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UAE Central Bank amends law decriminalising cheque bounce

The Central Bank of the UAE (CBUAE) has amended the Commercial Transactions Law regarding decriminalisation of bounced cheques. Under the amendments, to come into effect on January 2, 2022, CBUAE has made changes to the partial payment of cheques, as well as toughened administrative penalties in cases where they are issued without funds. The regulator stated that the amendments are in line with the government’s key plans to build and support a sustainable national economy. 

Khaled Mohamed Balama, Governor, CBUAE, stated that these amendments are in line with the CBUAE’s strategic initiatives to continuously upgrade banking laws and regulations to track developments in the financial sector, fill any legal gaps and shortcomings, and deliver the CBUAE’s vision to follow the best practice internationally in this regard.  

Stress on digital payment modes 

The scope for criminalising returned cheques due to insufficient funds has been narrowed and limited to cases of bad faith and other cheque crimes. 

The amendments also aim to protect the rights of cheque bearers and beneficiaries, as well as to speed up the collection of a cheque’s value, which will be determined by the CBUAE. They will also encourage people to use modern, technological, and digital methods rather than traditional paper cheques. 

Criminalization has been limited to cheque forgery and illegal use, deliberately writing or signing cheques in a way that renders them unpayable, the criminalization referred to in the Penal Code on issuing cheques without funds, or the phenomenon known commonly as returned or ‘bounced’ cheques, was canceled, similar to the practice adopted in a large number of jurisdictions, such as France and the United States of America.

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