UAE set to implement law on decriminalisation of bounced cheques

Amendments to a UAE law regarding the decriminalisation of bounced cheques will come into effect on January 2, 2022, making the use of cheques more flexible.

According to the Central Bank of the UAE (CBUAE), the changes will effectively decriminalise the issue of bounced cheques except for the most serious cases.

The decision will help facilitate commercial and banking transactions, streamline procedures for collecting the cheque’s value, and make the use of cheques more flexible.

Under the latest amendments, the scope for the criminalisation of returned cheques due to insufficient funds has been narrowed, and confined to cases of bad faith and other cheque crimes such as fraud.

Partial payment of the cheque has also become mandatory. If the amount available for payment is less than the cheque value, the drawee bank must pay the amount partially, unless the bearer rejects partial payment.

Meanwhile, administrative penalties will be toughened for issuing cheques without funds, in order to reduce the misuse of cheques.

"The new amendments will also consolidate the principles of justice by striking a balance between the interests of the cheque beneficiary or bearer in fulfilling their rights as soon as possible, and the drawer’s interest in removing any criminal case filed for non-payment of the cheque," said Khaled Mohamed Balama, Governor of CBUAE.

Abdullah bin Touq Al Marri, Minister of Economy, stated that decriminalisation of issuance of cheques without funds, in accordance with Federal Decree-Law No (14) of 2020 amending certain provisions of the Commercial Transactions Law, is an essential step in developing and enhancing the flexibility of legislation regulating economic, business, trade and investment activities in the UAE.

"Criminalisation has been confined to cheque forging and their illegal use, deliberately writing or signing cheques in a way that render them unpayable, the criminalisation referred to in the Penal Code on issuing cheques without funds, or the phenomenon known commonly as returned or 'bounced' cheques, was cancelled, similar to the practice in a large number of jurisdictions, such as France and the United States of America," explained Abdullah bin Sultan bin Awad Al Nuaimi, Minister of Justice.

He added that the new amendments will facilitate litigation procedures, avoid the accumulation of cheque cases at prosecution offices before civil and criminal courts, thus saving money and effort.