Introduction

As the United Arab Emirates (UAE) solidifies its position as a global hub for digital assets and virtual asset service providers (VASPs), the establishment of the Virtual Assets Regulatory Authority (VARA) marks a pivotal development for technology-driven businesses. Since its inception under Dubai Law No. (4) of 2022 and subsequent federal alignment through Cabinet Resolution No. (111) of 2022, VARA has been entrusted with overseeing, regulating, and licensing all virtual asset activities within Dubai (and indirectly influencing the wider UAE market). The emergence of compulsory licensing ushers in not only unprecedented opportunities but also new compliance risks and obligations for businesses seeking to operate in, or expand to, this dynamic sector.

This article delivers a comprehensive, consultancy-grade guide to preparing legally valid documentation for VARA licensing. Drawing exclusively from official UAE legal sources and the latest 2025 regulatory updates, we examine essential documentation requirements, practical compliance strategies, and risk mitigation considerations for organizations in the digital assets space. In doing so, this article offers UAE executives, legal practitioners, and compliance officers critical analysis and actionable insights to ensure robust legal standing and futureproof their business operations.

Table of Contents

Understanding the VARA Regulatory Framework

Establishment and Mandate of VARA

VARA was established under Dubai Law No. (4) of 2022 on the Regulation of Virtual Assets in the Emirate of Dubai. Its core mandate is to regulate, supervise, and license all entities providing virtual asset-related activities in Dubai, except those located in the Dubai International Financial Centre (DIFC), which has its own independent regulator, the Dubai Financial Services Authority (DFSA).

On a federal level, Cabinet Resolution No. (111) of 2022 concerning the Regulation of Virtual Assets and their Providers provided a unified, country-wide approach to the regulation of VASPs, aligning federal obligations with local frameworks.

Scope of VARA Licensing

VARA’s scope extends to a range of virtual asset activities, including (but not limited to):

  • Virtual Asset Exchange Services
  • Virtual Asset Custody and Management
  • Platform Operations for Virtual Asset Trading
  • Safekeeping and Administration of Virtual Assets
  • Advisory, Brokerage, and Payment Services involving Virtual Assets

Entities must obtain a VARA license before commencing any regulated activity. Compliance is assessed both at the application stage and through ongoing supervisory requirements.

Relevance of Recent Legal Updates

The promulgation of Federal Decree-Law No. (14) of 2018 (as amended by 2023 and 2025 updates) on Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) further cements the critical need for transparent, robust documentation as part of onboarding, onboarding, and ongoing regulatory reporting.

Key Documentation Requirements for VARA Licensing

Essential Documents According to VARA Guidelines

VARA has set forth detailed guidance on documentation through its Regulatory Rulebooks and public advisories, which reference frameworks such as the Financial Action Task Force (FATF) and internal UAE AML standards. The below is an authoritative summary of the minimum core documents required for initial VARA licensing:

Document Purpose & Content Official Reference
Business Plan Comprehensive overview of operations, technology, and market approach, including risk assessment. VARA Regulatory Rulebook; Dubai Law No. (4) of 2022, Article 7
Corporate Documentation Legal entity formation documents, board resolutions, and ownership structures. UAE Federal Law No. (32) of 2021 on Commercial Companies
AML/CFT Policies & Procedures Frameworks for customer due diligence, risk mitigation, and suspicious transaction reporting. Federal Decree-Law No. (14) of 2018 (as amended 2025),  VARA AML Rulebook
Data Protection & Cybersecurity Policies Measures to safeguard client data and technology infrastructure. Federal Decree Law No. (45) of 2021 on Protection of Personal Data
Governance & Compliance Manuals Documentation outlining internal controls, compliance officer responsibilities, and escalation procedures. VARA Regulatory Rulebook
Fit & Proper Assessments Background checks, declarations, and supporting evidence for Ultimate Beneficial Owners (UBOs), directors, and key employees. VARA Rulebook, Cabinet Resolution No. (74) of 2020
Financial Statements & Projections Audited accounts and forward-looking income/expense projections. VARA Licensing Application Guidelines
Proof of Capital Adequacy Documents evidencing sufficient paid-up capital and liquidity. VARA Prudential Rulebook
Client Onboarding & KYC Templates Standard forms and scripts for collecting and verifying client information. VARA AML Rulebook

Note: Official sources include the UAE Government Portal (www.government.ae) and Dubai VARA’s own regulatory portal. Always consult the latest Rulebooks, as documentation requirements are subject to periodic review in line with global risk trends.

