Abu Dhabi – June 26, 2025: The Central Bank of the UAE (CBUAE) has imposed strict regulatory sanctions on a local bank for failing to comply with Sharia governance requirements, including a six-month ban on onboarding new customers and a monetary fine of Dh3,502,214.
The CBUAE announced the measures following supervisory examinations that revealed significant lapses in the bank’s adherence to the regulatory framework governing Islamic banking.
The violations, according to the central bank, pertain specifically to the Sharia Governance Framework that Islamic financial institutions are required to observe. These frameworks ensure that products and services offered comply with Islamic law, which prohibits interest and mandates ethical investment practices.
The regulatory action was taken under Article 137 of Decretal Federal Law No. (14) of 2018, concerning the Central Bank and the Organisation of Financial Institutions and Activities, along with its subsequent amendments. The law empowers the central bank to enforce penalties against institutions that fail to meet regulatory obligations.
In a statement released on Wednesday, the CBUAE said the penalties reflect its ongoing commitment to upholding the integrity of the financial system and reinforcing compliance among all licensed banks.
“The Central Bank remains committed to ensuring that all licensed financial institutions operating in the UAE adhere to the legal and regulatory standards established to uphold transparency and integrity in the banking sector,” the regulator said.
The identity of the penalised bank has not been disclosed. However, the nature of the violation underscores the importance the CBUAE places on the proper governance of Islamic banking operations, which have seen rapid growth across the UAE in recent years.
Islamic finance institutions are expected to maintain dedicated Sharia supervisory boards, clear compliance mechanisms, and robust internal auditing to align their activities with Islamic principles.
While the financial penalty of over Dh3.5 million marks a significant punitive measure, the six-month restriction on onboarding new clients could have more far-reaching operational and reputational implications for the bank involved.
The restriction effectively pauses business growth and could impact the bank’s customer acquisition targets and market share.
This action is part of the Central Bank’s broader efforts to strengthen regulatory oversight and ensure that financial institutions maintain high standards of compliance, particularly in areas involving ethical and religious financial practices.
It also comes amid a growing demand for Sharia-compliant financial services in the region, with customers placing increasing importance on religious adherence and transparency. The CBUAE reiterated its role in safeguarding the financial system’s stability and maintaining public trust.
“Through its ongoing regulatory efforts, the CBUAE seeks to safeguard the stability and soundness of the UAE’s financial system and maintain public trust in its banking institutions,” the statement concluded.
As Islamic banking continues to expand in the UAE, the CBUAE’s move serves as a firm reminder that regulatory compliance remains non-negotiable, particularly in matters as sensitive as religious financial conduct.