Guidance Note on the Consumer Protection and Responsible Adoption and Use of Artificial Intelligence and Machine Learning by Licensed Financial Institutions in the U.A.E.

In February 2026, the Central Bank of the UAE (CB UAE) has taken a significant step in shaping the future of financial services by issuing a guidance note on the responsible use of artificial intelligence (AI) and machine learning (the “Guidance”). At a time when AI is rapidly transforming how financial institutions operate, this move reflects a clear intention: innovation must move forward, but not at the expense of consumer trust.

This Guidance is not about slowing down technological progress. Instead, it is about ensuring that as financial institutions adopt increasingly advanced tools, they do so in a way that is responsible, transparent, and aligned with the interests of customers.

Why Does This Guidance Matter Now?

AI is no longer a future concept in finance. It is already being used to make decisions that directly affect people’s lives, from approving loans to assessing insurance claims. With this growing influence comes a fundamental question: how do we ensure that these decisions remain fair, understandable, and accountable?

The Guidance answers this by introducing a principles-based framework that evolves alongside technology. It recognizes that AI systems are constantly developing and, therefore, regulation must be flexible enough to guide responsible use over time rather than impose rigid, outdated rules.

Can AI Be Trusted to Make Fair Decisions?

One of the central themes of the Guidance is fairness. Financial institutions are expected to ensure that AI systems do not produce discriminatory or manipulative outcomes. This goes beyond initial design. It requires continuous attention to the quality and relevance of data, as well as ongoing testing to detect and correct any unintended bias that may emerge.

In this context, the underlying message is clear: efficiency cannot come at the cost of equality. If an AI system leads to unfair outcomes, it should not be used.

Transparency in AI-Driven Decisions

Transparency is another cornerstone of the framework. Customers should not be left guessing whether they are interacting with a human or a machine, nor should they be subject to decisions they cannot understand.

Financial institutions are expected to clearly disclose the use of AI, particularly when it plays a role in significant decisions. More importantly, they must be able to explain how these systems work in a way that is accessible and meaningful to customers. Hence, financial institutions should consider the use of appropriate measures to check understandability.

Where Do Humans Fit Into an AI-Driven System?

Despite the increasing capabilities of AI, the Guidance firmly reinforces the role of human oversight. AI is positioned as a tool to support decision-making, not replace it entirely.

For decisions that have a meaningful impact on customers, human judgment must remain present. Customers should also have the ability to request a human review, ensuring that there is always a layer of accountability beyond the algorithm. This approach strikes a balance between efficiency and responsibility, acknowledging that trust in financial services ultimately relies on human accountability.

According to the Guidance, human oversight may be exercised through different models:

• Human-in-the-loop: Where AI provides recommendations but a human decision maker retains full authority to approve or reject the outcome;
• Human-on-the-loop: Where AI works autonomously for routine tasks, while a human monitors outcome and can intervene where necessary;
• Human-out-of-the-loop: Where AI operates without direct human involvement, which should only be utilised for low-risk, non-material processes with appropriate controls in place.

What About Data and Privacy?

AI systems are only as reliable as the data they rely on, which is why the Guidance places strong emphasis on data quality, security, and privacy. Financial institutions must ensure that data is accurate, relevant, and used appropriately, with safeguards in place to prevent misuse or unauthorized access.

There is also a clear expectation that privacy considerations are embedded into the design of AI systems from the outset, rather than treated as an afterthought. In an environment where data is central to innovation, protecting it becomes essential to maintaining customer confidence. In addition, financial institutions should establish policies to ensure AI and ML models use accurate, relevant, and up-to-date data, with clear provenance and audit trails.

Is This a One-Time Requirement?

The Guidance makes it clear that responsible AI is not a one-time exercise. Financial institutions are expected to continuously monitor their systems, reassess risks, and adapt to changes in data, market conditions, and customer behaviour.

Even when AI capabilities are outsourced to third-party providers, responsibility remains with the institution itself. This reinforces a critical point: adopting AI does not outsource accountability.

The Future of Finance in the UAE

This initiative shows how serious the UAE is about leading in both financial services and artificial intelligence. Through setting clear expectations on how AI should be used, the CB UAE is ensuring that innovation continues in a controlled and responsible way.

The message to the market is straightforward. AI is welcome and encouraged, but it cannot be used without proper controls. Financial institutions are expected to use these tools in a way that is fair, transparent, and aligned with the interests of their customers. It is no longer enough for AI to be efficient; it must also be explainable and accountable.

This also means that responsibility always stays with the institution. Even if AI tools are advanced or provided by third parties, firms are still expected to understand how they work, monitor their outcomes, and step in when needed.

In simple terms, this Guidance is shaping how AI will be used in the financial sector going forward. It is setting the expectation that technology should improve services, but never at the expense of fairness or accountability.

How Rasma Legal Can Help

If you would like to explore how these requirements can be implemented in practice, including governance frameworks, model oversight, and compliance alignment, we would be happy to support you at Rasma Legal.