More than 13,000 cases related to bounced cheques were settled out of court last year, Dubai's Attorney General said.
Dubai issued a criminal order – known as the Penal Order – in 2017, which authorised the Public Prosecution to issue verdicts on misdemeanours and minor offences, instead of referring them to the courts.
The system was aimed at speeding up judicial procedures and improving the efficiency of the courts' system.
Prosecutors said 16,289 cases were settled out of court last year under the Penal Order, which involved Dh48.1 million ($13.1m) in fines.
Bounced cheques accounted for 83 per cent of cases settled without having to go to court, Dubai’s Attorney General Essam Issa Al Humaidan said.
“As many as 13,517 cases settled via the Penal Order were of bounced cheques, 67 per cent of which were for cheques worth less than Dh50,000,” he said.
Those responsible for bounced cheques up to Dh50,000 are fined Dh2,000, while those who bounce cheques of between Dh50,000 and Dh100,000 pay a Dh5,000 fine, with a Dh10,000 fine for bounced cheques between Dh100,000 and Dh200,000.
“The Penal Order has achieved great results. It has saved time and effort and allowed courts to focus more on serious offences,” said Mr Al Humaidan.
In October last year, the UAE Cabinet updated the country's Federal Law on Commercial Transactions with several new provisions that aim to discourage criminal lawsuits against people and businesses for bouncing cheques.
The new amendments, which will come into effect in 2022, redefine crimes involving bounced cheques and the issuance of cheques without value.
Covid-19 contributes to drop in cases
The 2020 figures revealed a 45 per cent drop in the number of cases handled via the Penal Order, compared to 2019 when 29,629 cases were dealt with under the order, involving Dh92.9m in fines.
“The Covid-19 pandemic has contributed to a drop in the number of cases due to movement restrictions and suspension of business and social activities,” said Mr Al Humaidan.
“January last year saw 2,040 minor offences handled via the Penal Order and only five in April [last year],” he said.
“An average of 1,357 cases were handled during the other months of last year.”
Cases against people who failed to pay for services, like a taxi fare or not paying rent, made up three per cent of the overall number of last year’s minor offences, with only 490 cases.
“The year before there were 971 cases of people who refused to pay fees,” said Al Humaidan.
UAE and Russia in numbers
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
