A check bounces a criminal offense in the UAE, punishable by imprisonment, fine, or both. Due to the UAE’s vast corporate operations, cheque bounce situations are widespread. UAE rules impose financially threatening and rigorous legal repercussions on violators to dissuade them from indulging in such unethical and unlawful actions.
What are cheque bounces though?
Dishonored cheques or Cheque bounces (sometimes written checks) are those on which a bank refuses to pay (“honor”). A bank may refuse to honor a cheque for a variety of reasons. The most frequent is non-sufficient funds (NSF), which indicates that there are insufficient funds in the account. NSF checks are also known as bad checks, dishonored checks, bounced checks, cold checks, rubber checks, returned items, and hot checks. If there is money in an account but not enough funds, the check is usually in endorsement “Present again,” at which point the funds should have cleared.
7 Things about bounce cheques in UAE
Here are 7 things to know about bounce cheques in UAE in case you run into a bounced cheque in your business.
Original law
The original law stipulated a minimum fine of AED 1,000 and a month in jail for anybody who issued a bad-faith cheque (depending on the amount). The UAE Cabinet’s approval of an adjustment to the provisions of the Commercial Transactions Law relating to bounced cheques and the issue of cheques with insufficient money is likely to impact the way we do business. Instead, use cheque printing software.
Criminal consequences
The ability to bring a criminal action against the drawer of the check acts as a deterrence theory for the beneficiary to acquire the money from the drawer without filing a civil complaint. To commence legal procedures against the drawer, you must have a lawyer who can represent you in both criminal and civil charges. It is usually preferable to file a criminal complaint Search For Legal Articles against the drawer in addition to the civil lawsuit in order to collect the sum. Due to a large number of cheque bounce instances, it is difficult for criminal courts to keep up with such complaints. Cheque printing software can be in use as a cheque writer to avoid criminal consequences.
Federal law
The Commercial Transactions Law, in issue by Federal Law Number 18 of 1993, defines a cheque in Article 483 as a commercial paper containing an order. An order that is in issue by the drawer to a bank (the drawee) to pay, therein as the date of issue, a specific sum of money to the order of a third person (the payee), being the beneficiary, or the bearer thereof.
One-Day Trial
Following the passage of Law Number 1 of 2017, UAE legislators instituted a new method for dealing with minor issues by establishing one-day courts. The concerned courts are in a mandate to rule on minor disputes within 24 hours. Courts have been created in three main Emirates: Dubai, Abu Dhabi, and Ras Al Khaimah.
One-day courts aim to help members of the UAE legal system by expediting procedures in small instances. Moreover, strengthens the country’s rules for misdemeanors. It will also allow criminal courts to focus more on egregious crimes and punish the accused as soon as possible.
Narrower Criminality
The new amendments introduce narrowed criminality in cheque-related crimes. According to the revised rules, only the following activities will result in criminal charges:
- Cheque falsification on purpose
- Instances of fraud: This includes situations in which the issuer advises the relevant bank, not to pay the cheque amount, in accordance with the clause, the signature on the cheque would be interpreted as an acknowledgment of the debt.
- Supplying forged cheques
- Withdrawing the account balance prior to the date of cheque encashment to prevent the cheque from being cleared.
- Cheque writing software avoids getting you into a cheque crime.
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Partial Cheque Payment
With the recent modifications, the practice of partial cheque payment has now become required. If the amount available for payment is less than the value of an issued check, the drawee bank is now in the compulsion to pay the amount partly. Furthermore, the recipient might attempt to collect the remaining sum by taking legal action through civil courts. In such cases, the banks will issue a ‘partial payment certificate’ to the cheque presenter. Particularly, containing all of the basic information about the issuer of the cheques. Using cheque printing software can help you avoid such a situation.
Prison term
If a person forges or counterfeits a cheque, they will face at least a 12-month prison sentence. Additionally, a minimum fine of AED 20,000 (not to exceed AED 100,000). Similarly, attributing a cheque to a third party by changing any detail is punishable in the same way. Using cheque printing software can help with producing original cheques
Prevention
The following steps can lessen the chance of a poor check:
- Carrying a greater balance in the checking account, so that there is always a “buffer” amount in case an unexpected check does clear.
- Improved balancing techniques
- Overdraft protection can take the form of a connection to a savings account where funds are automatically sent, a credit card, or a line of credit intended specifically for this reason.
- Instead of checks, use a credit/debit card or cash.
- Using a cheque printing software
To minimize cheque bouncing, cheque printing software would be ideal. Because it eliminates one of the leading causes of check bounces—cheque writer mistakes. Because cheque printing software utilizes a cheque printing machine to precisely print your cheque.
Another method for avoiding cheque fraud and bounces is to use Elate cheque printing software. Where the sender has the ability to prohibit any textual mistakes, overwriting, or cancellations. Print checks are account payee cheques. The funds are then in wire to the receiver’s bank account.
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