UAE Central Bank tightens fraud controls, urges banks to move beyond OTP authentication

Abu Dhabi: The Central Bank has obligated financial institutions operating in the country to strengthen controls to protect consumers from fraud and enhance security authentication procedures. This includes increasing verification of transaction validity and avoiding reliance on a single method, such as SMS alerts or one-time passwords (OTPs).In a report, the Central Bank stated that it has begun establishing an operations center to combat fraud. The center will serve as a central platform combining operations and analysis, enabling real-time monitoring of fraudulent activities.The Central Bank confirmed that throughout 2025 it continued strengthening an integrated national system for fraud prevention, detection, and mitigation. This system supports consumer protection, enhances financial stability, and reinforces confidence in the country’s banking sector.As part of its proactive efforts, the Central Bank has begun establishing the Anti-Fraud Operations Center (CAFOC). This center will enable real-time monitoring of fraudulent activities, rapid response to incidents, and improved coordination with licensed financial institutions and relevant authorities.The Central Bank explained that the center relies on advanced tracking and analytical capabilities, effective escalation mechanisms, and sector-wide coordination, supporting a data-driven approach to combating fraud. It will also contribute to collecting and analyzing fraud patterns and indicators to strengthen supervisory processes and regulatory policy development.To enhance financial system resilience, the Central Bank has introduced a structured framework for collecting fraud risk assessment data. This aims to improve supervisory efficiency in identifying fraud methods and emerging risks across licensed institutions, enabling more precise and targeted interventions.According to the report, regulatory requirements to protect consumers from fraud have been tightened, requiring financial institutions to strengthen authentication controls and reduce reliance on single-factor methods, such as SMS OTP codes, in response to evolving fraud techniques and increasing digital risks.The Central Bank noted that supervisory efforts and continuous engagement with financial institutions during 2025 helped ensure consistent and effective implementation of these measures, strengthening the financial sector’s ability to address evolving fraud threats.These measures come amid accelerating digital transformation in the financial sector and increased use of digital banking services and electronic payments.Financial fraud risks remain one of the most significant challenges facing global financial systems, prompting regulators to adopt advanced, data-driven supervisory tools to enhance protection and enable rapid response.