four areas: virtual assets, artificial intelligence, whistle- blower protections, and the UAE’s removal from the EU’s AML high-risk list. These trends reflect a juris - diction that is not only adapting to global shifts, but beginning to actively shape them. UAE’s Evolving Virtual Asset Regulatory Framework The UAE’s commitment to becoming a global hub for virtual assets has continued to accelerate. In March 2025, Abu Dhabi’s state-owned investment firm, MGX, announced a landmark USD2 billion investment into Binance, the world’s largest cryptocurrency exchange. This transaction is widely regarded as the largest single investment in a cryptocurrency company to date. In a similar vein, the Central Bank of the UAE is expected to launch a retail central bank digital cur - rency (CBDC) by year-end, which will serve as legal tender. This move will position the UAE among the few jurisdictions globally to be using a retail CBDC at scale. In addition to these developments, the UAE continues to strengthen its enforcement and regulatory frame - works around virtual assets. In previous editions of this Guide, we covered the Cyber Crimes Law (Federal Decree Law No 34 of 2021, as amended by Federal Law No 5 of 2024) and virtual assets regulatory regime, which came into force in 2022 and 2023 respectively. In late 2024, the UAE authorities dismantled two major international money-laundering networks that had moved AED641 million through cryptocurrency. Inves - tigators identified cross-border links to the UK and the use of local companies and unlicensed cryptocur - rency intermediaries to facilitate money laundering. Regulatory bodies such as the UAE Central Bank and the Dubai Virtual Assets Regulatory Authority (VARA) have also intensified oversight. In July 2025, the Cen - tral Bank imposed a AED3 million fine on a UAE bank for breaches related to anti-money laundering and
sanctions compliance. VARA also took enforcement action against licensed virtual asset service provid - er, Fuze, for violations relating to AML and licensing obligations. Together, these developments reflect the UAE’s continued strategy of fostering innovation and investment in virtual assets while maintaining robust guardrails to mitigate financial crime risks. AI Developments in Fraud and Compliance In last year’s Chambers Guide, we explored how arti - ficial intelligence was being leveraged to strength - en internal business security and detect potential fraud. At the same time, fraudsters were exploiting AI for financial gain, a trend that has only intensified throughout 2025. The UAE, and Abu Dhabi in particular, have emerged as a hub for AI innovation, especially in compliance and financial risk. Abu Dhabi’s commitment to invest AED13 billion in AI between 2025 and 2027 under its “Falcon Economy” vision has further accelerated development in this space. Notably, in September 2025, UK firm Themis launched its AI Investigator in Abu Dhabi, a tool designed to automate large-scale data processing and due diligence that is capable of analysing millions of data points in seconds to uncov - er hidden links to financial crime. While it remains unclear whether UAE authorities will adopt such tech - nology for investigations, its potential is significant if proven effective. However, as AI becomes a powerful asset for busi - nesses in combating financial crime, it also introduces more sophisticated threats. The UAE Government’s Empowerment Department recently issued a warn - ing about AI-driven scams, particularly those involv - ing deepfake technology. These scams impersonate officials and use urgency to extract sensitive personal data. The alert advises individuals to be cautious of unexpected contact, pressure tactics, and requests for confidential information, and to verify sources before responding. It also warns against uploading personal photos to AI apps, which can expose biom - etric data and lead to identity theft. Other UAE authori - ties have echoed similar concerns. For instance, the Ministry of Human Resources and Emiratisation and the Dubai police have cautioned job seekers about fake online postings designed to steal personal infor -
296 CHAMBERS.COM
Powered by FlippingBook