Decriminalisation of issuing cheques without funds contributes to enhancing business growth

23/12/2022 Finance and investment | Central Bank of the UAE

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The recent amendments to the Commercial Transactions Law regarding the decriminalisation of issuing cheques without funds, and the amendments related to the partial payment of the cheque, which entered into force at the beginning of 2022, contributed to enhancing business growth, considering the importance of cheques in commercial transactions for both individuals and companies alike. The UAE Government is keen on broadening investment opportunities and supporting business growth. Hence, this Law has been amended in accordance with the best practices to keep pace with global developments, with the aim of developing a rigorous legislative framework for cheque transactions and dealing to ensure the preservation of the significant role of

the cheque as a payment instrument equivalent to cash


Generally, the new amendments to the Penal Code aim to decriminalise the issuance of cheques without funds, with a view to reducing the negative practical aspects of dealings in cheques In line with the best and most successful international practices. They also aim at consolidating the principles of justice, fairness and equal opportunities through balancing the interests of the beneficiary (in fulfilling their rights in the fastest way possible) and the interests of the drawer (in terminating the criminal case against them upon payment). In addition, the amendments aim at maintaining a solid national economy and a judiciary system based on efficiency and quality; as well as boosting the rule-of-law and international competitiveness indicators


Although the cheque was decriminalised, the Law identified cases of criminalisation to achieve of the decriminalisation objectives and replaced it with some civil measures. criminalisation cases include; fraud when issuing a cheque, such as requesting the bank to not cash a cheque before the due date without a legal reason, closing the account or withdrawing the entire funds before issuing the cheque or presenting it to the bank for cashing, in  addition to deliberately writing or signing the cheque in a way that prevents it from being cashed or forging the cheque and using it


Many officials have stated that the new amendments related to the decriminalisation of cheques will have a positive impact in supporting the competitiveness of the UAE on regional and global levels, and will increase its attractiveness for foreign investments. The world's economies are increasingly adopting digital applications and solutions, and these amendments would encourage individuals and companies to use modern and digital alternatives to guarantee their rights instead of traditional paper cheques


The Law has provided strong civil alternatives that lead to the collection of the cheque value. These include obligating banks to partially pay the cheque, make the cheque from the drawee's bank account with non-sufficient fund an executive deed to be fulfilled directly through the execution judge, without resorting to lengthy legal procedures, hence rendering the cheque an executive deed that does not require a court ruling. This would expedite the legal action through which cheque holders can receive their rights, and simplify the procedures for obtaining the cheque's value, resulting in further strengthening of the cheque as a fulfilment instrument in commercial and financial transactions

Central Bank of the UAE

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