Supporting Documentation

Beyond the core list, VARA may request additional documentation tailored to the specific virtual asset activities of the applicant – for instance, proof of custody arrangements, secure multiparty computation protocols, cross-border transaction policies, or evidence of compliance with technical standards such as ISO/IEC 27001.

Legal Validity: What Constitutes Legally Valid Documentation?

For licensing purposes, “legally valid documentation” under UAE law means documents that:

  • Are accurate, genuine, and not misleading (Federal Law No. (6) of 2012 on Anti-Forgery)
  • Comply with prescribed formats (authenticated copies, certified translations as required)
  • Are duly executed, signed, and sealed as per entity type and current Commercial Companies Law
  • Reflect up-to-date, truthful information – materially outdated or incomplete documents are considered non-compliant
  • Are prepared and maintained in either Arabic or accompanied by certified Arabic translations (per Ministry of Justice guidance)

For cross-border VASPs, additional notarization or apostillation (per Hague Convention or UAE diplomatic channels) may be required to prove authenticity to UAE regulators.

Consultancy Insight: Ensuring Legal Sufficiency

  • Early engagement of licensed UAE legal consultants with expertise in digital assets, AML, and corporate law is crucial to ensure all documentation meets both form and substance requirements.
  • Conduct comprehensive internal audits to identify gaps or deficiencies before official submission.
  • Keep detailed documentation logs and version histories, as VARA retains discretionary investigative powers and may request historical records during audits.

Validation Mechanisms by VARA

VARA undertakes multi-stage validation, including:

  • KYC verification of all UBOs and Authorized Signatories via official government platforms (such as the Ministry of Economy’s UBO Register)
  • Onsite and offsite examinations of governance protocols, AML systems, and IT infrastructure
  • Cross-checking against federal suspicious activity lists and international watchlists (per Cabinet Decision No. (74) of 2020)

Comparison: Pre-VARA Era vs. VARA-Regulated Documentation

Aspect Pre-VARA Era VARA Era
Regulatory Clarity Fragmented, unclear, with overlapping authorities (ADGM, DIFC, SCA) Centralized under VARA with clear Rulebooks and Licensing Roadmap
AML Documentation Limited enforcement; generic policies acceptable Mandatory, detailed AML/CFT frameworks required
Ownership & Governance Disclosure Minimal; often limited to notarial declarations Detailed UBO, director, and officer background checks
Format & Language Ad hoc; documents sometimes accepted in languages other than Arabic Strict Arabic execution or certified translation required
Ongoing Obligations Few, seldom enforced Continuous reporting and re-validation mandated by law
Penalties Generally administrative warnings or fines Severe; can include license revocation, criminal charges, and hefty fines

Case Studies & Hypothetical Scenarios

Case Study 1: Insufficient AML Documentation

Background: A foreign-based virtual assets platform seeks to set up a legal entity in Dubai and applies for VARA licensing. The company’s submitted AML policy is a generic template downloaded online, with limited attention to UAE-specific risks or Cabinet Decree obligations.

VARA’s Finding: The policy fails to reference Cabinet Resolution No. (10) of 2019 or integrate UAE-specific suspicious transaction typologies.

Outcome: Application is rejected; company must overhaul its AML framework, engage local counsel, and resubmit. Delays result in missed market opportunities and increased compliance costs.

Case Study 2: Incomplete UBO Declaration

Background: An applicant lists only immediate shareholders in its UBO register, omitting indirect beneficiaries and offshore holding entities as required under Cabinet Resolution No. (58) of 2020.

VARA’s Finding: Failure to disclose full beneficial ownership chain constitutes non-compliance.

Outcome: Application is suspended, triggering review by the Ministry of Economy and a potential monetary penalty.

