Breach of Trust and Fraud

Besides great business incentives, including tax-free income, the United Arab Emirates (UAE) central location and proximity to major global markets make it an attractive destination for global trade. The country’s warm weather and expanding economy make it attractive to immigrants, especially expatriate workers. Essentially, the UAE is a land of opportunities.

However, the UAE’s uniqueness as a place of great business opportunities and excellent living standards has attracted not only hard-working people from across the world but criminals as well. From dishonest employees to dishonest business partners, suppliers, and associates, breach of trust has become a common criminal offense in the UAE.

What is a Breach of Trust?

Fraud and breach of trust crime are criminal offenses in the UAE under Federal Law No. 3 of 1987 and its amendments (the Penal Code). According to article 404 of the UAE Penal Code, breach of trust law involves offenses of embezzlement of movable property, including money.

Generally, a criminal breach of trust involves a situation where a person put in a position of trust and responsibility takes advantage of their position to embezzle their principal’s property. In a business setting, the perpetrator is usually an employee, a business partner, or a supplier/vendor. At the same time, the victim (the principal) is usually a business owner, an employer, or a business partner.

UAE’s federal laws allow anyone, including employers and joint-venture partners who are victims of embezzlement by their employees or business partners, to sue the offenders in a criminal case. Additionally, the law allows them to recover compensation from the guilty party by instituting proceedings in a civil court.

Requirements for a Breach of Trust in a Criminal Case

Even though the law allows people to sue others for breach of trust offenses, a breach of trust case has to meet some requirements or conditions, elements of the crime of breach of trust: including:

  1. A breach of trust can only occur if the embezzlement involves a moveable property, including money, documents, and financial instruments like shares or bonds.
  2. A breach of trust occurs when the accused has no legal right over the property they are accused of embezzling or misappropriating. Essentially, the offender had no legal authority to act the way they did.
  3. Unlike theft and fraud, a breach of trust requires the victim to incur damages.
  4. For a breach of trust to occur, the accused must have possession of the property in one of the following ways: as a lease, trust, mortgage, or proxy.
  5. In a shareholding relationship, a shareholder who prohibits other shareholders from exercising their legal rights on their shares and takes those shares for their benefit may be prosecuted with breach of trust.

Breach of trust punishment in UAE

To deter people from committing breach of trust offenses, the UAE federal law criminalizes breach of trust under Article 404 of the Penal Code. Accordingly, breach of trust is a misdemeanor offense, and anyone found guilty is subject to:

  • A jail sentence (confinement), or
  • A fine

However, the court has the discretion to determine the length of the confinement or the amount of the fine but according to the provisions of the Penal Code. While the courts are at liberty to issue any penalty depending on the severity of the offense, article 71 of the Federal Penal Code No. 3 of 1987 stipulates a maximum fine of AED 30,000 and a maximum jail sentence of not more than three years.

In some cases, individuals may be Falsely Accused in UAE of breach of trust or embezzlement crimes. Having an experienced criminal defense lawyer is essential to protect your rights if facing potentially false allegations.

Breach of Trust Law UAE: Technological Changes

Similar to other areas, new technology has changed how the UAE prosecutes some breach of trust cases. For instance, in situations where the offender used a computer or an electronic device to commit the crime, the court can prosecute them under UAE Cyber Crime Law (Federal Law No. 5 of 2012).

Breach of trust offenses under the Cyber Crime Law carries a harsher penalty than those prosecuted only under the Penal Code provisions. Crimes subject to the Cyber Crime Law include those involving:

  • Forging a document using electronic/technological means, including common types of forgery such as digital forgery (manipulating digital files or records). 
  • Intentional use of a forged electronic document
  • Using electronic/technological means to obtain property illegally
  • Unlawful access to bank accounts through electronic/technological means
  • Unauthorized access of an electronic/ technological system, especially at work

A Common scenario of breach of trust through technology in the UAE includes unauthorized access of a person’s or an organization’s accounting or bank details to transfer money fraudulently or steal from them.

Breach of Trust in Business in UAE can occur in a multitude of ways, including:

Misappropriation of Funds: This occurs when an individual uses the business’s money for their own personal use without the necessary approvals or legal justifications.

Misuse of Confidential Information: This can occur when a person shares proprietary or sensitive business information with unauthorized individuals or competitors.

Non-compliance with Fiduciary Duties: This happens when an individual fails to act in the best interest of the business or stakeholders, often for personal gain or benefit.

Fraud: A person can commit fraud by providing false information or intentionally deceiving the company, often to benefit themselves financially.

Non-Disclosure of Conflicts of Interest: If an individual is in a situation where their personal interests conflict with the interests of the business, they are expected to disclose this. Failure to do so is a breach of trust.

Improper Delegation of Responsibilities: Entrusting someone with responsibilities and tasks that they’re not capable of managing can also be considered a breach of trust, especially if it results in financial loss or damage to the business.

Failure to Maintain Accurate Records: If someone knowingly allows the business to maintain inaccurate records, it’s a breach of trust as it could lead to legal issues, financial losses, and damaged reputation.

Negligence: This can occur when an individual fails to perform their duties with the care that a reasonable person would use under similar circumstances. This can lead to damage to the business’s operations, finances, or reputation.

Unauthorized Decisions: Making decisions without the necessary approval or authority can also be considered a breach of trust, especially if those decisions lead to negative consequences for the business.

Taking Business Opportunities for Personal Gain: This involves taking advantage of business opportunities for personal benefit rather than passing those opportunities along to the business.

These are just a few examples, but any actions that violate the trust placed in an individual by a business could be considered a breach of trust.

Breach of trust offenses common in UAE

The UAE is a land of opportunity for many people, including criminals. While the country’s unique position makes breach of trust offenses common, UAE’s Penal Code and several other provisions of the Federal Laws have been effective in dealing with these crimes. However, as a victim or even an alleged offender in a breach of trust case, you need a skilled criminal defense lawyer to help you navigate the often complex legal process.

Hire an Experienced and Professional Legal Consultant in Dubai

If you suspect that a breach of trust has taken place, it is best to seek the advice of a criminal lawyer in the UAE.  We are one of the leading criminal law firms in the UAE dealing with criminal breach of trust law.

When you hire our law firm to represent you in a breach of trust case, we will make sure that the court hears your case and that your rights are protected. Our Breach of trust lawyer in Dubai, UAE will give you all the help you need. We understand how important your case is to you, and we do our best to defend your rights and interests.

We offer legal consultations at our law firm in the UAE, For urgent Calls +971506531334 +971558018669

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