Home | Forum | Print |

Checks and Cheques in Dubai

Sunday 24 March 2019 (UAE)   

Cheques in Dubai, Abu Dhabi, UAE

Checks or cheques are commonly used in Dubai, Abu Dhabi, and UAE for bill payments but less frequently for day to day shopping. Bouncing a cheque in the UAE is known as check fraud and is a criminal offence that can (and often does) result in arrest and a jail sentence as punishment.

Personal chequebooks in Dubai and UAE
  • When opening a bank account in the UAE, a Current Account usually comes with a checkbook, and a Savings Account usually does not.
  • Banks in the UAE normally require a higher minimum deposit for Current Accounts with cheque books - from AED 2,000 to AED 10,000 is common. An additional fee of AED 50 to AED 100 is charged per month if the balance goes below the minimum.
Post Dated Cheques (PDC) in Dubai and UAE
  • Post Dated Checks (PDCs) are often used as a method of guaranteeing payment for a large item or service over time, for example private school fees, accommodation rental payments.
  • Personal loans, car loans, home mortgages might require monthly PDCs for the full period as payment security. And yes, that does mean manually writing out 48 cheques for a 4 year car loan.
  • If payments are automatically deducted from a bank account, a single PDC might be asked for as security.
Check Fraud and Bounced Cheques in Dubai and UAE
  • If you sign a cheque and it bounces due to insufficient funds in your bank account, that becomes a criminal offence known as Check Fraud.
  • Banks can, and do, call the police in that situation if the check was payable to them. Individuals who have cheques made out to them that bounce can also call the police to report the offender.
  • What happens then varies. The police might contact you directly and request you report to the nearest police station. If you do, then you might be arrested on the spot and put into jail, or you might be given an opportunity to make a payment to resolve the issue. If the option of avoiding immediate arrest is available, you might have to leave your passport in the custody of the police while you sort it out, or stay at the police station while a friend sorts it out.
  • Don't count on your bank to be cooperative. Although banks claim they want to be helpful, and it is obviously in their interest to see money returned rather than have a customer in jail, there are a large number of anecdotal stories from 2008-2010 about residents being treated in a manner that many find overly harsh.
  • According to a Gulf News report 12 July 2009, Colonel Khalil Ebrahim Al Mansouri of Dubai Police said: "We are very strict against bounced cheque cases, but before taking any legal action, we give the cheque issuers a chance to reach a compromise with the second party before filing a formal case. If the settlement can't be reached the complaint will be registered as a case and transferred to public prosecution and later to court." And referring to high profile cases, he said "What we usually do is set them free after they sign an undertaking leaving their passport [until] they can pay back their debt. However, people who fail to settle their financial commitments will be sent to jail to protect the rights of the affected parties,"
Jail sentences and prison time for bounced cheques in Dubai
  • The actual monetary amount has no bearing on whether or not an offence has been committed, however, it may affect any jail sentence or fine that the bouncer receives if a case goes to court and the offender is found guilty.
  • If someone is given a jail sentence for Check Fraud, they are not released after serving out the sentence unless the original money owed has also been paid back.
  • One particularly nasty trap for the unwary with respect to companies not honouring their checks is that the person who signed the check is viewed as the offender. Perhaps because it is easier for police to arrest a person than a company. This is a risky situation for management personnel who have signing authority for company cheques but are kept in the dark about how much money the company actually has in the bank.
Debt Consolidation in Dubai
Review of Check Fraud law in the UAE
  • There have been some reports that UAE authorities want to review the laws regarding debts and check fraud, but it seems likely that banks especially will resist any change, since the draconian penalities mean the job and cost of assessing creditworthiness and debt collection is effectively taken care of by the police force in Dubai and other emirates.
  • Gulf News reported 12 July 2009 that the UAE Minister of Justice, Dr Hadef Bin Jua'an Al Daheri, said "The government is currently reviewing a proposal to set up a centre to handle bounced cheque cases before referring them to court."
  • Emcredit is a UAE based organisation established to build up a database of credit risk of people and companies so that lenders can check credit history to see if applicants have a history of bad debts and/or check fraud cases.
  • Dubai Police signed a data-sharing agreement with Emcredit in 2008 or 2009 to provide them with information on bounced cheque cases.
Credit cards and security cheques in Dubai and UAE
  • It is normal when applying for a credit card in the UAE to sign a blank, undated cheque which is held as security by the bank issuing the credit card. Whether or not this is fair, or legal, is moot since banks will not usually issue you your credit card without handing over a security cheque.
  • If you go over your credit card limit and/or do not make the minimum monthly payments and/or lose your job, the bank might attempt to cash your security cheque for the total outstanding balance due. If you have insufficient funds in your bank account, the cheque will bounce, which becomes a criminal offence and the bank can then call the police to arrest you.
  • Many residents of Dubai and the UAE discovered this during 2008 and 2009 as the financial and economic crisis took hold in Dubai especially.
Interpol and the UAE
  • The Interpol Red List is a list of wanted criminals by various countries. The UAE has (or had) a disproportionately high number of Red List names as a result of the check fraud law, and the large number of expats who "did a runner" after losing jobs during 2008 and 2009.
Bounced checks in Dubai stories and news
  • 27 July 2009 - The Times (UK) reported that as many as 25% of all cheques written in Dubai have bounced, quoting an official figure of 544,196 bounced cheques (or 5.7%) for the first 4 months of 2009, but speculating that the figure might be as high as 1 in 4 according to Ghanem Nuseibeh, a senior analyst at Political Capital consultancy. The Times also reported that the Dubai Police Chief had said as many as one fifth of all jail inmates in Dubai were there because of check fraud.
UAE Federal Cheque Fraud Law

