A new Federal Degree Law regarding bounced cheques has been implemented by the cabinet. This law will come into force in the UAE in the beginning of 2022. The aim behind the new provision is better and faster ways of cheque collection while criminalization of cheque related defaults has been redefined. The below cases will be treated as criminal offences :
- Offences of cheque falsification
- Fraud use of cheques (Eg: asking the bank to not process the payment)
- Withdrawing money before the cheque date,
- Deliberately tampering the cheque to prevent encashment.
Apart from the cases mentioned above, laws for criminalization of cheque without balance in the account, now stands cancelled.
Another mechanism in place is the partial payment of the cheque. After deducting any amount that is already available with the beneficiary. The law now tries to avoid criminal charges and allows reconciliation. The defaulter can now make partial payment of cheque amount only to lapse any criminal charges. However, such Natural Persons would have to face certain penalties such as :
- Withdrawal of cheque book
- Prevention of delivery of new cheque book for a maximum period of 5 years.
- Suspension of professional or commercial activities.
Penalties for Legal Persons would include :
- Suspension of Commercial License for 6 months.
- Cancellation of license or liquidation in case of repeated offences.
The law also discusses cases of death or legal incapacity of one or more Joint Bank account holders. In such cases :
- The remaining joint account holders shall notify the bank within 10 days from the date of death or legal incapacity.
- The bank shall immediately suspend the withdrawal up to the share limit of the legally incapacitated person.
- No withdrawals can be made from his share till a successor has been designated.
The aim of the government is to facilitate litigation and speed up adjudication of cases related to cheques. The government is in the process of implementing best international practices, to make the UAE economy more competitive, and to have a better and fair judicial system.