Financial crime and operational resilience in ADGM regulator’s sights

UAE-based Marie Chowdhry and Jessa White of Pinsent Masons said that the focus of the Financial Services Regulatory Authority (FSRA) of the ADGM can be gleaned from its recent annual report for 2025, which they said provides an insight into the regulator's priorities, enforcement activity, policy developments and supervisory approach amidst rapid growth in the freezone.

As well as detailing the FSRA’s continued focus on financial crime prevention and operational resilience, the annual report also reveals the regulator’s interest in digital assets, cyber risk management and outsourcing oversight, they said.

The report provides an insight into the future direction of regulation within the ADGM, particularly for financial institutions, fund managers, fintechs and virtual asset providers, according to Chowdhry and White who cited amendments made to the digital assets and fiat-referenced tokens framework last year, in addition to new cyber risk management requirements, thematic supervisory reviews relating to AML and outsourcing, and increased use of regulatory technology and AI in supervisory and authorisation processes, all referenced within the report.

The report also highlights the FSRA's increasing focus on firms' outsourcing arrangements, with the regulator undertaking a thematic review of outsourcing practices during 2025 - including governance, risk management and oversight of third-party providers - reflecting the growing reliance on technology providers and shared infrastructure across the financial services sector.

In addition it also underlines the FSRA's continued contribution to the UAE's broader financial crime agenda, including preparations for the country's Financial Action Task Force Mutual Evaluation and implementation of the UAE’s anti-money laundering strategy.

Evidence of the maturing regulatory environment in the ADGM could also be seen from the fact the FSRA granted 95 financial services permissions in 2025 – up 22% on 2024. There was also an increase in the number of in-principle approvals –120, up 32% on the previous year. The FSRA finalised regulatory actions in 38 cases during the year, imposing fines totalling US$9.24 million in value.

Chowdhry and White said firms operating in the ADGM should expect increasingly sophisticated supervisory engagement, greater scrutiny of governance and control frameworks, and heightened regulatory expectations around operational resilience, cybersecurity and financial crime prevention.

Chowdhry said: “The FSRA's 2025 annual report demonstrates the continued evolution of the ADGM from a fast-growing financial centre into a more mature and sophisticated regulatory environment. While the headline growth figures are significant, perhaps the more notable takeaway is the regulator's increasing emphasis on risk-based supervision, enforcement and technology-enabled oversight.”

“The FSRA's thematic reviews, enforcement outcomes and policy initiatives indicate a regulator that is seeking to intervene earlier and more proactively where risks emerge,” she said.

White said the report is also notable for the continued development of ADGM's digital assets framework.

“Rather than stepping back from innovation, the FSRA appears focused on ensuring innovation develops within increasingly well-defined regulatory parameters,” White said. “This should provide greater certainty for firms operating in the virtual assets and fintech sectors, while reinforcing expectations around compliance and risk management.”

“More broadly, the report reinforces ADGM's ambition to compete with leading international financial centres by combining business growth with internationally aligned regulatory standards. Firms operating in ADGM should view the report as a useful roadmap of supervisory priorities and an indication of where future regulatory attention is likely to be directed,” she added.