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When a “Payment Agent” Becomes a Regulated Payment Business in the UAE

In international trade, the inability to make a direct payment is rarely treated by businesspeople as the end of the transaction. A buyer may face banking restrictions, currency limitations, compliance delays, or the simple unwillingness of banks to process a particular corridor. In response, the parties often try to introduce an intermediate company: the buyer pays that company, the company converts the currency or otherwise settles the amount, and the final supplier receives funds from a different source.

Commercially, this may be described as “payment assistance”, “settlement support”, “agency”, “treasury facilitation”, or “payment agent services”. Legally, however, the label is not decisive. If a UAE company receives money from one person and, for a fee, arranges or executes payment to another person, the question is not whether the parties call it an agency arrangement. The question is whether the activity falls within the perimeter of financial activities regulated by the Central Bank of the UAE.

This point is particularly important because the structure is widespread precisely in situations where direct payment is not available. That practical popularity should not obscure the regulatory risk. The more the UAE company is inserted into the payment chain, receives funds, converts currency, and remits funds onward, the closer the arrangement moves from ordinary commercial support to regulated payment or money transfer activity. The workpiece scenario follows this pattern: a UAE company acts as payment agent for a foreign client, receives funds from that client, converts the amount at a rate agreed by the parties, and then pays the client’s UAE counterparty, earning a fee for this function. 

The regulatory difficulty arises where the UAE company is not merely discharging its own commercial obligation, but is interposed as an intermediary in the movement of funds between two other parties. In such cases, the company may receive money from one person, convert or settle it according to an agreed mechanism, and procure payment to another. Although the arrangement may be framed contractually as agency, treasury support, settlement assistance, or payment facilitation, its substance may correspond to regulated money transfer, payment, or currency exchange activity.

The regulatory perimeter 

  1. The starting point is Article 61(1) of Federal Decree-Law No. (6) of 2025 regarding the Central Bank, Regulation of Financial Institutions and Activities, and Insurance Business (“CBUAE Law”). It treats several activities as financial activities subject to Central Bank licensing, including:
  • “providing currency exchange and money transfer services, including instant money transfer services”, and
  • “providing stored values services, retail payments and digital money services”.

The statutory language is broad. It does not only capture banks, exchange houses, or fintech platforms with a consumer-facing application. It is capable of capturing a corporate arrangement where the essence of the service is to accept funds and arrange their transfer to another party.

  1. The risk becomes even clearer under the Retail Payment Services and Card Schemes Regulation (“C15/ 2021 Regulations”). Article 2 provides that no person may provide, or engage in promotion within the UAE of, any Retail Payment Services listed in Annex I without a prior licence from the Central Bank unless that person is exempt. 

Annex I includes domestic and cross-border fund transfer services among the regulated retail payment services. The Regulation describes Cross-Border Fund Transfer Service as a retail payment service for the transfer of funds where the payment service providers of the payer and payee are located in different jurisdictions or countries. Domestic Fund Transfer Service is also defined broadly as accepting money for the purpose of executing, or arranging the execution of, payment transactions between a payer and payee in the UAE. 

  1. This wording matters because many “payment agent” models are not merely passive contractual arrangements. The UAE company does not only introduce the parties. It receives money, holds or controls it, applies an agreed currency conversion rate, and makes a further payment to the intended recipient. In substance, it accepts money for the purpose of arranging or executing a payment transaction. 
  2. Where the arrangement involves different jurisdictions, it may also present the features of a cross-border fund transfer service. Where currency conversion is embedded into the settlement, there is a separate and additional concern: the UAE company may also be providing currency exchange services, which Article 61(1) independently identifies as a licensed financial activity. 

Common misconceptions

  1. A common counterargument is that the UAE company acts only for one client, or only within a wider commercial relationship, and therefore should not be treated as a payment service provider. That argument may be relevant to a detailed legal analysis, but it is not a safe conclusion by itself. Licensing regimes usually look at:
  1. the activity actually performed, 
  2. the assumption of control over funds, 
  3. the fee earned, 
  4. the repetition or business character of the conduct, and 
  5. whether the person is arranging payments for others. 

A company that earns a fee for receiving funds from A and paying B is not in the same position as a party paying its own supplier from its own funds under an ordinary purchase contract.

