The Central Bank of the UAE has issued a comprehensive guidance note on the responsible adoption and use of artificial intelligence and machine learning across the country’s financial sector, marking a significant regulatory step to safeguard consumers while enabling innovation in digital finance.
The framework applies to all licensed financial institutions and aims to ensure that the rapid deployment of artificial intelligence across banking, insurance and financial services does not compromise consumer rights, transparency or financial stability. The regulator said the move reflects its proactive supervisory approach to digital transformation and aligns with the UAE’s broader ambition to position itself as a global hub for artificial intelligence–driven financial services.
The Central Bank said the guidance establishes a clear structure for the safe and responsible deployment of AI and machine learning technologies, requiring financial institutions to embed governance, accountability and ethical standards into automated decision-making systems. It also seeks to reinforce public confidence in the growing use of AI-driven financial services, from credit scoring and fraud detection to customer service chatbots and personalised financial products.
Khaled Mohamed Balama, Governor of the Central Bank of the UAE, said the guidance aims to balance innovation with robust consumer safeguards. “The guidance note establishes a clear framework for the responsible use of artificial intelligence and machine learning in the financial sector, in a way that enhances consumer protection, reinforces governance and transparency principles, and emphasises the importance of human oversight and data protection requirements,” he said.
Analysts said the UAE’s move comes as regulators worldwide step up oversight of AI adoption in finance to address risks linked to data privacy, bias and automated decision-making.
According to a recent PwC Middle East analysis, financial institutions across the region are rapidly integrating AI into core operations, but regulatory clarity is essential to ensure responsible deployment. “Strong governance and clear accountability structures are becoming critical as banks move from experimentation to full-scale AI integration,” PwC said in its regional fintech outlook, noting that regulators are increasingly focused on explainability, fairness and consumer protection.
Under the Central Bank’s new guidance, financial institutions must establish documented governance frameworks for AI and machine learning aligned with the scale and complexity of their operations. Boards of directors and senior management will be directly accountable for AI-related systems and outcomes, including model selection, deployment, monitoring and risk management.
Institutions must maintain detailed inventories of all AI models and ensure regular reporting to senior leadership on performance, risks and compliance. The regulator has also emphasised fairness and non-discrimination, requiring institutions to ensure that AI-driven decisions do not result in biased or unfair treatment of customers, particularly in high-impact areas such as lending, insurance underwriting or pricing. Models must be tested regularly to identify and correct unintended biases, and training data must be accurate, representative and relevant to the customer segments being served.
Transparency and explainability form another cornerstone of the framework. Financial institutions must clearly disclose when customers are interacting with AI systems and provide understandable explanations of how automated decisions are made, especially when those decisions materially affect access to financial products or services.
Customers must also be given the ability to request human review, seek clarification or opt out of AI-driven decisions in certain circumstances. Deloitte’s global banking technology outlook noted that regulators in leading financial hubs are placing increasing emphasis on “responsible AI” principles to ensure customer trust.
“As AI becomes embedded across credit, payments and customer engagement, institutions must demonstrate that automated decisions are transparent, fair and subject to human oversight,” Deloitte said, adding that robust model governance and data protection frameworks will be central to maintaining confidence in digital finance.
The Central Bank’s guidance also highlights the importance of data quality, privacy and cybersecurity. Financial institutions must ensure that data used in AI systems complies with the UAE’s personal data protection laws and is collected and processed only for legitimate purposes.
Privacy-by-design and security-by-design principles must be integrated into AI systems, with strong safeguards to prevent unauthorised access or misuse of sensitive information. Human oversight remains central to the framework.
The Central Bank has mandated that AI systems should operate under meaningful human supervision, particularly for decisions with significant consumer impact.
Customers must be able to request human intervention or review of automated outcomes, and financial institutions must maintain accessible complaint and redress mechanisms.
The regulator also cautioned against using AI for pressure-selling or targeting customers with unsuitable financial products. The guidance extends to outsourcing and third-party risk management, requiring institutions to conduct thorough due diligence on external AI providers and ensure contractual safeguards covering data protection, audit rights and regulatory compliance.
Institutions remain fully responsible for outsourced AI functions and must be able to suspend the use of AI systems immediately if risks or failures emerge. Fintech industry analysts observe that with the new framework the Central Bank aims to strengthen trust in financial innovation while ensuring that AI adoption supports sustainable growth and stability in the UAE’s financial system.
They say the move enhances the country’s standing as a forward-looking but prudently regulated financial hub, where technological advancement is matched by clear safeguards to protect consumers and preserve market integrity.
