CBUAE Cracks Down on Five Insurance Brokers for AML/CFT Failures

On May 12, 2025, the Central Bank of the UAE (CBUAE) took firm enforcement action against five insurance brokers operating within the country, reinforcing its zero-tolerance approach toward breaches in anti-money laundering (AML) and combatting the financing of terrorism (CFT) regulations. The move follows a series of on-site inspections that uncovered major shortcomings in the firms’ AML/CFT frameworks. As a result, two brokers were slapped with significant financial penalties, while the remaining three received formal warnings and were ordered to address their compliance failures within set deadlines. These sanctions underline the CBUAE’s ongoing efforts to promote transparency, integrity, and resilience in the UAE’s financial sector.

The disciplinary measures are rooted in Article (14) of Federal Decree-Law No. (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organisations. The CBUAE, during its supervisory checks, identified key compliance gaps at the sanctioned firms. These included poor customer due diligence practices, ineffective transaction monitoring mechanisms, and inadequacies in sanctions screening systems.

Following these inspections, two brokers were subjected to administrative fines. Three others were issued official warnings, instructing them to rectify their compliance gaps within a specified period. While the CBUAE did not reveal the names of the sanctioned firms or the amounts of the fines, the message sent was unequivocal: “any laxity in AML/CFT controls will trigger swift regulatory action.”

The inspections unearthed a series of compliance weaknesses. Brokers had failed to adequately verify customer identification documents, thereby exposing themselves to the risk of unknowingly onboarding politically exposed persons (PEPs) or entities involved in illicit finance. In terms of transaction monitoring, systems in place lacked robust scenarios or were misconfigured, leading to failure in detecting unusual or high-risk activity. Moreover, the sanctions screening protocols at several firms were found wanting, with outdated sanctions lists and insufficient screening against domestic and international watchlists. These failings threaten the wider financial system by allowing illicit activity to evade detection. As the article noted, “Effective CDD, real-time monitoring, and sanctions screening form the triad of any sound AML program; lapses in these areas leave the entire financial sector vulnerable to reputational, operational, and legal risks.”

The regulatory basis for these actions stems from the UAE’s comprehensive AML/CFT regime established under Federal Decree-Law No. (20) of 2018. Under Article 14, the CBUAE is empowered to impose a range of administrative sanctions, including financial penalties, warnings, and corrective directives. The severity of the penalties depends on the extent and recurrence of the violations, as outlined in the implementing regulations. The latest enforcement action follows a growing trend of increased regulatory vigilance. In February 2024, for instance, the central bank fined a UAE-based exchange house AED 3.5 million for comparable AML infractions. Through such actions, the CBUAE aims to build a culture of compliance across all financial institutions, spanning banks, money exchanges, insurance companies, and brokerage firms.

The impact on the UAE’s insurance sector could be significant. Insurance products—particularly those like life insurance with cash surrender values or trade credit policies—are often vulnerable to misuse in money laundering operations. Sanctions imposed by the CBUAE bring several consequences. These include reputational damage, not just for the penalized firms but for the broader industry; increased operational costs tied to the implementation of remediation measures; and changes in market dynamics as clients begin to demand stricter compliance from brokers. “By enforcing penalties, the CBUAE not only deters future misconduct but also encourages all industry participants to strengthen their AML/CFT infrastructures proactively,” the report noted.

To avoid similar sanctions, insurance brokers are advised to follow a series of best practices. These include instituting risk-based customer due diligence (CDD) policies, performing enhanced due diligence on high-risk clients, and regularly updating client data. Firms should also implement transaction monitoring systems with calibrated detection scenarios and ensure that they are frequently tested. Sanctions screening must be automated, with lists from UN, EU, OFAC, and UAE authorities updated daily. Further, companies must invest in ongoing staff training and develop a corporate culture that encourages employees to escalate suspicious activity. Regular internal or third-party audits should be conducted to identify and fix compliance gaps. These measures not only align firms with regulatory expectations but also bolster internal defences against evolving financial crime threats.

The penalties levied against the five insurance brokers by the CBUAE act as a stark reminder that AML/CFT compliance is not optional. Firms must continually assess and reinforce their risk controls, leveraging both advanced technology and ethical leadership to identify and prevent illicit finance. In doing so, they protect not only their own reputation but also contribute to the stability and integrity of the UAE’s broader financial system.

By fLEXI tEAM