Can you Cancel a Cheque in the UAE?
In the bustling business landscape of Dubai, the financial aspects of transactions often involve cheques. Cheques are widely used for payments, ensuring a secure and traceable exchange. However, there may come a time when you need to cancel a cheque, whether it's due to errors, lost cheques, or changed circumstances. According to the new Commercial Transactions Law Amendment that took effect on January 2, 2022, stop payment orders from a cheque issuer to his bank are no longer allowed, except in two specific conditions.
The legislature prevents the drawer from instructing his drawee bank not to pay the cheque's amount to the bearer, whose rights include the consideration for payment, under the Commercial Transactions Law (the Balance). Thus, in this blog, we will discuss all relevant information you should be familiar with about Canceling Cheques in the UAE. We will guide you through the process of cancelling a cheque in Dubai, with a particular focus on stopping cheque payments at Emirates NBD.
What exactly is a Cancelled Cheque?
In banking, cancelling a cheque is known as a "Protest to a Cheque." Stop payment orders from the cheque issuer to the bank are no longer valid under the new Commercial Transactions Law, which went into effect on January 2, 2022, except under two specific instances.
The Central Bank of the UAE (CBUAE) made the change to raise awareness among cheque users about illegally issuing cheques without sufficient funds and the criminality of withholding partial payment of the cheque amount.
What led the Authorities to make such an Amendment?
The CBUAE's clarification aims to raise awareness among cheque users about the decriminalization of issuing a cheque without sufficient funds, the criminalization of refraining from partial payment of the cheque's amount, and the harsher administrative penalties for issuing a cheque without sufficient funds.
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According to the apex bank, the Commercial Transactions Law has been updated following best practices to stay up with international changes.
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It also attempts to provide a strict legal framework for these transactions, governing cheques as a payment method rather than cash.
In general, the new amendments to the Penal Code decriminalize several cheque-related issues, particularly issuing a cheque without sufficient funds, and introduce amendments and new legal provisions to Chapters (Three) of Book Four of the Federal Commercial Transactions Law related to cheques.
Few instances which forced the authorities to take this step-
The following are examples of criminalization and fraud involving checks:
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Cases of fraud when issuing the cheque, such as requesting the bank not to cash the cheque before the due date without a valid reason (other than those specified in Articles (620) and (625), when the cheque has been misplaced, or the bearer has been declared bankrupt).
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Cases of criminalization involving check fraud and misuse
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Closing the account or withdrawing the entire sum before issuing the check, presenting it to the bank for cash, or if the account has been frozen.
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Intentionally writing or signing a cheque in such a way that it cannot be cashed.
Understanding the Need to Cancel a Cheque:
There are several reasons why you might need to cancel a cheque in Dubai:
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Errors: Cancelling becomes crucial if you make a mistake while writing the cheque, such as entering the wrong amount or beneficiary name.
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Lost or Stolen Cheques: In cases where a cheque goes missing or is stolen, it's essential to prevent unauthorized use.
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Changed Circumstances: If the circumstances that prompted the cheque issuance have changed, you may want to cancel the payment.
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Dispute Resolution: Cancelling the cheque can be a prudent step to resolve disputes or disagreements related to the payment.
What are the Exceptions to this Law?
The UAE's Central Bank has highlighted that the law permits a drawer to protest (send a stop payment order to the bank) and refuse to pay the value of a cheque in certain circumstances.
The modified law allows for two sorts of protests to the payment of a Cheque:
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One is for the benefit of a cheque bearer who has lost a cheque against his will, such as a stolen or lost cheque.
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The second type occurs after a bankruptcy filing when a bankrupt is barred from managing or disposing of their assets to protect their creditors.
The first scenario is a protest if the check is stolen or misplaced. The bearer may object to the drawee bank paying the cheque value if the cheque is stolen, lost, or obtained through fraud. In this circumstance, either the drawer or the cheque bearer might request a halt payment (protest) after the cheque has been stolen or misplaced.
How does this new law affect confidentiality?
Banking secrecy and confidentiality terms are also redefined in the latest commercial transaction statute modification.
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A bank employee's declaration that there are insufficient funds for the value of the cheque/part of the value of the cheque is not considered a violation of banking secrecy under the new requirements as long as the disclosure is made within the boundaries of the statement.
