Dubai Financial Services Authority (“DFSA”) announces AML and Glossary Module amendments come into force.
The DFSA, the independent financial regulator for the Dubai International Financial Centre (“DIFC”), confirmed that its updated Anti-Money Laundering, Counter-Terrorist Financing and Sanctions Module (“AML”) and the Glossary Module of the DFSA Rulebook came into force on 02.03.2026. The amendments were introduced to provide clarity on the AML regime applicable in the DIFC and to align with Federal AML legislation enacted in late 2025, namely Federal Decree by Law No. (10) of 2025 and Cabinet Resolution No. (134) of 2025.
Key Takeaways:
- The updated AML Module aligns the DIFC’s financial crime compliance framework with the UAE’s new federal AML, Counter-Terrorist Financing and Countering Proliferation Financing legislation.
- Customer Due Diligence (“CDD”) and Enhanced Due Diligence (“EDD”) requirements have been clarified and strengthened, including enhanced obligations around ongoing monitoring and beneficial ownership verification.
- Firms are required to adopt a more robust risk-based approach, with documented and regularly updated enterprise-wide AML risk assessments.
- Sanctions compliance obligations have been enhanced, with clearer requirements on screening, freezing, reporting, and handling of sanctioned persons or entities.
- The Glossary Module has been amended to update and harmonise key definitions, including beneficial owner, politically exposed person (“PEP”), sanctions, and suspicious activity, to ensure interpretative consistency across the DFSA Rulebook.
- Alongside the AML amendments, the DFSA also published a Notice of Amendments covering the Fees Module (“FER”) and the Prudential, Investment, Insurance Intermediation and Banking Business Module (“PIB”), bringing further regulatory alignment across the DIFC rulebook.
- All Relevant Persons in the DIFC are reminded of their obligation to ensure ongoing compliance with the updated requirements from the effective date.
Dubai’s Virtual Assets Regulatory Authority (“VARA”) introduces comprehensive regulatory framework for Exchange Traded Derivatives (“ETD”).
VARA, the independent regulator for virtual assets in the Emirate of Dubai, introduced a comprehensive regulatory framework for Exchange Traded Derivatives in virtual assets through Version 2.1 of its Exchange Services Rulebook, effective from 31.03.2026. The updated Rulebook makes Dubai one of the world’s first jurisdictions to bring virtual asset derivatives under a purpose-built, enforceable rulebook, enabling licensed Virtual Asset Service Providers (“VASPs”) to offer derivatives products within a clearly defined regulatory perimeter.
Key Takeaways:
- Version 2.1 introduces a brand new Part V on Exchange Traded Derivatives, covering listed futures, perpetuals, options, and contracts for difference, replacing the previous spot-focused rulebook framework with a fully defined derivatives regime.
- Only VASPs already licensed by VARA for Exchange Services may offer ETD products, and only where ETD permission is explicitly written into their VARA licence. Firms must submit a full derivatives pack to VARA prior to launch, covering product types, risk management frameworks, template ETD Services Agreements, margin and liquidation logic, and Insurance Fund arrangements.
- Retail investor access to derivatives is permitted but subject to strict guardrails, including a leverage cap of 5:1, a minimum initial margin requirement of 20%, and mandatory suitability assessments covering each client’s financial position, trading experience, and risk tolerance.
- VASPs are expressly prohibited from trading derivatives on their own account, eliminating conflicts of interest and aligning Dubai’s framework with traditional financial market standards.
- VARA retains broad intervention authority over the segment, including the power to suspend products, require position liquidations, adjust margin requirements, and expand insurance funds. In cases of severe market impact, VARA may act without prior notice.
- VASPs offering ETD services must maintain a minimum Insurance Fund for extreme but plausible market conditions, which may consist of virtual assets, fiat currency, or VARA-approved stablecoins.
- Enhanced governance requirements apply, including a mandatory independent director on the board, annual submission of board and committee compensation details to VARA, and a published code of conduct granting the VASP authority to take disciplinary action against participants.
