What happens when a postdated cheque bounces in the UAE? New rules have been introduced recently related to cheque bounce in the UAE, which include decriminalization of bounced cheque due to insufficient funds. The new provisions have been introduced through an amendment to the Commercial Transactions Law of the UAE, called the Federal Law No. 18 of 1993 and the erstwhile Penal Code of the country. The amendment is called the Federal Decree Law No. 14 of 2020 and introduced a flurry of new changes. The key changes have been set out below.
Criminal Penalties Restricted In accordance with the amended Commercial Transactions Law, criminal sanctions may still be imposed in some certain specified actions related to cheque. However, apart from the above, there will not be any criminal liabilities for cheque bounce matters. The criminal sanctions may be imposed in the circumstances set out in Articles 641 bis (2), 641 bis (3) and 641 bis (4). These circumstances have been set out below. “Shall be punished by imprisonment for a period of not less than six months and not exceeding two years, and a fine of not less than 10% of the value of the check and of a minimum of AED 5,000 (five thousand dirhams) and not more than double the value of the check, or by either of these penalties, whoever commits any of the following acts: 1. Ordering or requesting the drawee prior to the date of drawing a check, to refrain from paying the check he has issued in cases other than those set out in Articles 620 and 625 of this Law. 2. Closing the account or withdrawing all the funds therein prior to issuing a check or prior to presenting it to the drawee for payment, or having a frozen account. 3. Deliberately writing or signing a check such as to prevent its payment. The penalty shall be doubled in case of recidivism. ”Shall be punished by imprisonment for a period of not less than one year and a fine of not less than AED 20,000 (twenty thousand dirhams) and not exceeding AED 100,000 (one hundred thousand dirhams) whoever commits any of the following acts: 1. Forging or faking a check, or imputing it to a third party through the alteration of its data by addition, by deletion or by the other means set out in Article 216 of aforementioned Federal Law No. 3 of 1987, with the intent of causing harm to a third party and for the purpose of using it in respect of what it was forged for. 2. Knowingly using a forged or fake check. 3. Knowingly accepting amounts paid by a forged or fake check. 4. Wrongfully using or benefitting from a check that is duly drawn in the name of a third party, or whose use is associated with a fraud.