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September 13, 2021|
A returned cheque can invite both civil and criminal liabilities on an individual pursuant to the UAE laws. Therefore, it is very important, that UAE residents are well aware of the responsibilities in financial transactions including the potential risks.
Federal Decree-Law No. (14) of 2020 Amending Certain Provisions of the Federal Law No. (18) of 1993 ‘Concerning the Commercial Transaction Law’ (‘New decree’), states that:
Further pursuant to Article 617(3):
The drawee shall report the details of the account holder to the Central Bank, in accordance with the rules and regulations issued by the Central Bank, in any of the following cases:
The amended provisions thus impose criminal penalty on the following offences:
Under the new provisions if a cheque is submitted for clearing and post the same if the drawee withdraws the account balance to prevent the encashment of the cheque it would invite penalty. The new decree is proposed to be in effect from January 2022 onwards and imposes a criminal penalty of 10% of the cheque value for bounced cheque matters on the issuer of the cheque and subject to a minimum penalty charge amount of Aed 5000 and a maximum penalty charge amount of no more than twice the cheque value.
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