Key Highlights:

• UBO compliance is mandatory for most UAE businesses to prevent money laundering and maintain transparency.
• Ownership changes must be reported within 15 days, with comprehensive documentation required for each UBO.
• Non-compliance can result in escalating fines up to AED 100,000 and potential business license suspension.
• Exemptions exist for government-owned, publicly listed firms and those in DIFC/ADGM financial free zones.

You need to understand Ultimate Beneficial Ownership (UBO) compliance to protect your business in the UAE. 

The UAE Securities and Commodities Authority (SCA) imposed AED 1.15 million in fines since January 2025 on companies for regulatory breaches, including AML/CFT violations, demonstrating the serious enforcement of compliance requirements.

This comprehensive guide covers everything you need to know about current regulations, compliance requirements, and penalties.

Keep reading to learn more. 

What Makes UBO Compliance Critical for Your Business?

UBO compliance serves as the cornerstone of the UAE’s anti-money laundering (AML) and counter-terrorism financing (CFT) framework. The regulations require you to identify and disclose the real individuals behind your business operations.

Federal Decree-Law No. 20 of 2018 defines a beneficial owner as “the natural person who owns or exercises effective ultimate control over the client or the natural person on whose behalf a transaction is being conducted or the natural person who exercises effective ultimate control over a legal person or legal arrangement, whether directly or through a chain of ownership, control, or other indirect means.”

The importance extends beyond regulatory compliance. You’re contributing to a transparent business environment that attracts international investment and maintains the UAE’s reputation as a trusted financial center.

Understanding the Current UAE UBO Legal Framework

1. Federal Decree-Law No. 20 of 2018: The Foundation

This federal law establishes the UAE’s commitment to combating money laundering and terrorism financing. It created the legal foundation requiring businesses to maintain transparency in their ownership structures.

The law was amended by Federal Decree-Law No. 26 of 2021 and Federal Law by Decree No. 7 of 2024, showing the UAE’s continuous efforts to strengthen its AML/CFT framework.

After all, the Central Bank of the UAE established a dedicated Anti-Money Laundering and Combatting the Financing of Terrorism Supervision Department (AMLD) in August 2020. 

According to official CBUAE statements, ‘The AMLD serves three key objectives: Examining Licensed Financial Institutions (LFIs), ensuring adherence to the UAE’s AML/CFT legal and regulatory framework, and identifying relevant threats, vulnerabilities and emerging risks concerning the UAE’s financial sector.

2. Cabinet Decision No. 109 of 2023: Current Requirements

This decision came into effect on November 6, 2023, and replaced Cabinet Decision No. 58 of 2020. It introduces enhanced UBO identification procedures and streamlined compliance processes for all registrars and legal persons licensed in the UAE.

The decision applies to registrars and legal persons licensed or registered in the UAE, including commercial free zones, but exempts entities wholly owned by the government and those in financial free zones.

3. Cabinet Resolution No. 132 of 2023: Penalty Framework

This resolution establishes the administrative penalty structure for UBO violations. It was issued on December 15, 2023, and provides detailed penalties ranging from written warnings to fines up to AED 100,000.

The resolution replaced Cabinet Decision No. 53/2021 and introduced a comprehensive penalty framework with escalating fines for repeat violations.

Who Must Comply with UAE UBO Regulations?

Entities Required to Comply

You must comply with UBO regulations if your business operates as:

• Mainland companies registered with local licensing authorities
• Commercial-free zone companies (excluding financial free zones)
• Offshore companies
• Designated Non-Financial Businesses and Professions (DNFBPs)

Important Exemptions

According to Cabinet Decision No. 109 of 2023, certain entities are exempt:

• Companies wholly owned by the Federal or Local Government
• Publicly listed companies on recognized stock exchanges
• DIFC and ADGM financial free zones entities

Financial free zones DIFC and ADGM have their own separate UBO regulations and compliance requirements.

Step-by-Step UBO Compliance Process

Step 1: Identify Your Ultimate Beneficial Owners

According to Cabinet Decision No. 109 of 2023, you must identify individuals who meet these criteria:

25% Ownership Threshold: Any individual who owns or controls 25% or more of company shares or capital.

Control Criteria: Person exercising significant control over company operations, even without direct ownership.

Senior Management Rule: When no individual meets the ownership criteria, senior management officials become the designated UBOs.

Nominee Shareholders: You must identify individuals behind nominee shareholders acting on behalf of others.

Step 2: Create and Maintain UBO Register

Cabinet Decision No. 109 of 2023 requires you to maintain specific information in your UBO register:

Required Information:

• Full name, nationality, and identification details
• Ownership percentage and nature of control
• Date of becoming a UBO
• Record-keeping requirements and documentation standards

Documentation Requirements: Keep comprehensive records that meet UAE standards and can be easily accessed during regulatory reviews.

Step 3: Submit UBO Information to Licensing Authority

You must submit your UBO information to the relevant UAE licensing authority:

Identification of Authority: Determine your specific licensing authority based on business type and location.

Submission Requirements: Complete official forms and provide required documentation.

15-Day Notification Rule: You must update the licensing authority within 15 days of any ownership changes.

Step 4: Ongoing Compliance Monitoring

Regular UBO Audits: Conduct periodic reviews of your ownership structure to ensure compliance with current regulations.

Compliance Officers: Appoint dedicated compliance officers to manage ongoing requirements.

