The UAE Central Bank has introduced various measures to regulate the financial sector in recent months. Photo: UAE Central Bank
The UAE Central Bank has introduced various measures to regulate the financial sector in recent months. Photo: UAE Central Bank
The UAE Central Bank has introduced various measures to regulate the financial sector in recent months. Photo: UAE Central Bank
The UAE Central Bank has introduced various measures to regulate the financial sector in recent months. Photo: UAE Central Bank

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UAE Central Bank revokes exchange house’s licence for misconduct

Investigation found Dollar Exchange failed to maintain the required level of paid-up capital and engaged in money laundering

Deepthi Nair
Deepthi Nair

February 28, 2023

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The UAE Central Bank has revoked the licence of an exchange house operating in the Emirates and struck its name off the register for regulatory misconduct and weak compliance.

The sanctioning of the exchange house comes after an investigation by the banking regulator uncovered serious regulatory misconduct by Dollar Exchange, it said in a statement on Tuesday.

“The exchange house failed to maintain the required level of paid-up capital and bank guarantee and was found to have been in default of equity obligations,” the regulator said.

“Furthermore, the exchange house was found to have engaged in serious money laundering misconduct.”

The UAE, the Arab world’s second-largest economy, has introduced a number of measures to regulate the country’s financial sector in recent months.

It has passed strict laws to prevent money laundering and the financing of terrorism, and has issued regulations over the years to clamp down on financial crime.

The UAE Central Bank issued new guidelines last month for licensed financial institutions — including banks, finance companies, exchange houses, insurance companies, agents and brokers — to combat money laundering and the financing of terrorism.

In 2021, the UAE established the Executive Office of Anti-Money Laundering and Counter-Terrorism Financing. The regulator also instructed all hawala providers — informal fund transfer agents operating outside the banking system — to register with it in an effort to strengthen oversight of money transfers.

In 2020, the Ministry of Economy set up an anti-money laundering department to ensure that all non-financial businesses and professionals complied with the law.

Dollar Exchange had a weak compliance framework and failed to comply with its regulatory obligations, the findings showed.

The time set for submitting an appeal has expired and none was filed, the regulator said.

The Central Bank works to ensure that all exchange houses, their owners and staff abide by the UAE laws and regulations to safeguard the transparency and integrity of the country’s financial system, the statement said.

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Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

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