Virtual Assets in the Spotlight: UAE’s AML Focus Up to 2027

The UAE has placed virtual assets under intense supervisory scrutiny until at least 2027, recognizing their high-risk profile for money laundering and terrorist financing. Federal and emirate-level authorities—including the Securities and Commodities Authority (SCA), the Dubai Virtual Assets Regulatory Authority (VARA), the Central Bank of the UAE (CBUAE), and the Abu Dhabi Global Market’s FSRA—have issued detailed frameworks to regulate Virtual Asset Service Providers (VASPs).

A key development is the UAE Virtual Asset Service Provider (VASP) licensing regime. VARA, based on Dubai Virtual Asset Law No. 4 of 2022, requires the licensing, regulation, and enforcement of all VASPs in Dubai. Similarly, SCA rules and FSRA regulations extend this licensing requirement nationwide, with a prohibition against unlicensed operation.

Strengthening the AML Backbone for Virtual Assets

VARA’s Compliance and Risk Management Rulebook mandates the appointment of Money Laundering Reporting Officers (MLROs), robust due diligence measures, suspicious transaction monitoring, and application of the FATF Travel Rule for virtual asset transfers.

In parallel, CBUAE Guidance to licensed financial institutions stresses the fact that specific attention should be given to enhanced due diligence concerning VASP accounts, a risk-based approach, and reporting suspicious transactions in a timely manner. The Joint Supervisory Guidance (2022) is also cautioning against transacting with unlicensed VASPs, stipulating again that AML compliance cannot be compromised to ensure the integrity of the UAE financial system.

Enforcing a Cohesive Regulatory Structure

The UAE AML regulations, specifically, as outlined in Federal Decree-Law No. 20 of 2018, amended by Federal Decree-Law No. 26 of 2021, remain the cornerstone. Cabinet Resolutions No. 10 of 2019 and No. 111 of 2022 integrate virtual assets into this national AML/CFT framework.

SCA guidelines clarify that virtual assets for investment purposes—including those traded on licensed platforms—are subject to the same AML and counter-terrorist financing (CFT) rules as traditional securities. ADGM’s FSRA also applies stringent AML requirements to its licensed firms, requiring alignment with international FATF standards.

VARA’s Rulebooks and the Push for Transparency

A critical feature of the Virtual Asset Regulation UAE framework is the specialized VARA Rulebooks, which cover the issuance, custody, transfer, settlement, compliance, and risk management aspects of virtual assets. These require:

• Transparent public disclosures of conflicts of interest.

• Strong governance for client asset protection.

• Policies against insider dealing, market manipulation, and unlawful disclosure.

These multiple obligations help in ensuring that the ecosystem in Dubai is consistent with global standards of financial crime deterrence, as well as, protection to the investors against abuses and fraud.

Crypto AML Compliance: Expectations Until 2027

With crypto AML compliance in the spotlight, UAE regulators are adopting a risk-based approach to regulation. VASPs must:

• Implement enhanced due diligence for high-risk customers.

• Monitor the source and destination of funds through blockchain analytics.

• Enforce sanctions screening and maintain audit-ready compliance systems.

Supervisory tests, disclosure, and annual compliance checks evidence the rising intent of the UAE to promote the resilience of its financial system and sustainable financial innovation.

Strict Sanctions Ahead for Non-Compliant Firms

There is zero tolerance for AML penalties for crypto companies in the UAE. Penalties are in the form of multi-million-dirham fines, suspension of operations, and reputational damage for non-adherence to AML controls. VARA's 2023–2025 rules explicitly empower the authority to fine for violations of Disclosure, Transaction Monitoring, or Client Due Diligence requirements.

These measures complement the UAE's ambition to exit the FATF grey list permanently and establish itself as a compliant destination for digital asset businesses.

How to Obtain a VASP License in the UAE

For firms eyeing entry into this market, obtaining a VASP license in the UAE requires meeting rigorous conditions:

• Submission of detailed compliance frameworks.

• Hiring compliance officers with AML experience.

• Evidence of sufficient financial resources and organizational systems.

• Whitepaper approvals for token issuances according to VARA's Issuance Rulebook.

This structured licensing path reflects the best global practices, ensuring that only serious, well-prepared firms can operate in the UAE’s evolving virtual asset sector.

Secure Your VASP License with AMCA

The multi-faceted strategy of the Federal AML Law UAE shows that security does not have to be sacrificed for innovation. By establishing its regime on international FATF standards and implementing strict AML monitoring till 2027, the UAE guarantees the establishment of its digital economy on the pillars of trust, compliance, and international credibility.

Are you prepared to address the emerging UAE AML demands on virtual assets? AMCA's compliance experts act as a guiding force through all the processes involving the acquisition of a VASP license to the installation of highly enforced AML systems. Reach out to us now to protect your crypto business and keep up to date with regulatory requirements.

FAQs

1. Are unlicensed VASPs allowed to operate in the UAE?

No. Joint regulatory guidance explicitly prohibits dealing with unlicensed entities, warning that parties who do so expose themselves to legal and financial risks.

2. What are the penalties for AML breaches in the virtual asset sector?

Penalties include fines, license suspension or cancellation, and possible criminal liability under Federal Decree-Law No. 20 of 2018.

3. What steps must a company take to secure a VASP license?

They must submit compliance frameworks, appoint MLROs, maintain governance structures, and secure approvals from the relevant regulator (VARA, SCA, FSRA, or DFSA).