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Trends and climate

Trends

Have there been any recent changes in the enforcement of anti-corruption regulations?

Combatting corruption continues to be a key priority in the United Arab Emirates and the government is constantly seeking to improve its efforts to enforce anti-corruption legislation. In April 2016 the Emirate of Dubai passed a new law to establish the Dubai Economic Security Centre, which will focus on the enforcement of anti-corruption legislation.

Legislative activity

Are there plans for any changes to the law in this area?

There are not currently any proposed changes to the law in the areas of anti-corruption and bribery.

Legal framework

Authorities

Which authorities are responsible for investigating bribery and corruption in your jurisdiction?

The authorities responsible for the investigation of bribery and corruption include:

  • the individual police forces of each emirate;
  • the State Audit Institution (for public sector bodies);
  • the Abu Dhabi Accountability Authority (for public sector bodies);
  • the Dubai Financial Services Authority (for the Dubai International Financial Centre);
  • the Financial Services Regulatory Authority (for the Abu Dhabi Global Market); and
  • the Anti-money Laundering and Suspicious Cases Unit at the Central Bank of the United Arab Emirates.

Domestic law

What are the key legislative and regulatory provisions relating to bribery and corruption in your jurisdiction?

Bribery – which includes facilitation payments – is addressed in a number of laws, including:

  • Federal Law 3/1987, known as the Penal Code, at Articles 234 to 239; and
  • Federal Decree Law 11/2008 (also known as the Federal Human Resources Law).

In the emirate of Dubai these are supplemented by:

  • the Penal Code 1970; and
  • Dubai Law 37/2009 on the Procedures for the Recovery of Illegally Obtained Public and Private Funds (Financial Fraud Law).

Other forms of corruption, including money laundering and the financing of terrorism, are addressed by:

  • Federal Law 4/2002 regarding the Criminalisation of Money Laundering;
  • Federal Law 9/2014 amending certain provisions of Federal Law 4/2002 concerning the Combating of Money Laundering Crimes;
  • Dubai Law 4/2016 on Financial Crimes;
  • Cabinet Resolution 38/2014, Executive Resolution of Federal Law 4/2002;
  • Federal Law 7/2014, Combating Terrorism Crimes; and
  • regulations regarding declarations by travellers entering or leaving the United Arab Emirates carrying cash and monetary or financial bearer instruments (issued in 2011).

Criminal procedure (relevant to both bribery and other corruption offences) is found under Federal Law 35/1992 as amended (the Federal Penal Procedures Law).

International conventions

What international anti-corruption conventions apply in your jurisdiction?

The United Arab Emirates ratified the UN Convention against Corruption pursuant to Federal Decree 8/2006.

The United Arab Emirates is also a signatory of the Arab Convention to Fight Corruption, which was signed on December 21 2010 by 21 Arab countries.

Specific offences and restrictions

Offences

What are the key corruption and bribery offences in your jurisdiction?

Bribery offences

The key corruption and bribery offences in the United Arab Emirates are set out in Articles 234 to 239 of Federal Law 3/1987. These articles criminalise slight variations of bribery offences, but in essence boil down to the criminalisation of:

  • any public official or person entrusted with public service functions or a foreign public official or an employee of an international organisation who accepts, solicits or promises to accept, whether for themselves or a third party, a bribe, being any undeserved gift or privilege or grant, whether directly or indirectly, in return for the commission or omission of an act during the course of their duties;
  • a person who manages an entity or establishment of the private sector or any person who works for such entities in any capacity, who accepts, solicits or promises to accept, whether for themselves or a third party, a bribe, being any undeserved gift or privilege or grant, whether directly or indirectly, in return for the commission or omission of an act in accordance with or in default of their job duties; and
  • a person who promises, offers or gives a public official or person entrusted with public service functions or a foreign public official or an employee of an international organisation, a bribe, whether directly or indirectly, in return for the commission or omission of an act during the course of their duties.

It should be noted that these laws separately criminalise the bribee in both the public and private sectors, but only criminalise the briber in the public sector.

Offences include situations where the act or omission in the course of an official’s duties occurs before or after any relevant promise, solicitation, acceptance or offer and also in the case of crimes committed by the official whether they actually intended to follow through with the action they were to receive or had received a bribe for.

