UAE Central Bank Fines Malik Exchange Dh2 Million for Anti-Money Laundering Violations

The Central Bank of the UAE (CBUAE) issued a Dh2 million fine against Malik Exchange for anti-money laundering violations, revoked its license, and removed it from the official Register. It’s one of the clearest recent examples of how seriously the UAE enforces AML and counter-terrorism financing (CFT) compliance across exchange houses, banks, and insurance companies, non-compliance here doesn’t end with a fine, it can end the business entirely.

This guide covers what led to the CBUAE’s action, the current AML/CFT legal framework behind it, other recent enforcement actions, and a practical compliance self-check for financial institutions.

Background of the Case

Following a thorough investigation, the CBUAE found that Malik Exchange had seriously violated UAE laws on anti-money laundering and the financing of terrorism and illegal organizations (CFT). The violations indicated the exchange house had failed to meet the supervisory standards required to protect the financial system from abuse. In response, the CBUAE imposed a Dh2 million fine, revoked the exchange house’s license, and removed its entry from the official Register.

Also check: AML Compliance Services

Current AML/CFT Legal Framework

UAE AML/CFT obligations are currently governed by Federal Decree-Law No. 10 of 2025, effective 14 October 2025, with its implementing regulation set out in Cabinet Resolution No. 134 of 2025, effective 14 December 2025. This framework requires financial institutions to conduct Know Your Customer (KYC) and Customer Due Diligence (CDD) checks, report suspicious transactions to the Financial Intelligence Unit (FIU), maintain robust internal monitoring and compliance systems, and provide regular staff training on AML obligations. The current framework also extends personal liability for Money Laundering Reporting Officers, an individual accountability layer beyond the institutional penalties seen in the Malik Exchange case.

Why the Central Bank Took Action

The Central Bank’s core function includes protecting the UAE’s financial system and ensuring institutions operate to local and international standards. AML violations are treated seriously because they damage the UAE’s reputation as a safe financial hub, allow illegitimate money to enter the economy, and create risk exposure to terrorism financing and other unlawful activity. The penalty and license cancellation together send a clear message: any exchange house, bank, or insurance company falling short of these standards should expect strict enforcement, not a warning.

Must check: Ultimate Beneficial Ownership (UBO) Declaration

Other Recent Central Bank Enforcement Actions

• August 2024. YAS Takaful PJSC’s license was suspended for failing to meet insurance regulation requirements.
• July 2024. Al Khazna Insurance Company’s license was suspended for failing to comply with licensing conditions.
• March 2024. A combined Dh2.62 million fine was issued against five banks and two insurance companies for compliance violations.

Taken together, these actions show consistent, active Central Bank supervision, not isolated one-off enforcement.

Compliance Self-Check for Financial Institutions

Before assuming a compliance program is adequate, exchange houses and other regulated institutions should honestly assess:

• Is KYC and CDD genuinely applied to every customer relationship, not just at onboarding but on an ongoing basis as risk profiles change?
• Is suspicious transaction reporting to the FIU actually happening in practice, not just documented as a policy that isn’t consistently followed?
• Does the AML policy reference the current legal framework, Federal Decree-Law No. 10 of 2025 and Cabinet Resolution No. 134 of 2025, rather than the superseded 2018/2019 framework?
• Is staff training current and recurring, rather than a one-time onboarding exercise?
• Does the Money Laundering Reporting Officer understand their personal liability exposure under the current framework?
• Are internal audits and compliance reviews conducted regularly, rather than only in response to a regulator inquiry?

Lessons for Businesses

• Compliance systems are a requirement, not a formality. Financial institutions need genuinely functioning internal systems monitoring transactions against current AML law, not documentation that exists without enforcement behind it.
• Staff training is essential. Every employee needs to be able to identify and report suspicious activity without delay.
• Regular monitoring matters. Internal audits and compliance reviews should happen on an ongoing basis, keeping pace with regulatory updates.
• Reputation is part of the cost. Non-compliance carries market reputation damage well beyond the financial penalty itself.

Frequently Asked Questions (FAQs)

How Farahat & Co. Can Help

Farahat & Co. supports financial institutions with AML/CFT compliance advisory, internal policy drafting, staff training, and risk assessments aligned with the current UAE AML legal framework.

Contact Farahat & Co. today to discuss your AML compliance requirements.