The above crimes (relating to money) are contained within the Federal Decree-Law No. 31 of 2021 (otherwise known as the ‘Penal Code’), which applies to all crimes and penalties in the UAE.
Notwithstanding, there are specific Federal Decrees which authorities in the UAE follow about particular financial crimes. They include:
- Federal Decree-Law No. 28 of 2022: introduced to overhaul the pre-existing tax procedures of the UAE.
- Federal Decree-Law No. 20 of 2018 on Anti-Money Laundering, Combating the Financing of Terrorism and Financing of Illegal Organization: introduced to ensure the UAE complied with the international standards relating to combatting anti-money laundering and the financing of terrorism.
Article 2 of this Decree-Law sets out the definition of a perpetrator of the crime of Money-Laundering as any person knowing that the funds are proceeds of a felony or a misdemeanour, and who wilfully commits any of the following acts:
- Transferring or moving proceeds or conducting any transaction to conceal or disguise their illegal source;
- Concealing or disguising the true nature, source, or location of the proceeds, as well as the method involving their disposition, their movement, ownership or relevant rights;
- Acquiring, possessing or using the proceeds upon receipt;
- Assisting the perpetrator of the predicate offence to escape punishment.
Punishment: Under Article 22 of this Decree-Law, any person who attempts to commit or indeed commits any of the above acts may be sentenced to up to 10 years imprisonment depending on the severity of the offence. Alternatively, a fine of between AED 100,000-5,000,000 may be imposed.
Furthermore, a temporary imprisonment sentence and/or a fine of no less than AED 300,000 and no more than AED 10,000,000 shall be applied if the perpetrator commits a Money Laundering Crime in any of the following situations:
- If he abuses his influence or the power granted to him by his employment or profession or professional activities;
- If the crime is committed through a Non-Profit Organisation;
- If the crime is committed through an organized crime group.
- In case of recidivism.
Article 14 of this Decree-Law further confirms that financial institutions, designated non-financial businesses and non-profit organisations will face any of the following penalties if found to have violated the same:
- Financial penalties ranging between AED 50,000 and 5,000,000 for each violation;
- Banning of the perpetrator/s from working in the sector for some time (to be determined by a supervisory authority);
- Restricting the powers of Managers, the Board of Directors or the executive management team;
- Suspending managers, the board of directors and the executive management team;
- Suspending or restricting the activity of the profession (to be determined by the supervisory authority); and
- Cancel the license of the business.
Under Article 29 of this Decree-Law, any expat who commits any money laundering offence or an act relating to the financing of terrorism must be deported from the UAE.
Tax evasion is governed by Federal Decree-Law No. 28 of 2022 on Tax Procedures.
This Decree-Law discusses the requirements placed upon those in tax-related professions, such as accounting.
Article 25, Tax Crimes and Penalties of this Decree-Law confirms that an individual will be deemed to have committed tax evasion in the following circumstances:
- Deliberately failing to settle any payable tax;
- Deliberately understating the actual value of his business or his revenues or failing to consolidate his related businesses, with the intent of remaining below the relevant registration threshold, tax rate or other tax thresholds;
- Deliberately imposing and collecting amounts as tax without being registered;
- Deliberately decreasing the due tax; and e. Deliberately committing or omitting any other act which may constitute tax evasion under this Decree-Law
Punishment: Any person who is guilty of tax evasion will be subject to a penalty ranging from a fine or imprisonment (depending upon the severity of the offence). However, it should be noted the penalty will not exceed three times the amount of evaded tax.
Conversely, a prison sentence and/or a fine of no more than AED 1,000,000 will be imposed on anyone who deliberately provides false information, data and incorrect documents to the Authority. The same penalties shall apply to anyone who hinders the Authority from performing their duties, together with destroying or concealing relevant documents.
Market abuse (otherwise known as market manipulation) is governed by Federal Law No. 4 of 2000 Concerning the Securities and Commodities Authority and Market. The following punishments will apply to directors if found guilty of market abuse offences:
- Providing false information, statements or data can affect the market value of a specific security and therefore influence an investor’s decision of whether to purchase a particular stock or not. Punishment: Any person found to have breached this regulation may be imprisoned for a period of 3 months – 3 years; and/or face a fine of between AED 100,000- AED 1,000,000.
- The use of insider information by a director of a company to purchase or sell securities from their respective company. (this includes the use of confidential information to achieve personal monetary gain or to spread rumours regarding the selling or buying of securities) Punishment: Any person found to have breached this regulation may be imprisoned for a period of 3 months – 3 years; and/or face a fine of between AED 100,000 and 1,000,000.
The Chairman/Chairwoman of a company and any members of the Board of Directors of which securities are listed in a market that is licensed in the UAE may also face imprisonment of up to 3 years; and/or a fine of between AED 100,000- AED 1,000,000.
Whilst fraudulent offences are wide-ranging, the below examples provide a brief insight into the punishments for such offences in the UAE:
- Article 451 of the UAE Federal Penal Code: whoever succeeds (fraudulently) in appropriating, for them or others, movable property, a written instrument (including signatures), cancellation, destruction or amendments thereof intended to deceive a victim. This includes the use of false names or capacity. Punishment: Imprisonment of up to 2 years and/or a fine of up to AED 20,000.
- Article 346 of Federal Decree-Law No. 32 of 2021 on Commercial Companies: providing false information (including company documents or shares/bonds) contrary to the law. Punishment: Imprisonment of between 6 months and years; and/or a fine of between AED 200,000 and AED 1,000,000.
- Article 349 of Federal Decree-Law No. 32 of 2021 on Commercial Contracts: concealing the true financial position of the company. Any Manager, Board Member, Auditor, or Liquidator who deliberately provides false statements in the balance sheet, in the profits and losses account or in a financial report, or omits material facts in such documents to conceal the true financial position of the company. Punishment: Imprisonment of between 6 months and years; and/or a fine of between AED 100,000 and 500,000.
Corruption is a serious crime in the UAE and offenders can face up to 5 years imprisonment.
- Under the Penal Code, associates and agents of corruption-related offences can also be held liable.
- A legal person will be liable for an offence committed by representatives, directors or agents of the company acting on their behalf or in a way which benefits the company.
Those who have open knowledge of any corruption may be punished should they fail to report it to the relevant authorities