These offences provide that bribes may be any “undeserved gift or privilege or grant”, which may be to the benefit of the person bribed or a third party and the offences may be carried out both directly or indirectly.

In addition, the act of influencing a person to engage in a bribery offence (whether as the briber or bribee) is a criminal offence.

A person convicted for bribery offences will be fined an amount equivalent to the bribe or if greater Dh5,000. In addition, when a crime involves a public official or a person entrusted with public service functions, any gift accepted by them or offered to them will be confiscated.

The briber or any intermediary may be exempt from criminal punishment if they promptly inform the authorities of the crime before the crime is discovered.

Bribery provisions are explicitly extra-territorial and criminalise such acts if they occur outside the United Arab Emirates, if the perpetrator or victim is a UAE national or if the crime was committed by a public or private employee in the United Arab Emirates or involved in UAE public property.

Other corruption offences

The other key corruption offences in the United Arab Emirates are those relating to money laundering or the financing of terrorism. This covers:

  • money laundering, which includes:
    • converting;
    • transferring;
    • depositing;
    • saving;
    • investing;
    • exchanging; or
    • managing any proceeds of crime or concealing or disguising the true nature or origin, ownership, location, rights related to said proceeds; and
  • terrorist financing, which includes:
    • providing;
    • collecting;
    • securing; or
    • transferring funds, in any way directly or indirectly to any entity or person falling under the provisions of Federal Law 7/2014 concerning Combatting Terrorism Crimes.

Hospitality restrictions

Are specific restrictions in place regarding the provision of hospitality (eg, gifts, travel expenses, meals and entertainment)? If so, what are the details?

There are specific restrictions on both federal and government employees under respective human resources laws (Federal Decree Law 11/2008 and Dubai Law 26/2007), which prohibit the acceptance of any material gifts, other than those of a purely symbolic or promotional nature marked with the logo and name of the presenting party.

Facilitation payments

What are the rules relating to facilitation payments?

In the United Arab Emirates, facilitation payments constitute criminal conduct on the part of both the briber and the bribee under Articles 234, 235 and 237 of Federal Law 3/1987. Articles 234 and 235 criminalise the bribee (ie, the public official) and Article 237 criminalises the briber.

Liability

Scope of liability

Can both individuals and companies be held liable under anti-corruption rules in your jurisdiction?

Both individuals and companies can be held liable under anti-corruption rules.

Can agents or facilitating parties be held liable for bribery offences and if so, under what circumstances?

Both agents and facilitating parties can be held liable for bribery offences if they fall within the terms of the relevant offence under Federal Law 3/1987 (ie, in the same circumstances that any other person can be held liable for bribery offences).

Foreign companies

Can foreign companies be prosecuted for corruption in your jurisdiction?

Yes, if a foreign company is active in the United Arab Emirates and its conduct is contrary to the relevant laws it may be prosecuted for corruption.

Bribery provisions are explicitly extraterritorial and criminalise such acts if:

  • they occur outside the United Arab Emirates;
  • the perpetrator or victim is a UAE national; or
  • the crime was committed by a public or private employee in the United Arab Emirates or involved UAE public property.

Whistleblowing and self-reporting

Whistleblowing

Are whistleblowers protected in your jurisdiction?

Whistleblowing is not currently protected at a federal level and in certain circumstances whistleblowing may potentially lead to both criminal and civil liability for breach of confidentiality and criminal liability for defamation.

However, in Dubai, Dubai Law 4/2016 on Financial Crimes has some protection for whistleblowers in respect of certain financial crimes, but, in compliance with the UAE Constitution, these provisions will need to be read compatibly with federal law.

Self-reporting

Is it common for leniency to be shown to organisations that self-report and/or cooperate with authorities? If so, what process must be followed?

A briber or any intermediary may be exempt from criminal punishment if they promptly inform the authorities of the crime before the crime is discovered, pursuant to Article 239 of Federal Law 3/1987.

If a confession is made after the case is communicated to the court, it will be counted as a mitigating excuse.

The court has discretion regarding prosecution for money laundering by an individual, among multiple perpetrators, who co-operates with the authorities by providing them with information as to the other perpetrators and the crime itself before the authorities acquire such information and provided that such information leads to the detection of the other perpetrators or the funds which were the subject of the crime.

