The UAE will decriminalise bounced cheques starting next year, and has also introduced several key changes
2 November 2021| Last updated on 2 November 2021
Bounced cheques in the UAE will soon no longer be punishable by law, under certain cases.
The UAE will decriminalise cheques issued without funds starting from January 2nd, 2022, announced a Khaleej Times report.
According to the UAE Central Bank's new amendments to the Commercial Transactions Law, bounced cheques will only be punishable by law if it is due to insufficient funds confined to cases of fraud, forgery, and bad faith.
The key changes to the UAE Commercial Transactions Law include:
- Decriminalisation of cheques issued without funds
- Criminalisation of bounced cheques due to insufficient funds confined to cases of fraud, forgery and bad faith
- Partial payment of cheque becomes mandatory
- Banks must pay drawee the partial amount from the account if the amount in the account is less than the value mentioned in the cheque unless drawee rejects it
- New amendments replace decriminalisation with preventive measures
- Amendments include deterrent alternative penalties to reduce misuse of cheques
- Amendments will expedite the collection of cheque value in a more effective manner
What happens if a cheque bounces in the UAE?
Starting from January 2nd, 2022, if a cheque bounces in the UAE, the following penalties can apply:
- The violator's chequebook will be withdrawn.
- The transgressor will be denied the right to receive a new cheque for a period up to 5 years.
- Suspension of his or her commercial or professional activity in the UAE.
The new amendments are in line with the government’s key plans and strategic initiatives to build and support a sustainable national economy.