UAE – Decriminalization of Bounced Cheque

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The UAE, being one of the business hubs in the world, cheques are one of the common forms of payment. There are certain hardships with cheques usage, such as bounced or dishonored cheques for various reasons, which can lead to civil or criminal action. 

The new law -Federal Decree-Law No. (14) of 2020- came into effect in the UAE from January 2, 2022, decriminalized cases of bounced cheques, amending the previous law, which stipulated that anyone who issues a cheque that is not honored can face criminal proceedings.  The new law made path-breaking amendments in relation to the dishonor of cheques and limits the options for filing a criminal action for a bounced cheque.  They are in line with the Central Bank’s strategic initiatives and plans to upgrade banking laws and regulations to track developments in the financial sector, fill any legal gaps and deliver its vision to follow best practices internationally. 

While the law itself is quite detailed, it de-criminalises bounced cheques – except specific cases related to forgery, ‘stop payment’ instructions, etc. The Attorney General’s Office, Government of Dubai issued Circular No. 9 of 2021 directing police and public prosecution authorities to close all pending cases on bounced cheques or cases that are already decided by criminal courts.

The amendment also helps to promote commercial and banking transactions, streamline procedures for collecting the cheque’s value and make the use of cheques more flexible. The amendments also aim to secure the rights of cheque bearers and beneficiaries and would expedite the collection of a cheque’s value in a more effective manner, which will be determined by the Central Bank. 

As said, the scope for the criminalization of returned cheques due to insufficient funds has been narrowed and confined to cases of bad faith and other cheque crimes. This would deliver the desired goals of replacing decriminalization with preventive measures, coupled with deterrent alternative penalties to reduce the misuse of cheques and also encourage the public to use modern, technological, and digital means instead of traditional paper cheques.

Further, the decriminalization of the issuance of cheques without funds is an essential step in developing and enhancing the flexibility of legislation regulating economic, business, trade, and investment activities in the UAE.


The new amendments reduce the negative aspects revealed by the practical experience of dealing with cheques, compared to the best and most successful international practices. The new amendments would also consolidate the principles of justice by striking a balance between the interests of the cheque beneficiary or bearer in fulfilling their rights as soon as possible and the drawer’s interest in removing any criminal case filed for non-payment of the cheque. This will definitely help to boost business between companies and individuals and provide clarity to banks concerning the procedures and processes associated with the criminal acts, helping them to amend their bank policies. 

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