Case Study 3: Technology Controls

Background: A crypto exchange submits IT and cybersecurity documentation referencing international standards but without UAE data localization compliance (per Federal Decree Law No. (45) of 2021).

VARA’s Finding: Documentation does not address mandatory client data storage and retention within the UAE

Outcome: VARA issues a conditional approval, requiring urgent policy amendments prior to final license grant.

Risks of Non-Compliance & Legal Consequences

Risks of Documentation Gaps

  • Rejection of License Applications: Deficient, incomplete, or outdated documentation results in immediate denial.
  • Regulatory Fines: Failure to adhere to documentation standards may trigger penalties of up to AED 10 million (per Cabinet Resolution No. (111) of 2022).
  • Delayed Market Entry: Remediation of documentation gaps can result in significant go-to-market delays.
  • Reputation Damage: Public disclosure of enforcement actions may erode trust with partners and clients.
  • Criminal Prosecution: Submission of forged or materially false documents may constitute a criminal offense under Federal Law No. (6) of 2012 and the UAE Penal Code.
  • Ongoing Regulatory Scrutiny: Poor documentation may result in ongoing, intrusive audits or monitoring by VARA and federal authorities.
Penalty Legal Basis Practical Impact
Fine (AED 100,000 – AED 10 million) Cabinet Resolution No. (111) of 2022 Direct financial loss and remedial costs
License revocation or suspension Dubai Law No. (4) of 2022 Inability to operate or loss of market share
Publication of enforcement action VARA Regulatory Rulebook Reputational and client trust damage
Criminal prosecution Federal Law No. (6) of 2012; UAE Penal Code Individual and corporate criminal liability

Best Practices: Preparing VARA-Compliant Documentation

Comprehensive Compliance Checklist

To increase the probability of approval and mitigate future risks, organizations are advised to implement a robust, iterative documentation process. Here is a suggested placement for a compliance checklist visual:

  • Establish an internal project team comprising legal, compliance, finance, and IT specialists.
  • Engage a licensed UAE legal consultant with direct VARA experience.
  • Maintain a master index of all documentation, with clear ownership and update logs.
  • Ensure all UBO, directorship, and officer disclosures comply with Cabinet Resolution No. (58) of 2020 and the Ministry of Economy’s directives.
  • Localize AML, data protection, and cybersecurity documentation in accordance with UAE laws and VARA’s Rulebooks.
  • Prepare certified Arabic translations where required and ensure all documents are properly executed.
  • Conduct third-party audits or mock regulatory interviews to validate preparedness.

Ongoing Obligations

  • Continuously monitor updates to the VARA Rulebooks and federal AML/CTF laws (the UAE Federal Legal Gazette publishes amendments proactively).
  • Institute periodic internal reviews and keep documentation current; material changes must be promptly reported to VARA.

Conclusion: Charting a Proactive Path Forward

The UAE’s proactive stance on the regulation of virtual assets is global best-in-class but demands exacting compliance, particularly in the area of legally valid documentation. The days of generic templates and low-effort applications are over: today, only applicants prepared to demonstrate substantive, verifiable, and localized compliance will be licensed by VARA and enjoy the benefits of operating in Dubai’s fast-growing digital asset ecosystem.

Looking forward, continued evolution in both federal and emirate-level legislation is likely. Organizations should embed legal and regulatory monitoring into their core governance and remain agile in their compliance approach. By investing in quality documentation, regular audits, and expert consultancy, companies can reduce regulatory risk and position themselves as trusted, future-ready participants in the UAE’s flourishing virtual asset market.

Key Takeaways

  • Adherence to VARA’s documentation standards is non-negotiable: comprehensive, UAE-specific, and continually updated records are required.
  • Non-compliance can result in severe penalties, including fines, reputational loss, criminal liability, and business interruption.
  • Success depends on early legal engagement, internal M&A and compliance coordination, and ongoing regulatory vigilance.

For bespoke VARA documentation support and legal advisory, organizations are encouraged to consult a specialist UAE legal consultant or law firm with proven expertise in virtual asset regulation.