UAE: Central Bank Imposes Financial Sanction on Bank for AML Failures

Gulf News, 21 April 2025: The UAE Central Bank has imposed financial sanctions on an unnamed banking entity following an examination that revealed significant gaps in its internal anti-money laundering (AML) processes.

This decision underscores the Central Bank’s commitment to ensuring all banks and their staff comply with UAE laws, regulations, and standards related to AML. The penalty was issued after the Central Bank assessed the findings of its examination, which indicated non-compliance with AML policies, reflecting the regulator’s stringent enforcement of compliance requirements across the financial sector, including banks, currency exchange houses, and insurers.

The sanctioned bank must address the identified deficiencies and align its operations with national AML standards. This development follows the Central Bank’s announcement last year that a new internal entity, the National Anti-Money Laundering and Combating Financing of Terrorism and Financing of Illegal Organisations Committee (NAMLCFTC), would oversee anti-money laundering operations.

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UAE: Trade Licensing Authority’s Decision on Financial Year Sparks Confusion

The National News, 10 April 2025: A recent decision by a UAE trade licensing authority to standardise the financial year for entities under its jurisdiction to a calendar year has led to confusion among businesses.

A UAE trade licensing authority has required all entities under its jurisdiction to adopt a calendar financial year, running from January 2025 to December 2025. This decision will require thousands of companies to alter their memorandums of association and has caused confusion about the potential tax impact. Previously, businesses which came under the trade licensing authority had the flexibility to choose their financial year based on their month of formation, but the new directive has standardised the period.

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UAE: New Tax Rules for Non-Resident Investors in Investment Funds

Gulf News. 6 April 2025: The UAE Ministry of Finance has issued Cabinet Decision No. 35/2025 for non-resident investors in Qualifying Investment Funds and Real Estate Investment Trusts.

Cabinet Decision No. 35/2025, outlines the conditions under which non-resident juridical investors in Qualifying Investment Funds (QIF) or Real Estate Investment Trusts (REIT) are deemed to have a nexus in the UAE, and therefore are subject to taxation. It has repealed Cabinet Decision No. 56/2023 and follows Cabinet Decision No. 34/2025 concerning Qualifying Investment Funds and Limited Partnerships.

It impacts non-resident juridical investors in QIFs and REITs, specifying that a taxable nexus arises if a QIF or REIT distributes 80% or more of its income within nine months from its financial year-end, either on the date of dividend distribution or the date the ownership interest is acquired. A nexus would also be created if a QIF fails to meet the diversity of ownership conditions during the tax period. Conversely, non-resident investors who are exclusively investing in QIFs and REITs without breaching these conditions would not be considered to have a taxable presence in the UAE.

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UAE: New Stricter Traffic Laws to Enhance Road Safety

Khaleej Times, 2 April 2025: The UAE has brought into force new traffic laws on 29 March 2025 which impose severe penalties.

Federal Decree-Law No. 14/2024 On Traffic Regulation was issued on 30 September 2024 but came into force on 29 March 2025. It provides for stringent penalties for various traffic offences including imprisonment and fines up to Dh200,000. The law aims to address serious offences including jaywalking, driving under the influence, and driving without a proper licence. Road safety experts have welcomed the changes but state that there needs to be stricter enforcement and cultural shifts in the UAE to promote road safety.

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UAE: New Zakat Law Approved

Khaleej Times, 19/03/2025: The UAE has approved a new zakat draft law, imposing fines of up to Dh1 million and imprisonment for illegal collection.

The Federal National Council (FNC) has passed a comprehensive federal law regulating the collection, distribution, and management of zakat across the UAE. The decision, led by the Chairman of the General Authority for Islamic Affairs, Endowments, and Zakat, aims to enhance transparency and accountability in the administration of zakat funds. The new law governs all aspects of zakat processes, including the investment of surplus funds in line with Sharia principles, and applies to all individuals and entities engaged in zakat activities within the UAE, including those in free zones. Certain organisations may be exempted by the Cabinet, provided they meet registration and reporting requirements.

The law introduces strict penalties for violations. Collecting, receiving, or distributing zakat without authorisation is considered a crime against public funds, punishable by imprisonment, fines of up to Dh1 million, or both. Misuse of funds, unauthorised deductions, and submitting false documents may result in further fines and imprisonment. Authorised entities also face fines of up to Dh1 million for violations such as distributing zakat abroad without permits, failing to comply with regulations, or mismanaging investments. All entities must regularise their status within a year of the law’s enactment, with an option for extension.

A key feature of the law is the creation of the ‘National Zakat Platform,’ which is a unified digital system to monitor authorised entities, beneficiaries, and fund allocations. This platform aims to ensure zakat funds are distributed efficiently to rightful beneficiaries and managed transparently. The law also restricts zakat distribution outside the UAE to exceptional circumstances like natural disasters, requiring official approval through the platform.

The law maintains the religious integrity of zakat by requiring investment surplus to be used exclusively for zakat purposes, and bars deductions for managing authorities. After extensive debates, the FNC upheld the original provision allowing traditional zakat giving to relatives and acquaintances without the need for excessive administration.

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