Federal Decree-Law No. 6 of 2025 establishes new banking supervision framework — UAE financial institutions

Federal Decree-Law No. 6 of 2025 provides a new legal framework for the UAE financial sector, placing banking, insurance, payment services, and related financial activities under Central Bank supervision. The law increases regulatory duties, consumer protection, supervision, and penalties.

Article 170 criminalizes unlicensed financial activities, with penalties of imprisonment and fines up to AED 500 million. Article 168(1)(s) imposes minimum administrative fines of AED 1 million for promotion or carrying out of unlicensed financial activities.

Article 150 introduces consumer protection safeguards for credit facilities to natural persons and sole proprietorships. Licensed financial institutions must obtain and maintain adequate guarantees proportionate to client income, existing guarantees, and facility size. Failure to comply may result in rejection of recovery claims and administrative sanctions.

Article 148(11) prohibits compound interest on consumer facilities. Simple interest only is permitted, with maximum rates of 9% per annum where not specified in contracts. Islamic financial institutions face specific restrictions under Article 473 of Federal Decree-Law No. 50 of 2022, which prohibits charging interest or benefit on delayed debt.