UAE Trends and Developments Contributed by: Stefan Mrozinski, Gabrielle Margerison (nee Lowe) and Arnold Krutilins, White & Case LLP
Introduction In the last 12 months, the UAE has continued to demonstrate its commitment to positioning itself as a leading regional and global financial centre. Similar to the global technology industry, fintech in the UAE continues to evolve at a rapid pace, something assisted by the fact that fintech in the UAE was still relatively undeveloped five or six years ago as compared to traditional finan - cial institutions that have dominated the UAE for decades. Financial services providers (FSPs) in the UAE, as elsewhere, operate within a strictly regulated framework, a necessity given their role in pro - tecting individuals’ wealth and economic stabil - ity. Historically, smaller fintechs benefited from regulatory flexibility due to their limited market impact. However, as these companies expand their footprint and integrate into the UAE’s main - stream financial sector, they face increased regulatory scrutiny comparable to established banks and financial institutions. Many technology entrepreneurs and start-ups often perceive regulatory compliance as onerous and burdensome. Yet, from a strategic perspec - tive, this challenge presents significant opportu - nity for fintechs that are prepared and willing to navigate the UAE’s regulatory landscape. Fin - techs that invest in robust compliance frame - works position themselves as trusted providers for consumers and can adapt more quickly when there are regulatory changes. The regulatory evolution is most evident in the payments and virtual asset space, where each regulator in each of the jurisdictions of the UAE has, in the last two to three years, established comprehensive frameworks to govern the provi - sion of payments and virtual asset-related prod - ucts and services in their respective jurisdictions.
The UAE’s regulatory journey has not been with - out challenges, particularly in addressing AML challenges that have required co-operation and attention. Following the country’s removal from the Financial Action Task Force’s (the “FATF’s” ) grey list in 2024, and in preparation for its upcom - ing FATF mutual evaluation in 2026, stakehold - ers across the UAE’s financial ecosystem are intensifying efforts to strengthen compliance frameworks and take enforcement action even more seriously. Fintechs that are able to navigate evolving regulatory frameworks are in a strong - er position to gain competitive advantages and ensure sustainable growth and market integrity through enhanced market credibility including from regulators, other market participants and consumers. The UAE’s Multi-Jurisdictional Regulatory Framework To fully appreciate the developments in UAE fintech regulation and related initiatives at both federal and emirate levels, it is essential to understand the unique regulatory landscape that governs financial services, including the prod - ucts and services offered by fintechs, across the country. The UAE comprises a multi-layered regulatory system where numerous regulators operate with distinct, but sometimes overlap - ping authority, creating a complex landscape that fintechs must carefully navigate. In onshore UAE (which for financial services reg - ulatory purposes includes the non-financial free zones and mainland UAE), the Central Bank of the UAE (the “CBUAE” ) and the Securities and Commodities Authority (the “SCA” ) regulate financial services. Following the exponential growth in fintech and, more specifically, virtual asset-related activity in the UAE, a third regu - latory authority, the Virtual Assets Regulatory Authority (the “VARA” ), was established in 2022
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