ADGM financial regulator explores enhanced AML framework after consultation

The Financial Services Regulatory Authority (FRSA) of the ADGM recently concluded a consultation looking at revisionsto its anti-money laundering (AML) framework (15-page / 318KB PDF), aimed at bringing it into alignment with wider federal requirements across the country.

Jessica White, a financial regulation expert with Pinsent Masons in the UAE, said the consultation signalled the regulator was looking to avoid an increased burden for firms operating in the ADGM.

“Many of the proposed changes consolidate existing expectations already arising under federal AML legislation, Financial Action Task Force guidance and FSRA supervisory practice, particularly around senior management accountability, risk assessments and customer due diligence (CDD).”

“Of particular note for regulated firms are the enhanced governance elements, including explicit senior management approval of AML systems and risk assessments, and clearer differentiation between reliance on third-party CDD and outsourcing arrangements.”

The consultation, which closed in mid-May, covers multiple areas of the existing AML framework, including the financial service market regulations and rules around registration and supervisory responsibilities for designated non-financial businesses and professions.

Also included are significant revisions to rules concerning electronic funds transfers, alongside separate, more detailed provisions for virtual asset and fiat‑referenced token transfers - including the application of the ‘travel rule’ and specific requirements for transfers relating to unhosted wallets.

Marie Chowdhry, a fintech expert with Pinsent Masons in the UAE, said the proposals would have particular relevance to money service businesses and virtual asset firms operating in and from the ADGM in terms of rules around transfers.

“While the FSRA anticipates minimal operational impact, firms should use this as an opportunity to future-proof compliance frameworks, ensure internal AML documentation aligns across federal and ADGM rules, and identify any areas where existing policies may need refinement once the amendments are finalised,” she added.

Relatedly, the ADGM has updated its ML/TFrisk assessment of legal persons and arrangements (38-page / 1.38MB PDF) for 2026 as it looks to introduce a more granular approach to assessing risk across different entity types and activities. 

The revised methodology incorporates enhanced threat indicators and strengthened mitigating measures, including improved beneficial ownership transparency, increased supervisory activity, and expanded enforcement capabilities.

“The updated risk assessment highlights the ADGM’s increasingly data‑driven and supervisory‑focused approach to financial crime risk management,” said Chowdhry.

“While the headline conclusion that overall risk levels remain stable may provide some comfort to firms, the framework and expanded supervisory tools point to a heightened expectation around how firms assess and evidence risk in practice.

“For many institutions, the key impact will not be a change in headline compliance requirements, but the need to demonstrate a more sophisticated and tailored approach to risk assessment.”