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According to a letter from the CBUAE, "there is no infringement of banking secrecy if the bank employee's assertion that there is insufficient funds, or that there is a portion of it in the drawer/account clients to cash the check is restricted to that only, without referring to other data."
Functioning of Cheques under the New Law
The functions of Cheques are as follows-
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When adequate funds exist, the bank (the drawee) must pay the cheque's value upon presentation. It must accept payment since doing so would jeopardize the holder's primary entitlement to possessing the cheque in exchange for payment.
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Although the law allows the bank (the drawee) to refuse to pay if it receives opposition, the law has narrowed the circumstances in which this opposition is permissible, limiting it to cases of cheque loss and bearer bankruptcy only to ensure that the cheque serves its intended purpose as a payment tool.
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Strong civil alternatives have been developed that lead to the fastest and simplest possible collection of the cheque value, including: -
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Obliging the bank to pay the cheque (at least partially)
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Making a cheque from the drawee's bank account with insufficient funds an executive document to be implemented directly through the execution judge, without resorting to lengthy legal procedures, as was previously the case (before the amendments).
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This eliminates the necessity for a police report, a complaint, and the subsequent follow-up procedures with the police and prosecution, followed by the courts. In this scenario, the cheque has the power of an executive bond, which means it can be used without a court order, which should speed up legal action and make it easier for a bank to exercise its rights and receive the cheque's value. This should strengthen the cheque as a business and financial transaction payment method.
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Suppose the entire (or the remainder) of the cheque's value is paid before mandatory execution processes or the issuance of a final judgment. In that case, this gives a way to avoid criminal action and associated procedures.
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Several extra penalties have been applied, including the withdrawal of the guilty person's existing chequebook, a five-year ban on getting a new chequebook, and suspending the legal person's professional or commercial activities.
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For repeated violations, the imposition of a fine, license suspension for six months, and license cancellation or dissolution of the legal entity have all been introduced as new additions for legal persons (excluding banks and financial institutions).
How to Cancel a Cheque in Dubai:
To cancel a cheque in Dubai, follow these steps:
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Contact Your Bank: Reach out to your bank as soon as possible. In this example, we will consider Emirates NBD. You can contact the bank through their customer service hotline or visit your nearest branch.
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Provide Cheque Details: Be ready to provide the cheque number, date, and the beneficiary's name. This information will help the bank locate the cheque in their system.
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Fill Out a Stop Payment Request Form: The bank typically asks you to complete a "Stop Payment Request" form. This form will formalize your request to cancel the cheque.
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Pay a Fee: Most banks in the UAE charge a nominal fee for stopping cheque payments. Ensure you inquire about the charges when contacting your bank.
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Monitor Your Account: Monitor your bank account to confirm that the cheque payment has been stopped successfully. This may take some time, so patience is key.
Stop Cheque Payment in UAE: The Emirates NBD Way:
Emirates NBD, one of the leading banks in the UAE, has a user-friendly process for stopping cheque payments:
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Contact Emirates NBD: Call Emirates NBD's customer service at the provided hotline or visit your nearest branch.
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Provide Cheque Details: Furnish the bank with the necessary information, including the cheque number, date, and beneficiary details.
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Complete the Form: Emirates NBD will guide you through completing the "Stop Payment Request" form.
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Pay the Fee: Be prepared to pay the stipulated fee for the service. Emirates NBD's customer service representatives will provide you with the exact amount.
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Stay Informed: Keep tabs on your bank account to ensure the cheque payment has been halted.
Why Choose Us?
At Dhanguard, we understand the complexities of financial transactions in Dubai and the broader UAE region. Our expert team specializes in providing comprehensive financial advisory services to businesses and individuals alike. Whether you need assistance with cheque cancellations, financial planning, or any other financial matter, Dhanguard is your trusted partner.
Our Services Include:
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Financial Consultation: Tailored financial advice to meet your specific needs.
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Business Advisory: Strategic guidance for business growth and development.
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Tax Planning: Efficient tax strategies to optimize your financial position.
Conclusion:
Being up to date with the changing norms is the need of the hour to avoid any unwanted circumstances which can create hindrances for you. Feel free to check out our website for information on other related aspects.
Cancelling a cheque in Dubai, mainly through Emirates NBD, is a straightforward process that can save you from potential financial headaches. For more information or personalized financial assistance visit our website.