Dispute resolution and risk management

Pre-court settlements

Is it possible for anti-corruption cases to be settled before trial by means of plea bargaining or settlement agreements?

There is currently no legislation which permits plea bargaining or settlement agreements in relation to criminal charges.

Defences

Are any types of payment procedure exempt from liability under the corruption regulations in your jurisdiction?

The laws against corruption in the United Arab Emirates do not distinguish between types of payment procedure.

What other defences are available and who can qualify?

The abovementioned legislation does not specify any applicable defences to bribery.

Risk management

What compliance procedures and policies can a company put in place to assist in the creation of safe harbours?

There are no formal safe harbours in UAE anti-bribery and corruption laws.

However, from a risk management perspective companies should consider putting in place policies representing global best practice in respect of anti-bribery and corruption, including anti-money laundering policies which are specifically tailored to the risk profile of the business and take active steps to implement and update those policies once in place.

Record keeping and reporting

Record keeping and accounting

What legislation governs the requirements for record keeping and accounting in your jurisdiction?

For companies registered in the United Arab Emirates, record keeping and accounting is governed by a number of pieces of legislation including:

  • Federal Law 2/2015 regarding Commercial Companies;
  • Federal Law 18/1993 on the Commercial Transaction Law; and
  • Cabinet Resolution 38/2014.

In the Dubai International Finance Centre (DIFC), record keeping and accounting is governed by:

  • DIFC Companies Law and Regulations 2009;
  • General partnership Law 2004; and
  • Limited Partnership Law 2006.

What are the requirements for record keeping?

UAE (other than the DIFC)

A company must keep accounting records for a period of at least five years from the end of the company’s financial year end (under Article 26 of Federal Law 2/2015). Accounting records must accurately show the company’s financial condition at all times.

There are also accounting record requirements under Federal Law 18/1993 (the Commercial Transactions Law) in Articles 26 to 38. This legislation requires that such records as may be required by the nature and importance of the business show the financial position of the company accurately, including any rights and liabilities relating to the business. In particular, a business must keep a daybook and a general ledger.

Financial institutions must also keep such records, files and documents as may be prescribed by certain supervisory authorities from time to time for a period of five years from the date of:

  • closure of a client account;
  • completion of an inspection by such authorities;
  • completion of an investigation by such authorities; or
  • a relevant judgment.

DIFC

In the DIFC, companies, limited partnerships and registered partnerships – formed under the relevant legislation – must keep accounting records for a period of at least six years from the date on which they are created (under Article 101 of the DIFC Companies Law, Article 18 of the General Partnership Law and Article 26 of the Limited Partnership Law). Accounting records must disclose with reasonable accuracy the financial position of the company.

Financial institutions regulated by the Dubai Financial Services Authority may be required to comply with additional requirements with respect to account records.

Reporting

What are the requirements for companies regarding disclosure of potential violations of anti-corruption regulations?

There is a general obligation on persons to report crime, as a failure to do so is itself a criminal offence (under Article 274 of Federal Law 3/1987), it is also a crime to fail to report money laundering or the financing of terrorism.

Penalties

Individuals

What penalties are available to the courts for violations of corruption laws by individuals?

Penalties for bribery include imprisonment and fines of various duration (up to 15 years’ imprisonment) and amounts (equal to the amount of the bribe or Dh5,000 if greater) respectively depending on the exact offence and individual circumstances.

In respect of other corruption laws, the courts may impose sentences of imprisonment and fines for various durations and amounts.

In addition, there are administrative sanctions available to the supervisory authorities in respect of money laundering and the financing of terrorism offences, which include:

  • fines;
  • warnings;
  • sector exclusions;
  • restrictions on board members or owners;
  • suspension of business; and
  • trade licence cancellation.

Companies or organisations

What penalties are available to the courts for violations of corruption laws by companies or organisations?

The penalty available to courts for the violation of corruption laws by companies or organisations is the imposition of fines.

In addition, there are administrative sanctions available to the supervisory authorities in respect of money laundering and the financing of terrorism offences, which include:

  • fines;
  • warnings;
  • sector exclusions;
  • restrictions on board members or owners;
  • suspension of business; and
  • trade licence cancellation.