Until very recently, UAE’s laws stipulated that bounced cheques implicated a criminal offense. The credibility of this form of payment was affected. In cases where there was no cash, the legal process to fix it took way too much time. Therefore, people stop accepting cheques as payment. Now, the UAE Bounced Cheque Law is being changed, giving people more opportunities.
In this article, you will learn everything about the UAE Bounced Cheque Law, and how it is changing in 2022. This change will have a tremendous impact in commercial aspects, and for the general public as well. Starting from January 2nd, 2022, banks will have fewer options in regards to controlling cheque payments.
- What is a bounced cheque?
- When did the UAE decide to change the law?
- What are the differences between the previous law and the new one?
- How can I deal with a bounced rental cheque?
- When could I pay a fine for a bounced cheque?
- Why should I get legal assistance from Connect Legal?
1. What is a bounced cheque?
Cheques are instruments that help people to pay large bills without having to carry them in cash. Unfortunately, sometimes issuers release cheques without having that amount of money in their account. In the past, this was a reason to file a civil case for cheque bounce in Dubai.
When the bank dishonors a cheque that means that it has been bounced. As a result of this different repercussions have to be faced. Passing bounced cheques is a serious offense, that could prevent people from renewing their visas, and even going to jail. We can provide you with more information about visa cancellations, to prevent any misfortunate surprises.
There is a UAE Bounced Cheque Law that stipulates the following procedure in those cases. Recently, the Federal Law of 1993 is facing some changes in regards to the decriminalization of bounced cheques.
When it comes to financial law, counting with a team of lawyers from Connect Legal is a must. This specialized legal team will make sure you stay within the legal barriers in all of your financial transactions.
2. When did the UAE decide to change the law?
In September of 2020, His Highness Sheikh Khalifa bin Zayed Al Nahyan was making public the changes concerning commercial transactions law. This helps promote commercial and banking transactions. It also makes the use of cheques a lot more flexible.
The reasoning behind this lift is to accelerate the recovery in economic activities, particularly in the private sector. Decriminalizing bounced cheque saves the beneficiaries from initiating a civil or criminal charge.
Although the new UAE Bounced Cheque Law was announced in 2020, it is coming into force in January 2022. All commercial businesses should have a team of lawyers to back them up throughout these new changes. In Connect Legal we have experts in corporate commercial laws ready to assist you.
3. What are the differences between the previous law and the new one?
One of the outstanding changes being made is the decriminalization in cases of returned cheques. This is concerning insufficient funds on the account. However, there are some exceptions to this law. It is still a crime if there is bad faith surrounding the actions. There are also different specific criminal actions.
3.1 Narrowed Criminality
As for now, there are only a few actions that are considered criminal actions. First of all, the intentional falsification of a cheque is still a criminal act. Providing a counterfeit cheque will result in facing legal consequences.
Withdrawing the funds from the account before the cheque can be cashed is also a criminal act. Any attempt to clear the account balance to prevent cashing the check is an act of bad faith.
In regards to how to pay a fine for a bounced cheque in Dubai, it could go up to 7500 AED for those committing serious offenses. The steps you need to follow will be given to the offender by the authorities.
3.2 Partial Payment of Cheque
In case there are no available funds to pay the complete amount of the debt, the bank still has to pay partially. It is now mandatory to practice the partial payment of the cheque. In case the bank can provide a partial payment certificate if the person presenting the cheque requests it.
In the partial payment certificate, the bank will include all the details of the cheque’s issuer. This includes emirates passport or ID number, and IBAN. In cases where the issuer is a company, the bank will provide the trade license details. Finally, telephone, address and other contact details will be given.
With this information, the presenter can initiate legal measures. It is important, however, to take into consideration the validity of a bounced cheque in the UAE. A cheque is only valid for 6 months starting from the issuance date. If the bank rejects a cheque that has expired, the drawer can file a bounced cheque case.
3.3 Applicable Penalties
The law makes subject to a penalty to anyone that endorses a bearer cheque while knowing such cheque cannot be drawn. However the circumstances may be, the delivery of a cheque with insufficient funds to pay is punishable. The penalty should be no less than 10% of the amount accorded in the cheque.
Any person that was convicted for issues related to bounced cheques will lose the benefit of getting a checkbook. This will be valid for five years. They also need to pay at least 10% of the cheque amount. In some cases, they can also face imprisonment from six months to two years.