Article number 401 covers cheque fraud law in the UAE. The text of the article after amendment according to Federal Law No. (34) 2005 published on December 2005 by Federal Gazette (additions to original article in italics) is:

Article No. (401) of the Penal Code under Federal Law No. (3) 1987

Shall be punishable by confinement or fine any individual who, in bad faith draws a cheque which does not have a provision which could be withdrawn or which has a provision less than the amount of the cheque or who, in bad faith, after issuing a cheque, withdraws all or part of the provision and renders the balance insufficient to settle the amount of the cheque or, in bad faith, orders the drawee not to pay the value of the cheque or, in bad faith, draws or signs a cheque in such a manner as to prevent it from being paid.

Shall also be liable to the same punishment any person who shows or delivers to another a cheque payable to bearer, with full knowledge that it does not have a provision which could be withdrawn or which has a provision less than the amount of the cheque.

The criminal case shall terminate if payment was made or assignment was established after commitment of the offence and before a final judgment was passed in respect thereof, and if such occurred after the judgment became final, it would stop execution.

If the cheque book was withdrawn by order of the court and the claimant was prohibited to optain new cheque books pursuant to article (643) of the Commercial Transaction Law. The public prosecution shall advise the Central Bank of the matter in order to circulate to all Banks.

In case any bank contravened the said order, it has be required to pay (AED 100,000).

A couple of points to note:

  • The term "bad faith" sounds like it means there is criminal intent to defraud. Whether or not you have any intention of defrauding a bank when you sign a blank security cheque, the UAE courts normally seem to think you do, or did.
  • If convicted of cheque fraud, punishment is 1 month to 3 years in jail and/or a fine of AED 100 to AED 30,000. It appears that in most or all cases, a jail sentence is handed out if a guilty verdict is reached.
  • During 2009 and 2010, due to the large number of check fraudsters in the UAE ending up in jail, there was talk of making changes to the law, even from high ranking officials and authoritative individuals. Change may take time, especially as banks in the UAE happily use the current system as a defacto replacement for proper credit checks.
Civil Court for bounced security cheques
  • A couple of sources say that in the matter of Security Cheques: However, in consideration that the cheque is an instrument of payment and undertaking to pay its value based on legal grounds, the drawer would be allowed to proof the real reasons behind the issuance of the cheque. A cheque expressively made as security for performance of obligations or as a trust could not be the basis for a criminal charge. In this event the case will be heard by Civil Court only.
  • Original source unknown, and this clause appears to be ignored by banks and the criminal courts in the UAE anyway (as of 2010 at least). Either that, or our understanding of what it says about signing security cheques is wrong.
Bounced cheques in Dubai data and statistics
  • 2010 Jan-Apr total value of bounced cheques in the UAE was AED 18.6 billion, number of bounced cheques was 588,570, about 1 in 16 (UAE Central Bank data reported by Emirates Business 24-7 on 05 August 2010).
  • 2009 Jan-Apr total value of bounced cheques in the UAE was AED 24.8 billion, number of bounced cheques was 544,196, about 1 in 18.
Last update Saturday 22-Mar-2014 . Page development 4L 5C.
Related pages
Related websites (new window)
  • www.molinarilegal.com/articles_en.asp - some useful information and explanation about cheques and the law in the UAE.


Abu Dhabi AUH ABD ADB, Ajman AJM, Al Ain AAN, Dubai DXB, Fujairah FUJ, Ras Al Khaimah RAK, Sharjah SHJ, Umm Al Quwain UAQ

DubaiFAQs UAE information guide. Copyright © 2004-2019 www.dubaifaqs.com, Dubai, UAE - United Arab Emirates | blog | Facebook | Twitter |