Fraud in the UAE Introduction
Fraud in the UAE is becoming undesirably common. Nowadays we are observing two different ways to fraudulently obtain funds from third parties, in this instance, victims of the fraud. This novelty concerns the use of electronic means: WhatsApp, SMS and E-mails.
Before jumping into the most common examples of fraud taking place in the UAE we will define the concept of fraud and its regulation under UAE Law.
The UAE legal system covers the concept of fraud in Article 451 of Federal Law No. 31 of 2021 on the Issuance of the Crimes and Penalties Law:
Any person who unlawfully appropriates for himself or for another person movable property, or who obtains a benefit or document or a signature on the said document, or a revocation or alteration of the document, by seeking fraudulent method or by false pretence or capacity so as to deceive the victim and induce him to surrendering such document, shall be liable to a jail sentence or a fine. The same penalty shall be imposed against any person who disposes of a real estate or movable property, knowing that he is neither the owner nor having the right to dispose of the same, or that he has previously disposed of the same or concluded a contract on the same, and which may inflict damage to a third party.
If the subject matter of the crime is money or bond for the State or any of the entities mentioned in Article 5, such matter shall be considered an aggravating circumstance.
Any attempt to commit the crime shall be punishable by a jail sentence for a period not exceeding two (2) years or a fine not exceeding AED twenty thousand (20,000). Upon any conviction against a recidivist with a jail sentence for one (1) year or more, the court may order surveillance measure for a period not exceeding two (2) years and not exceeding the term of the sentence.
Fraud, hence, involves two aspects:
- The appropriation; and
- The deceit on method, identity or capacity to do the appropriation.
Examples of Fraud in the UAE
We are currently assisting a significant number of clients with cases such as:
E-mail Identity Theft
Email identity Theft to claim funds that correspond to a thid party. This we are actually observing in a different number of fields such as commercial transactions, tenancy renewals and settlement agreements.
Most of these cases bear in common that the criminal hackers and takes over the identity of someone else and does a change in the banking details that are to be paid, rather quickly.
To build more into these examples:
- Tenancy Renewal: at the time of renew the tenancy, the criminal takes over the emails of the landlord or real estate agent and sends different banking details to complete the payment.
- Commercial disputes: at the time of paying for goods, the criminal takes over the emails of the seller and sends different banking details to receive unlawfully the payment.
- Settlement Agreements: at the time of meeting a payment deadline under the agreement, the criminal takes over the email accounts of the counterparty and changes the banking details.
In all these scenarios the plot is unveiled when the party that is awaiting the funds follows up with the paying party.
At this point. What do you do? You file a case against someone that you do not know? Will the UAE authorities prosecute following the IBAN and identity of receiving party?
It is in fact surprising that banks accept payments when beneficiaries do not match and that all receiving parties are in the UAE (to date, based on our experience).
A second type of fraud takes place via sms or WhatsApp messages usually the criminal takes over the identity of an authroiti of the UAE, a private bank or police and via sms requests very specific details of the receiver claiming an update, to avoid a penalty/fine, etc.
Despite the fact that criminals can be prosecuted, and fines/jail is provided under Article 451 of the UAE Criminal Law, going through the process of tracking the criminal may not be pleasant and may not be successful if the wrongdoer is out of the UAE. Usually, the criminal process stops if the wrongdoer is not detained.
This would apply to the second type of fraud cases we have seen, but, what happens to the earlier cases when there’s a party that really pays to a cyber ghost? Will he have to repay? Will the other party be held responsible for having been hacked as the paying party followed legitimate instructions from a checked source?
The answer is a big depends on the specific circumstances will need to be evaluated. We strongly recommend prompt expert advice as fruit of the initial emotions it is not rare seeing criminal applications that could have been avoided. The proper strategy will mitigate the harm.
We trust that the above is of help in avoiding the fast rising fraudulent tricks. For additional information on UAE legalities you may visit our website news and our Managing Partner’s YouTube channel.
*The present is not intended as legal advice but rather as a publication of general application.