Furthermore, any commercial or professional activities of the convicted individual can be suspended for six months. If there is a reoccurrence, the commercial or professional activities will be revoked. If a corporate entity was the one issuing the cheque, they will be in the obligation to declare bankruptcy.
The validity of a bounced cheque in the UAE can vary in each Emirate. In some cases, people have up to two years to take action regarding a bounced cheque. The Dubai police’s cheque bounce policy establishes that if the issuer is guilty, its fine would be AED 2.000 – AED 10,000.
3.4 Surrender checkbooks
One of the repercussions a convicted person can face is the withdrawal of any existing checkbook. Also, they cannot obtain a new checkbook for the next five years. Whoever refuses to surrender their existing checkbooks, they are going to face a sentence to a penalty.
3.5 Executive Instrument
Now, the law is considering a bounced cheque as an executive instrument. This helps cheque bearers to save money and time since they can ask to execute the issuer’s account to get the amount claimed.
The long proceedings are not a problem anymore, the holder can simply go to the executive judge with the cheque and claim its money. This will significantly boost business confidence. In the same way, it will reduce a great amount of pressure on civil and criminal courts.
Making bounced cheques an executive instrument now allows the presenter to go directly to the court asking for enforcement proceedings. They will no longer have to prove their case through court. Filing a civil case for a cheque bounce in Dubai is not needed to demand the money from the bank.
4. How can I deal with a bounced rental cheque?
It is a fact that collecting rent payments through cheques brings more benefits to landlords. For instance, it is easier to handle several cheques instead of a significant amount of cash. However, there is always the risk of a bounced check.
4.1 Prevent the situation
The first thing to do is identify the reason why the cheque issued bounced. This will give you information about what route to choose. There are a few non-illegal reasons, like finding irregularities in the signature.
Moreover, taking a good look at the cheque that you are receiving is important. Make sure there are no overwritten parts or any misspelling on the issued cheque. Those are some of the reasons that are not illegal for a bounced rental cheque.
In addition, if your business is based on renting places, you should always have a team of lawyers working with you. There are different legal services ready to provide legal assistance for businesses. They can also assist you in how to pay a fine for a bounced cheque in Dubai.
As a matter of fact, any business owner needs to take this opportunity. Legal services will help them to avoid common legal mistakes, that typically come from a lack of knowledge. However, those mistakes could lead to serious consequences for their business.
4.2 Take legal action
If you have been the victim of a bounced rental cheque fraud, you can take legal action. This dispute can be resolved by our best Connect Legal lawyers, experts in General Civil Law. They specialize in business and finance law, landlord and tenant law, among others.
Anyhow, with the new UAE Bounced Cheque Law landlords can get the money they were to receive. Thanks to the new decree, the bank is obligated to provide the funds if they are available. However, as a landlord, you have the option to still file a civil case for a cheque bounce in Dubai against the cheque issuer.
5. When could I pay a fine for a bounced cheque?
Courts in Dubai are putting the new procedures into effect already. Most of the cases that were considered minor offenses are now outside the court system. This means, the Dubai persecutors are issuing fines against offenders, and not referring them to trials.
If you wonder how to pay a fine for a bounced cheque in Dubai, you need to take a look at the different values included in the new UAE Bounced Cheque Law. The penalties for bounced cheques usually depend on the amount due. The good thing now is that it is a civil suit and not a criminal offense.
As we mentioned earlier, the Dubai police’s cheque bounce policy is different from the rest of the UAE. In other parts of the United Arabic Emirates, the charges are detention and a fine equal to 10% of the cheque amount.
In Connect Legal we can help you understand all the changes, contact us for more information. Even if you are outside Dubai, the best option is to issue a Power of Attorney to close the case. If you fill out our registration, you will be one step closer to solving all your legal problems.
6. Why should I get legal assistance from Connect Legal?
The reform of the UAE Bounced Cheque Law is meaning to boost business and provide a sense of clarity to the banks. This will cause the payments dynamic to change from what we know. The banks, the businesses, and the market are already starting to make adjustments to improve as a result.
With all the changes, it is important to stay updated and well informed. Connect Legal is the best option to get assistance. Learn all about us. Hence we can support you with any type of financial law issue. Staying updated with the constant changes in law can result super beneficial for you and your business.
Are you interested in hiring Connect Legal or finding more information about why UAE Bounced Cheque Law is no longer considered an offense? Email us at firstname.lastname@example.org .We are ready to answer all your questions.
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