CBUAE Allows Case-by-Case Offshore Disaster Recovery for Banks

The Central Bank of the UAE (CBUAE) has allowed banks to seek approval to host disaster-recovery infrastructure outside the UAE on a case-by-case basis, according to information obtained by Unlock Blockchain from banking executives familiar with the discussions.

The measure appears aimed at ensuring operational continuity during a period of heightened geopolitical uncertainty. However, the central bank has not introduced a permanent policy change, and offshore hosting of banking data remains subject to individual regulatory approval.

In a recent statement, the CBUAE confirmed that banks, financial institutions, and insurance companies across the country continue to operate normally and provide services without disruption. The regulator emphasized that it is closely monitoring developments and remains committed to safeguarding the stability of the UAE’s financial system.

Offshore disaster recovery approvals reviewed individually

Banking executives told Unlock Blockchain that the CBUAE is reviewing requests from financial institutions to activate offshore disaster-recovery environments when necessary.

Importantly, the central bank has not specified preferred jurisdictions where such data hosting should take place. Instead, approvals are being granted on a case-by-case basis, leaving the choice of destination subject to regulatory review.

This approach allows the central bank to maintain oversight while giving banks the flexibility to activate backup infrastructure outside the country if required.

Executives at two banks active in the UAE’s digital asset ecosystem said financial institutions had previously requested the ability to rely on offshore disaster-recovery environments as a precautionary measure, even if their systems were not directly affected.

One executive described the move as a necessary step to protect the continuity of the banking system, while another called it an important measure for business continuity during uncertain times.

Cloud infrastructure and regional redundancy

Much of the modern banking infrastructure used by financial institutions runs on global cloud platforms such as Amazon Web Services and Microsoft Azure, which host a wide range of banking applications, payment platforms, and financial data processing systems.

Public documentation from these providers indicates that their cloud regions typically include multiple physically separated data centers designed to support redundancy and failover capabilities.

Unlock Blockchain has not independently confirmed the specific structure of these providers’ infrastructure deployments in the UAE. References to regional cloud architecture are based on publicly available information describing how such cloud environments generally operate.

While regional redundancy can protect against localized outages, some banks argue that broader geographic failover capabilities may be necessary to ensure resilience during large-scale disruptions.

Implications for the UAE’s digital asset ecosystem

The reliability of banking infrastructure is also crucial for the UAE’s growing digital asset ecosystem.

Regulated exchanges, custody providers, and fintech platforms depend on banking partners to facilitate fiat settlement and liquidity flows. Stablecoin-based payment systems, which are increasingly part of discussions around digital finance in the region, rely on continuous banking connectivity.

Although stablecoins operate on blockchain networks, the issuance and redemption processes still depend on banking infrastructure holding the underlying reserves. Disruptions in banking services could therefore affect liquidity management and settlement processes across digital asset markets.

Resilience without a permanent regulatory shift

For the Central Bank of the UAE, the current approach reflects a balance between operational resilience and regulatory oversight.

The UAE has historically encouraged financial institutions to maintain critical banking infrastructure and financial data within national borders. Offshore disaster-recovery hosting, under the current framework, remains an exceptional measure rather than a permanent policy change.

By reviewing requests individually and without designating specific offshore jurisdictions, the central bank retains full supervisory control while allowing banks to take steps to ensure system continuity when necessary.

Whether the current flexibility will lead to broader discussions about long-term infrastructure strategies for the UAE banking sector remains to be seen.