A New Era for AML/CTF/PF in the UAE: Analysing Federal Decree-Law No. 10 of 2025 on Combating Money Laundering, Countering Terrorism and Proliferation Financing

The United Arab Emirates has significantly enhanced its legal framework for anti-money laundering, countering terrorism and proliferation financing with the promulgation of Federal Decree-Law No. 10 of 2025 (the "2025 AML Decree-Law"). Effective from 14 October 2025, this new legislation repeals Federal Decree-Law No. 20 of 2018 (the "2018 AML Law"), introducing substantive amendments designed to enhance the enforcement framework, expand the scope of criminal liability, and align closely with evolving international standards.

An Expanded Regulatory Perimeter

The 2025 AML Decree-Law broadens the scope of the AML/CTF regime, most notably by incorporating non-proliferation and clarifying key definitions.

• Inclusion of Countering Proliferation Financing: The legislation's title is amended to include “Countering Proliferation Financing" replacing the previous focus on "Illegal Organisations" in the 2018 AML Law. This shift is achieved through the introduction of specific offenses for financing the proliferation of arms and definitions for "Weapons of Mass Destruction" and "Arms Proliferation".
• Expanded Predicate Offenses: While the 2018 AML Law defined a "Predicate Offense" as any act constituting a felony or misdemeanour, the 2025 AML Decree-Law broadens this definition in Article 1 to explicitly include the "evasion of direct and indirect taxes". This clarification expands the range of illicit activities from which criminal proceeds may originate.
• Digital and Virtual Assets: The definitions of "Money Laundering" and "Terrorist Financing" have been updated to expressly state that these offenses can be committed "through digital systems, virtual assets, or encryption technologies," a detail absent in the 2018 AML Law. This ensures the law remains relevant in the context of emerging financial technologies.
• Refined Definition of Proceeds: The definition of "Proceeds" in Article 1 has been expanded to more clearly include recurring and derivative benefits, specifying that it covers not just profits and economic advantages but also "other benefits derived" from criminal property. This closes potential loopholes related to gain from illicit funds.
• Clarified Mens Rea Standard: Money laundering now covers not only knowingly handling criminal proceeds but also situations where someone "should reasonably be aware that funds come from AML-related crimes" and still acts. Article 2(1) specifies that a person is liable if they know, or if there are "sufficient evidence or indications" of their knowledge, that funds are illicitly sourced.

A Robust Enforcement, Asset Recovery and Sanctions Regime

The new law expands the powers of the Financial Information Unit (FIU), introduces formalised asset recovery framework, and significantly increases financial penalties to strengthen deterrence.

• Enhanced FIU Powers: The 2025 AML Decree-Law grants significant new direct powers to the Head of the FIU under Article 5. This includes the authority to order the suspension of a transaction for up to ten working days and to freeze funds for up to thirty days (extendable by the Public Prosecutor). This marks a shift from Article 5 of the 2018 AML Law, where the power to freeze funds for up to seven days was vested in the Governor of the Central Bank.
• Clarification of Freezing and Seizure: The 2025 AML Decree-Law provides distinct definitions for "Freezing" and "Seizure" of funds, clarifying the level of control over the assets as well as the reasons for and effects of each measure. Previously, the 2018 AML Law used a single definition for both terms. Under the new framework, the Head of the FIU is empowered to issue both "Seizure" (suspension) and "Freezing" orders.
  
  • A Seizure order, which can extend up to 10 days and is extendable, may be issued based on the FIU's analysis of a Suspicious Transaction Report (STR), information or requests from national or international unit counterparts, or a request from any competent national authority. The effect of a Seizure order is far-reaching, applying to any transaction, and during its period of application, the competent authority will take control of the seized assets. This indicates a direct transfer of management and control.
  • A Freezing order, which can last for up to 30 days and is also extendable, is typically based on the FIU's analysis of an STR or other information received by the FIU. These orders primarily affect Financial Institutions (FIs), Designated Non-Financial Business and Professions (DNFBPs), and Virtual Asset Service Providers (VASPs). Critically, under a Freezing order, the assets remain under the control of the person(s) receiving the order for its duration, although they are prohibited from utilizing, transferring, converting, exchanging, or disposing of the same.
• Formalised Asset Recovery: While the 2018 AML Law provided for the management and disposal of seized assets under Article 5(7), the 2025 AML Decree-Law introduces a new, dedicated Article 22 for "Asset Recovery" which establishes a legal framework for asset recovery to be further detailed by executive regulations to be issued by the Cabinet of Ministers. Most notably, Article 22 provides safeguards for the rights of innocent third parties with respect to confiscated criminal property.
• Voiding of Evasive Contracts: Article 6(3) of the new law renders any contract or transaction null and void if a party knew, or could have reasonably known, that its purpose was to impede the ability of authorities to seize, freeze, or confiscate criminal property. This strengthens a similar, but less expansive, provision found in Article 26 of the 2018 AML Law.
• Increased Penalties: The financial penalties for key offenses have been substantially increased and now include mechanisms to link fines to the value of the criminal property.

Impact on Regulated Entities

For Financial Institutions (FIs), Designated Non-Financial Businesses and Professions (DNFBPs), and Virtual Asset Service Providers (VASPs), the 2025 AML Decree-Law reinforces existing obligations while introducing important nuances.

• Continuous Monitoring: Article 19 of the 2025 AML Decree-Law makes "continuous monitoring" a more explicit and distinct requirement of due diligence compared to its framing within Article 16 of the 2018 AML Law. This cements the expectation that regulated entities must maintain dynamic and ongoing oversight of client relationships.
• Expanded Definition of Client: Article 1 of the new law defines a "Client" as any person, entity or legal arrangement that has a business relationship or is about to establish such a relationship, a subtle but important expansion from the definition in the 2018 AML Law that focused on those who undertake or attempt to carry out business. This extends due diligence obligations more clearly to the pre-onboarding phase.
• Forthcoming Regulations: Article 19(2) of the 2025 AML Decree-Law anticipates that the executive regulations will provide detailed guidance on the specific a wider range of entities and roles, including:
  
  • Non-profit organizations.
  • Economic and commercial registries responsible for regulating legal arrangements.
  • Companies, their managers, and nominee shareholders.
  • Legal arrangements, trustees, and persons holding similar positions.

This indicates that further, more granular compliance requirements are on the horizon. Until such regulations are issued, any existing regulations would remain applicable.

Conclusion

Federal Decree-Law No. 10 of 2025 is a comprehensive replacement of the 2018 framework, creating a more robust, modern, and institutionally sound regime. By expanding the law's scope, strengthening supervisory powers, and imposing stricter penalties, the legislation signals a clear commitment to combat financial crime. Entities operating in the UAE must proactively assess their internal policies and monitoring systems to ensure compliance with this new and more demanding legal landscape.

Should you require any further information, please contact Mohammed Al Dhaheri, Partner, Dispute Resolution and Money Laundering Reporting Officer at m.aldhaheri@hadefpartners.com or Mohammed Abbas Al-Obaidi, Senior Associate, Dispute Resolution at m.abbas@hadefpartners.com.