Abu Dhabi Global Market Financial Services Regulatory Authority (“FSRA”) issues updated Virtual Asset guidance closing regulatory gaps on DeFi, tokenised assets, and AI-driven trading.
The Financial Services Regulatory Authority (“FSRA”) of Abu Dhabi Global Market (“ADGM”) issued updated virtual asset guidance in March 2026, further enhancing ADGM’s position as one of the world’s most comprehensive virtual asset regulatory environments. The guidance closes existing regulatory gaps, introduces new licence categories, and explicitly addresses emerging asset classes and technologies including decentralised finance (“DeFi”) protocols, tokenised securities, and AI-driven trading systems.
Key Takeaways:
- The updated guidance introduces a new DeFi Protocol licence category, enabling DeFi platforms with identifiable operators to seek regulatory certainty and operate within ADGM’s supervised framework, making ADGM one of the first jurisdictions globally to bring DeFi under a formal licence structure.
- Regulatory gaps on tokenised securities are addressed, with the guidance providing clearer parameters for the classification and treatment of tokenised assets, particularly those exhibiting security-like characteristics under ADGM’s Financial Services and Markets Regulations (“FSMR”).
- AI-driven trading systems are explicitly brought within the guidance, establishing supervisory expectations for firms deploying algorithmic or artificial intelligence-based strategies in virtual asset markets, including governance, risk management, and transparency requirements.
- The FSRA continues to operate four primary licence categories for virtual asset activities, namely Broker-Dealer, Exchange, Custodian, and the newly introduced DeFi Protocol category, with a base capital requirement of USD 250,000 for most categories.
- Only Accepted Virtual Assets (“AVAs”) that have been assessed against the FSRA’s criteria may be used in regulated activities within ADGM. Privacy tokens and algorithmic stablecoins remain expressly prohibited.
- The guidance reinforces ADGM’s institutional focus, with the FSRA targeting global institutional firms, custody providers, tokenisation platforms, and DeFi protocols with identifiable operators as its primary licensee base.
- Firms are encouraged to engage the FSRA supervision team early, particularly for novel business models, given that complex applications, especially for the new DeFi Protocol category, can take up to 8 to 12 months from submission.
Mohammed bin Rashid Al Maktoum issues Law No. (4) of 2026 regulating the management and occupancy of shared housing in Dubai.
His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, issued Law No. (4) of 2026 on 11.03.2026, establishing a comprehensive legal framework regulating the management and occupancy of shared housing across the Emirate of Dubai. The law applies to private development zones and free zones and covers property owners, tenants, and licensed establishments that lease or manage shared housing units.
Key Takeaways:
- The law is designed to prevent overcrowding and informal housing, address building and land use violations, promote fair rental practices, and support the stability and safety of Dubai’s residential real estate market.
- Dubai Municipality is designated as the primary authority for overseeing the shared housing sector, including the responsibility to set strategic policies, define maximum occupancy levels, establish minimum space requirements per resident, and specify standards for shared facilities such as kitchens, bathrooms, and ventilation systems.
- Only property owners or licensed management companies are permitted to lease shared housing units. Tenants are expressly prohibited from subleasing rooms or bed spaces to other occupants.
- A new digital registry system will be introduced to monitor resident numbers in each shared housing unit in real time by connecting residents’ Emirates IDs to the registry, enabling authorities to track and respond to overcrowding situations.
- The law specifies that not every residential unit may be designated for shared housing. Dubai Municipality will designate specific neighbourhoods where shared housing is permitted, based on infrastructure capacity and urban planning considerations.
- Violations of the law attract significant financial penalties, with fines of up to AED 1,000,000 for serious breaches. Property owners and licensed operators are expected to regularise their operations in line with the new requirements.
- Collective labour accommodation units are expressly excluded from the provisions of the law and continue to be governed by separate regulations.
