What you need to know about financial crimes in the UAE
Are you involved in a case regarding financial crimes in the UAE, or simply curious about Emirati laws regarding financial crimes? This article tells you what you need to know about financial crimes in the UAE, their laws, and how a lawyer can help you.
What is a financial crime?
As the name implies, financial crime refers to any criminal activity that involves taking money or property that belongs to someone else to get financial or professional gain. Due to their nature, the impact of financial crimes is felt globally, with varying levels of intensity, depending on the strength of individual nations’ economies.
According to the International Compliance Association, we can divide financial crimes into two broad categories:
- Those committed with the intent of generating wealth for the perpetrators, and
- Those committed to protect an ill-gotten benefit or wealth from a previous crime.
Who commits financial crimes?
Different people commit financial crimes for various reasons. However, we can put these people into the following groups:
- Those who commit large-scale frauds to fund their operations, such as organized criminals like terrorist groups;
- Those who use their positions of power to loot their constituency’s coffers, such as corrupt heads of state;
- Those who manipulate or misreport financial data to give a false picture about an organization’s financial position, such as business leaders or C-Suite executives;
- Those who steal a business or organization’s funds and other assets, such as its employees, contractors, suppliers, or “joint task force”, made up of company staff and external fraudulent parties;
- The “independent operator” constantly on the lookout for opportunities to relieve unsuspecting victims of their hard-earned funds.
What are the main types of financial crime?
The committing of a financial crime can happen in many different ways. However, the more common ones are:
- Fraud, e.g., credit card fraud, phone fraud,
- Electronic crime
- Bounced cheques
- Money laundering
- Terrorist financing
- Bribery and corruption
- Identity theft
- Market abuse and insider trading
- Information security
- Tax evasion,
- Embezzlement of company funds,
- Selling fictitious insurance plans, known as insurance fraud
What are the financial crime laws in the UAE?
Emirati financial crime law outlines different financial crime scenarios and their attendant penalties. For example, Clause (1) of Article (2) of the Federal Decretal-Law No. (20) Of 2018 defines money laundering and the activities that count as money laundering.
Anybody who knows that the funds in their possession were the proceeds of a felony or a misdemeanor and still willfully commits any of the following activities is guilty of money laundering:
- Conducting any transaction to conceal or disguise the funds’ illegal source, such as moving them or transferring them.
- Disguising the location or nature of the funds, including their disposition, movement, ownership, or rights.
- Taking the funds and using them instead of reporting to the relevant authorities.
- Helping the committer of the felony or misdemeanor to escape punishment.
Note that the UAE considers money laundering to be an independent crime. So a person who is convicted of a felony or misdemeanor can still be convicted and punished for money laundering. Thus, the person will bear the penalties for both crimes independently.
Punishment for financial crimes
- Money laundering carries a penalty of up to 10 years imprisonment and a fine of AED 100,000 to 500,000. If the crime is especially egregious, the fine could go up to AED 1,000,000.
- Bounced cheques carry a penalty of between one month to three years in prison, a hefty fine and restitution to the victim.
- Credit card fraud carries a hefty fine and some time spent in prison
- Embezzlement carries the penalty of a hefty fine, prison time of between one month to three years and victim restitution.
- Forgery carries a penalty of 15 years in prison or more, hefty fines and probation.
- Identity theft is considered a felony offense and carries a penalty of hefty fines, probation, and a permanent mark on the culprit’s criminal record.
- Insurance fraud carries hefty fines.
Apart from money laundering, other financial crimes carry a penalty of up to three years in prison and/or a fine of AED 30,000.
Don't be a victim of financial crime.
Let’s face it: financial crimes are getting more complicated every day, and the risks of falling victim to one are pretty high. However, if you follow some simple rules, you should escape falling victim to financial crimes.
- Always verify the company or individual offering you items before you make any purchases;
- Never give out personal or confidential information over the phone;
- Always check online reviews of a company before making a purchase. Google is your best friend;
- Never click on links or open attachments in emails you were not expecting to receive or that come from an unknown sender;
- Never make payments online or do any online banking if you are connected to public Wi-Fi, as your information can be easily stolen.
- Be wary of bogus websites – check the links properly before you click on them;
- Be careful about allowing other people to use your bank account;
- Be wary of cash transactions involving large amounts of money, as there are much more secure payment methods available;
- Be wary of transactions that span countries.
How is financial crime linked to terrorist financing?
Article (3), Federal Law No. (3) Of 1987 and the Federal Law No. (7) Of 2014 explains how financial crimes link to terrorist financing. Anybody who intentionally commits any of the following crimes will be guilty of terrorist financing:
- Any of the acts specified in Clause (1) of Article (2) of the law above;
- If the person knew that the funds were wholly or partly owned by or intended to finance a terrorist organization, person, or crime, even if they did not intend to conceal its illicit origin;
- A person that provides the funds for acts of terrorism or funding terrorist organizations;
- A person that provided the means through which the funds would be acquired to use them for acts of terrorism;
- A person that commits the acts above on behalf of terrorist organizations, knowing full well their true nature or background.
Case study of a financial crime
In 2018, a 37-year old Pakistani director of a bank’s stock exchange section was accused of taking Dh 541,000 in bribes from a 36-year old compatriot businessman. Per the charges, the businessman paid the bribe so that he could buy unliquidated shares in six various companies that were trading in the Pakistani market but were not in high demand, over different periods.
This case is a classic example of bribery and insider trading. Fortunately for the two men, a Dubai Court of First Instance acquitted them of all the charges and dismissed the civil lawsuit against them.
How can our law firm help in a financial crime case?
Our regional financial crime team consists of lawyers from various civil law and common law jurisdictions, native Arabic and English speakers who have international and regional expertise. Because of this high-performing team, our clients enjoy the comprehensive service they need, ranging from initial consult to drafting in Arabic or English, to advocating in court.
Additionally, our team enjoys close relationships with local and international government bodies and regularly leverages these connections when handling clients’ cases related to financial crime.
How lawyers can help in a financial crime case
Lawyers are invaluable in financial crime cases because they provide advice and assistance with investigations into the matter and legal representation for parties involved in the case. In addition, depending on the specifics of each case, they will work towards getting charges dropped or recovering compensation for an injured party.