UAE Verification Rules: A Big Step Towards Global Best Practices

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Through changes in the law, the government and the Central Bank of the UAE hope to protect the interests of all stakeholders in financial transactions involving checks.
Image Credit: Gulf News

Dubai: The UAE’s new bad check decriminalization law that took effect on Sunday is a big step forward in updating the country’s banking laws in line with global best practices.

The new amendments to the Commercial Transactions Law come with severe administrative penalties for issuing checks without sufficient funds and a strong judicial alternative through civil courts to protect the rights of check recipients.

The changes in the law consolidate the principles of justice by reconciling the interest of the beneficiary of the check (bearer) to exercise his rights as soon as possible, and the interest of the drawer to suppress any criminal action initiated for non-payment of the check.

Through changes in the law, the government and the Central Bank of the UAE hope to protect the interests of all stakeholders in financial transactions involving checks.

Despite the changes to the Bad Checks Law, some cases will be retained as offenses to achieve the desired goals of decriminalization and its replacement by certain civil measures. Under the amended provisions, fraud related to checks and cases of intentional failure to pay on checks issued at maturity without a legal reason such as the check was lost or the holder has been declared bankrupt may give rise to to criminal prosecution.

In addition, cases related to check fraud and abuse involving account closure, or withdrawal of the entire balance before the check is issued, or before presenting it to the bank for collection and / or intentional freezing of the account or any activity to prevent the cashing of a check will become a criminal offense.

More clarity and flexibility

The new amendments to the Commercial Transactions Law aim to reduce the difficulties encountered in the practical experience of processing checks and to put in place the best and most efficient international practices.

A QUESTION OF CONCERN

Over the years, criminal cases related to financial transactions, the majority of which involved bad checks, had long been a matter of concern to the government, regulators, law enforcement agencies and the justice system of the United States. country. Although the changes in the law reduce the scope of criminal proceedings, they are expected to reduce the burden on the police and the judiciary in determining the criminality of bad checks and provide swift and effective justice to aggrieved parties.

The provision for partial payment of the check in the event of insufficient funds has emerged as a flexible alternative to payments and reducing the criminalization of bad checks.

Essentially, in letter and spirit, the changes to the law present themselves as a flexible alternative, simplifying the procedures for collecting the value of a check issued in favor of the payee while minimizing criminal proceedings.

While the amended law consolidates the principles of justice by balancing the interests of the payee of the check and the drawer, there is a clear emphasis on the operational flexibility of checks in financial transactions. Going forward, criminal proceedings and heavy fines for non-compliance will be exceptions rather than a rule and should act as a deterrent to those who are likely to violate the new rules.

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