UAE Banks Told To Carry Out Checks Before Issuing Chequebooks

The United Arab Emirates will stop imprisoning expatriates for writing cheques that bounce, which was previously a serious criminal offence. These courts have been established in the Emirates of Abu Dhabi, Dubai and Ras Al Khaimah and appear to have been successful in significantly lessening the load on the Criminal Courts which will have the impact of allowing those more serious crimes to move through the system.
Under a new criminal order issued by the Dubai Attorney General Essam Al Humaidan, a range of minor offences - including bouncing cheques and failing to pay rent - will no longer be put through the court system and instead be treated as a misdemeanour subject to a financial penalty.



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To open a cheque bounce case, the first step in the Emirate of Dubai is to request to register a criminal complaint with Dubai Police; and with recent developments such request is required to be done only online on the Dubai Police website or mobile phone application by uploading a copy of the bounced cheque, bank memo and the complainants EID number by following the necessary steps.

Here, business relationships are based on integrity and trust developed over time, and so, traditionally, there has been less recourse to legal procedure for dealing with bankruptcy and insolvency situations,” said Andrew Tarbuck, a Dubai-based partner at Latham & Watkins.
Henceforth, in cases where it has been proved that the cheque was issued as a guarantee to pay off a financial obligation in favor of the financial facility at which the debt was incurred (for example, a bank), there shall be no prejudice or influence on the cheque's authenticity in proving the debt.

This is in accordance with Article 401 of the Federal Law No. 3 of 1987 related to issuance of Penal Code (the 'Penal Law of UAE'), which states: "Detention or a fine shall be imposed on anyone who, in bad faith, gives a draft (cheque) without a sufficient and drawable balance or who, after giving a cheque, withdraws all or part of the balance, making the balance insufficient for settlement of the cheque, or if he orders a drawee not to cash a cheque or makes or signs the cheque in a manner that prevents it from being cashed.
In a move to adjust the volume of cases which places stress on the Police, Public Prosecution and Criminal Courts, and to address the severity of penalties in low value claims, the UAE legislators have (a) created a new process to address minor crimes such as bounced cheques in an expedited manner by the establishment of One Day Courts”; and (b) amended the circumstances in which certain bounced cheques are to be punishable by detention.