Corporate Fraud in the United Arab Emirates: An Overview

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Corporate Fraud in the United Arab Emirates An
Overview
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Introduction to United Arab Emirates legal system
The United Arab Emirates (UAE) legal system
works under a civil law system comprising of a
federal court system composed of civil, criminal
and shariah courts. The highest court in the land
of UAE is the Supreme Court with its presence in
three Emirates which are Abu Dhabi, Dubai and Ras
Al-Khaimah and their jurisdiction covers all
matters which does not fall under the federal
courts which are allocated according to the UAE
constitution with their own first instance and
appellate courts. Apart from that, the UAE also
has formulated additional framework or
regulations to govern the free trade zones with
special tax, customs and imports regimes. There
are certain law especially commercial laws that
do not apply in some free trade zones. For
example, the Dubai International Financial Centre
(DIFC) is a free trade zone which practices
offshore common law jurisdiction with its own
law. The civil and commercial laws of UAE except
UAE criminal law does not apply in the DIFC. This
blog does not cover the jurisdiction or laws of
the DIFC.
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Corporate or business fraud offences The UAE
government and the corporate lawyers in Dubai are
very careful to remain within the law and it
expects the same from the corporate sectors.
However, now and then the UAE judiciary find
itself facing financial offences like fraud in
the context of corporate business that includes
the following crimes as it has been established
by the UAE Penal Code 1. Article 399 of UAE
Federal Law No. 3 of 1987 engaging in
fraudulent activity this offence states that
the offender take possession (either for himself
or for others) of any movable property or written
instrument by assuming a false name or quality
and/or by using fraudulent practice with the
mindset of deceiving the victim in surrendering
his/her legal rights.   As a result the offender
can be guilty and punished for falsification.   2.
Article 401 of the Penal Code of the UAE Federal
Penal Code enacted in 1987 dishonoured cheque
the act of any individual who in bad faith, draws
a cheque without any existing or drawable fund
or after issuing the cheque, withdraws all or
part of the provision so that the balance becomes
insufficient to settle the amount of the cheque
orders the drawee not to pay the cheque or
deliberately makes or signs the cheque in such a
manner to prevent it from being paid.
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3. Article 402 Federal Law No. 3/1987 This
deals with a drawee who, in bad fair, declares
the availability of the fund which is less than
the amount he/she actually has available for
withdrawal.   4. Article 404 Federal Law No.
3/1987 the offence of breach of trust It
involves the offences committed by any person who
embezzles, uses or diminishes funds, instruments
or any other movables which were entrusted to
him/her in a fiduciary capacity, and causes
damage to the person who holds title to such
funds, instruments or any other movable, can be
considered as breach of trust.   It carries a
penalty of imprisonment or a fine. Additional
related legislation A leading judge has warned
that cases of cyber, electronic, phone and scam
fraud are on the rise across the UAE. So, the UAE
government passed additional legislation to
effectively govern these types of fraud. Let us
learn more about the most common relevant
legislation
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• The UAE Cyber Crimes Law This shed light among
  other things unauthorized
• access to networks or data systems, data
  tampering, credit cards cloning and the use of
• IT to commit a variety of offences.
• 2. The UAE Commercial Transactions Law that
  penalized a companys board of directors if they
  commit certain acts at the time of the companys
  bankruptcy, such as hiding or demolishing company
  accounts or documents, or acknowledging debts
  that they know are not payable by the company.
•  
• 3. The Dubai Recovery of Public Funds Law
  prohibits the retention of illegal money which
  is funds that are directly or indirectly received
  as a result of a deed that constitutes a crime
  punishable under federal or Dubai Law. It also
  governs the misappropriation of public funds in
  Dubai.

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