What are the Latest Updates on Financial Crime in the UAE?

Posted by Awatif Mohammad Shoqi Advocates & Legal Consultancy on July 20th, 2022

United Arab Emirates has a robust set up for curbing financial crimes, which is governed and regularly updated based on international best practices.

Financial crimes are recognized and punished in the UAE under various laws. For instance, crimes related to money laundering, financing terrorism and unlawful organizations are codified in the Federal Decree Law No. 20 of 2018 (AML Law).

Crimes such as fraud, breach of trust, bribery and their punishments are set out in Federal Decree Law No. 31 of 2021 (UAE Penal Code). The UAE Penal Code is the new penal code introduced by the Government of UAE. It came into force from 2 January 2022 and has replaced the previously existing Federal Law No. 3 of 1987.

Crimes related to bounced cheques are codified under Federal Law No. 18 of 1993 (Commercial Transactions Law) concerning the commercial transactions law, as most recently amended by the Federal Decree Law No. 14 of 2020.

A brief overview of the financial crimes and their punishments are set out below.

Money Laundering:

Under Article 2 of the AML Law, a perpetuator of a money laundering offence is a person who is aware that the funds (including all kinds of assets such as currencies, crypto, shares, cheques, etc.) have been derived from a felony or a misdemeanor and: (a) transfers or moves the proceeds, or disposes the funds/proceeds with the intention of concealing or disguising their source; (b) conceals or disguises the true nature, source or location of the proceeds including the manner of disposal; (c) acquires, possesses or uses the proceeds on receiving them; or (d) assists the person who committed the felony / misdemeanor to escape punishment.

Money laundering is punishable by imprisonment of up to 10 years or fine of up to 5 million dirhams or both under Article 22/1.

In case the perpetuator abuses his influence or power vested in him by virtue of his profession to launder money, he is punishable by imprisonment of up to 15 years and fine of up to 10 million dirhams under Article 22/2. Similar punishments are applicable if the crime is committed through a non-profit organization or an organized criminal group.

Even an attempt to commit money laundering triggers full penalties under the AML Law.

Fraud:

Under the UAE Penal Code, unlawful appropriation of movable property, whether for one self or another person, or obtaining a benefit, document or signature on a document, through fraudulent methods so as to deceive the victim would be considered fraud under Article 451.

Article 451 read as follows.

Any person who unlawfully appropriates for himself or for another person movable property, or who obtains a benefit or document or a signature on the said document, or a revocation or alteration of the document, by seeking fraudulent method or by false pretense or capacity so as to deceive the victim and induce him to surrendering such document, shall be liable to a jail sentence or a fine. The same penalty shall be imposed against any person who disposes of a real estate or movable property, knowing that he is neither the owner nor having the right to dispose of the same, or that he has previously disposed of the same or concluded a contract on the same, and which may inflict damage to a third party.

An act of fraud is punishable with jail or fine. Any attempt to commit fraud is also punishable with jail of up to 2 years or a fine of up to twenty thousand dirhams.

Breach of Trust:

Breach of trust is a criminal offence under the UAE Penal Code and is punishable with jail or fine. Article 453 of the UAE Penal Code states that: any person who embezzles, uses, or disperses money, documents, or any other movable property, to inflict damage to their rightful owners and when they are delivered to such person on the basis of a deposit, lease, mortgage, loan for consumption, or agency, shall be liable to a jail sentence or a fine.

Bribery:

The UAE Penal Code, under 275 to 287, governs the anti-bribery practices in the UAE. With recent amendments followed by issuance of the new UAE Penal Code itself, the applicability of bribery provisions to individuals has been broadened to include foreign public servants, employees of international organization as well as employees in the private/ public sector, in addition to its original applicability on public servants and persons entrusted with public service.

Acts of bribery by a public official, foreign public official or an employee of an international organization is punishable with temporary imprisonment.

Bounced Cheque:

The Commercial Transactions Law prescribes imprisonment and fines for bounced cheque related offences, including knowingly using a forged or fake check, accepting amounts paid by a forged or fake check, wrongfully using/benefitting from the check drawn in the name of a third party or whose use is associated with fraud, forging or faking a check or imputing it to a third party through change in the data with the intent to cause harm to the third party, etc. (Article 641 bis (2) and (3)).

If a person knowingly accepts amounts which are paid by a forged or a fake check for a terrorist purpose, he is punishable with imprisonment for life and fine of up to 1 million dirhams under Article 641 bis (4).

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