Dubai regulator warns digital threats are evolving rapidly, urges cross-border collaboration on AI and encryption oversight.
The Dubai Financial Services Authority (DFSA) has warned that cybersecurity, artificial intelligence, and quantum computing risks are becoming increasingly systemic to global finance, as it urges greater international regulatory coordination in its latest report.
In Cyber and Artificial Intelligence Risk in Financial Services: Strengthening Oversight Through International Dialogue, the DFSA outlines how emerging technologies are reshaping both digital vulnerabilities and regulatory priorities. The findings follow the DFSA’s inaugural Cyber and AI Risk Regulatory College, hosted in May at Dubai International Financial Centre (DIFC), which convened 70 senior regulators from 18 jurisdictions across five continents.
“Digital risks are no longer peripheral — they are fast becoming systemic,” said Justin Baldacchino, Managing Director of Supervision at DFSA. “This report reflects a growing supervisory consensus on where these risks are converging and how regulatory approaches are evolving.”
Regulatory Priorities in Focus
The 2025 report focuses on three key areas: cybersecurity, AI governance, and quantum readiness. Among the key findings:
- Cyber threats are increasing in frequency and sophistication, often exploiting vulnerabilities in third-party and supply chain systems.
- Quantum computing could eventually break current cryptographic systems, making coordinated planning around post-quantum encryption urgent.
- AI oversight must evolve to include explainability, stronger third-party risk frameworks, and ethical governance models.
Herman Schueller, DFSA’s Director of Innovation & Technology Risk Supervision, said regulators must remain agile. “As innovation accelerates, financial regulators globally are actively examining how best to adapt oversight practices,” he said. “This report reflects the value of open, cross-border dialogue.”
DFSA’s Broader Innovation Mandate
The publication reinforces DFSA’s role as a regional leader in forward-looking regulation. Ongoing initiatives include its Threat Intelligence Platform and AI risk monitoring programs within the DIFC ecosystem.
The report recommends greater alignment among global regulators to prevent fragmentation in digital oversight. It also reiterates the importance of safeguarding innovation while reinforcing trust and stability in increasingly data-driven financial systems.