Annual Confirmation: Complete annual confirmation processes as required by your licensing authority.

Continuous Monitoring: Maintain systems to track ownership changes and ensure timely notifications.

Understanding the Penalty Structure

1. Administrative Penalties Under Cabinet Resolution No. 132 of 2023

The penalty structure follows a progressive enforcement approach with escalating fines for repeat violations:

First Violation: Written warnings for initial non-compliance with specified correction periods.

Second Violation: Monetary fines ranging from lower amounts to AED 50,000, depending on the specific violation.

Third Violation: Maximum fines up to AED 100,000.

2. Business License Suspension

For serious violations, the registrar may suspend the commercial license for 50,000, with a minimum of one year. During suspension, you cannot:

• Conduct normal business operations
• Issue new contracts or agreements
• Access certain banking services
• Maintain normal company legal standing

Legal Consequences

Persistent non-compliance can lead to:

• Court proceedings for ongoing violations
• Criminal liability under Federal Decree-Law No. 20 of 2018
• Enhanced regulatory scrutiny across all business activities

2025 Regulatory Updates and Current Requirements

1. Cabinet Decision No. 109 of 2023 Key Changes

The 2023 decision introduced several enhancements:

Enhanced UBO Identification: Updated procedures for identifying beneficial owners in complex structures.

Streamlined Compliance: Simplified processes for submission and ongoing compliance.

Digital Capabilities: Updated submission requirements including digital submission capabilities.

2. Current Enforcement Measures

UAE authorities have implemented increased monitoring measures:

• Regular compliance audits by licensing authorities
• Coordinated enforcement across emirates
• Enhanced monitoring by regulatory bodies

3. Ministry of Economy Guidelines

The ministry has issued updated guidance including:

• Clarified exemption criteria
• Enhanced documentation standards
• Updated procedural requirements

Best Practices for UAE UBO Compliance

1. Internal Compliance Framework

Clear Policies: Establish policies aligned with UAE requirements and Cabinet Decision No. 109 of 2023.

Regular Training: Provide training aligned with current UAE regulations and requirements.

Documentation Systems: Implement systems meeting UAE standards for record-keeping and reporting.

Risk Assessment: Conduct regular assessments of your ownership structure complexity.

2. Professional Support Strategy

UAE-Qualified Consultants: Engage professionals familiar with UAE law and current regulations.

Legal Advisory Services: Maintain relationships with legal advisors who understand UAE compliance requirements.

Technology Solutions: Implement systems designed for UAE compliance requirements.

3. Proactive Compliance Strategies

Regular Audits: Conduct periodic compliance audits to ensure ongoing adherence.

Regulatory Updates: Stay informed about UAE regulatory changes and updates.

Authority Relationships: Build positive relationships with licensing authorities.

Continuous Improvement: Regularly enhance your compliance processes based on regulatory developments.

Industry-Specific Requirements

1. Free Zone Companies

Commercial-free zone companies must coordinate compliance efforts:

Dual Compliance: Meet both free zone authority requirements and federal regulations.

Authority Coordination: Work with both free zone authorities and federal regulators.

Specific Requirements: Each free zone may have unique submission requirements and deadlines.

2. Offshore Companies

Offshore entities face additional requirements:

Enhanced Due Diligence: Special reporting requirements under UAE law.

Multiple Authorities: Coordination with various relevant authorities depending on operational scope.

3. DNFBPs Compliance

Designated Non-Financial Businesses and Professions have specific obligations:

Sector-Specific Requirements: Unique requirements under Federal Decree-Law No. 20 of 2018.

Enhanced Monitoring: Additional monitoring procedures for designated professions.

Frequently Asked Questions 

1. What happens if you miss the UBO submission deadline?

Immediate penalties apply under Cabinet Resolution No. 132 of 2023. You’ll receive written warnings first, followed by escalating fines. However, you can still rectify non-compliance within specified grace periods.

2. How often must UBO information be updated?

You must notify authorities within 15 days of any ownership changes. Additionally, complete annual review and confirmation processes as required by your licensing authority.

3. What are the maximum penalties for non-compliance?

Administrative fines can reach up to AED 100,000, with license suspension possibilities and potential legal consequences under UAE law.

4. Can corporate entities serve as UBOs?

No. You must identify the ultimate individual owners behind corporate structures. The regulations require disclosure of natural persons who ultimately control the entity.

5. What documentation is required for UBO registration?

You need personal identification documents, ownership proof, shareholding certificates, and documentation showing control and influence over the company.

6. Are there any exemptions from UBO requirements?

Yes. Government-owned entities, publicly listed companies, and DIFC and ADGM financial free zones are exempt from these requirements.

7. What are the consequences of providing false UBO information?

Enhanced penalties apply under Cabinet Resolution No. 132 of 2023, with potential criminal liability risks and regulatory investigation procedures.

Key Takeaways for Business Success

UBO compliance represents more than regulatory adherence—it demonstrates your commitment to transparency and builds trust with stakeholders.

The UAE’s commitment to international AML/CFT standards creates opportunities for businesses that embrace compliance as a strategic advantage. By following these guidelines based on official UAE government sources, you position your business for long-term success in one of the world’s most dynamic business environments.

Note: This information is based on current UAE government regulations as of 2025. Costs and requirements may change, so always verify with official sources and your licensing authority before making compliance decisions.

Book your Free Consultation call today with the expert of JSB Incorporation for all assistance regarding UBO compliance.