  1. Another practical misunderstanding is to focus only on anti-money laundering risk. AML compliance is important, but it is not a substitute for licensing. A company may perform KYC, screen counterparties, document source of funds, and still be carrying on an activity for which a Central Bank licence is required. 

In fact, the Retail Payment Services framework itself links licensing with ongoing obligations, including safeguards around users’ funds, contractual transparency, technology risk, and AML and CFT controls. The existence of compliance procedures therefore does not remove the licensing question. It often confirms why the activity belongs within a regulated perimeter.

Penalties

  1. The consequences of misclassification are severe. Article 170 of the Central Bank Law provides that any person engaging in licensed financial activities referred to in Article 61(1) without a licence or authorisation may be punished by imprisonment and a fine from AED 50,000 up to AED 500 million, or either punishment. Article 174 separately provides penalties with imprisonment and a fine from AED 200,000 up to AED 10 million, where licensing as required under C15/ 2021 Regulations (issued under Article 60(6) of CBUAE Law) has not been obtained.
  2. These are not merely theoretical sanctions. Article 168 also gives the Central Bank broad administrative and financial powers where a person carries on licensed financial activities without a licence, including cautions, corrective measures, operational restrictions, and other sanctions or fines. 
  3. The risk is also personal. Where a violation is committed by a juridical person, Clause 1 of Article 181 provides that “the official in charge of management shall be punished by the same penalties prescribed for actions committed in violation of the provisions of this decree-law, whenever his knowledge of the violation was established, or if the violation was a result of his negligence or failure to perform his duties”. 

According to Clause 2 of this Article, “the juridical person shall be jointly liable with the manager in charge in respect of the adjudged financial fines and damages, if the violation was committed, in his name and on his behalf, by one of his employees”. This makes the issue not only a corporate licensing matter but also a governance and director (officer) risk.

No regulatory exemption for payment “workarounds”

  1. The safer analytical approach is therefore to separate genuine commercial settlement from payment intermediation:
  • A UAE company paying its own debt, receiving payment for its own goods or services, or reimbursing costs within a properly documented principal-to-principal relationship may be outside the payment services perimeter. 
  • By contrast, a company that receives third-party funds for the purpose of remitting them onward, charges a fee for doing so, and possibly earns or embeds a spread on currency conversion should assume that the Central Bank licensing question is live.
  1. The commercial inconvenience that led the parties to the structure is understandable. Direct payment may be unavailable, delayed, or commercially impractical. But UAE regulatory law does not create a general exemption for “workarounds”. A structure designed to solve a payment problem can itself become the regulated activity. Where the UAE company is not licensed as a bank, exchange house, payment service provider, or other relevant licensed institution, the arrangement should be reviewed before implementation, not after funds have started to flow.

Conclusion

  1. The practical conclusion is simple. In payment structures, agency language may describe the private-law relationship between the parties, but it does not neutralise the public-law licensing regime. If the economic function is to receive, convert, arrange, or transfer money for another person, the UAE company may be stepping into the domain of regulated payment and currency exchange services. In that domain, the cost of proceeding without a licence can be far higher than the commercial problem the structure was intended to solve.

Disclaimer

This article has not been commissioned, authorised, reviewed, or endorsed by the Central Bank of the UAE or any other UAE regulatory or governmental authority. It does not purport to state the official position of any such authority on the regulatory treatment of payment agency, settlement support, treasury facilitation, currency conversion, money transfer, or retail payment services.

The analysis reflects the authors’ understanding of the UAE regulatory framework as applied to the type of commercial arrangements discussed in the article. The characterisation of any particular arrangement depends on its specific facts, including the contractual structure, the role of each party, the flow and control of funds, the existence of any fee or spread, the currency conversion mechanism, the frequency and business character of the activity, and the manner in which the arrangement is implemented in practice.

This article is intended for general discussion only. It should not be treated as legal, regulatory, tax, financial, or compliance advice, and should not be relied upon as a substitute for obtaining professional advice or, where appropriate, clarification from the competent UAE authority. The conclusions, interpretations, assumptions, and possible characterisations set out in this article are the authors’ opinion only and may not necessarily be adopted by the Central Bank of the UAE, other UAE authorities, or the courts.Although we have tried to avoid inaccuracies, the article, Like any human job, may contain errors or omissions. If you notice any mistake or have a different interpretation, please let me know so that I can consider making corrections.