UAE Islamic Banks Face Product and Document Reviews Under New Central Bank Regulations

The United Arab Emirates has issued Central Bank Regulation No. 1/2026, introducing an extensive rulebook governing Islamic financial institutions and takaful operators. The regulation brings into effect provisions under Federal Decree-Law No. 50/2022 and consolidates existing Islamic financial transaction principles into a formal regulatory regime.

According to law firm Pinsent Masons, the regulatory shift could require banks, insurers, and investors to reassess the structuring and legal documentation of their sharia-compliant offerings. The framework establishes specific rules across a wide variety of Islamic finance mechanisms, including murabaha, ijarah, salam, istisna'a, mudaraba, musharaka, and wakala. It also governs Islamic deposits, investment accounts, commercial guarantees, documentary credits, and takaful products.

The regulatory scope covers Islamic banks and finance companies in the UAE, conventional institutions operating Islamic windows, and takaful and retakaful providers. Additionally, corporates and project sponsors utilizing Islamic financing structures, as well as institutional investors participating in sharia-compliant transactions, fall within its remit. In-house legal, compliance, risk management, and sharia governance teams are expected to review internal arrangements to ensure adherence.

The measure comes alongside broader supervisory reforms across the UAE's financial sector. Earlier this year, the Dubai Financial Services Authority expanded its Islamic Finance Rules following consultation paper CP172 to tighten oversight over sharia-compliant securities and Islamic funds operating within the Dubai International Financial Centre.