In the modern business world, breach of trust can pose significant risks, potentially damaging a company’s reputation and eroding stakeholder confidence. Common breach of trust offenses include embezzlement, fraudulent schemes, falsification of financial records, misuse of authority, and unauthorized use of company resources.
Defining Criminal Breach of Trust
According to the UAE Penal Code, a breach of trust involves:
- the act of embezzlement, use or dissipation of moveable property, such as cash, papers, financial assets or instruments like shares or bonds;
- the accused’s lack of legal entitlement to the misappropriated assets. However, the accused must have has had possession of the said assets through lease, trust, mortgage or proxy; and
- the rightful owner or beneficiary must has suffered damage as a result of the breach.
The term ‘proxy’ used in the UAE Penal Code signifies the role of an ‘agent’, including co-owners or intermediary/manager of the asset. In practice, this provision operates as a recourse for businesses or owners to seek rectification or compensation for losses incurred by the criminal actions of its employees or business partners.
Punishment
Imprisonment and Fines: The UAE Penal Code prescribes a punishment of incarceration and fine, determined in consideration of the accused’s culpability and the severity of the crime. For instance, the act of wrongful possession with intent of appropriation; or the misappropriation or embezzlement of movable asset under judicial or administrative attachment is punishable with imprisonment of up to 2 years and/or a fine not exceeding AED 20,000.
Professional Prohibition – Where the criminal act involves a breach of professional or commercial duties, the accused may also be prohibited from practicing his or her profession for a period of up to 2 years. In the event, the accused is found to be a repeat offender, such prohibition can extend up to 5 years.
Cyber Crimes – The accused may also be charged under the provisions of the UAE Cyber Law where the breach has been committed with the use of technology, for example, unauthorized access or alteration of accounting records or banking credentials for financial benefit. In some instances, the UAE Cyber Law may accord greater punishments than those provided under the UAE Penal Code.
Civil Recourse
In addition to criminal proceedings, victims can file a civil claim to seek compensation for the damages incurred. Depending on the legal strategy, claimants can choose to pursue this civil action concurrently with or independently from the criminal complaint.
Mitigation Strategies
To safeguard against breaches of trust, businesses should establish comprehensive data protection and asset management policies, and conduct regular internal audits to identify and address potential vulnerabilities. It is essential to educate employees and key personnel on ethical practices and legal responsibilities. Furthermore, companies should implement a robust privacy policy and execute Non-Disclosure Agreements (NDAs) and other legal agreements to ensure the protection of sensitive information.
Choose Expert Legal Guidance
Breach of trust represents a critical legal concern in the UAE, carrying far-reaching consequences for both individuals and businesses. Understanding the applicable laws and implementing effective preventive strategies are crucial to safeguard one’s assets, uphold trust, and mitigate the risk of severe legal repercussions.
At YMB Legal Services, our experienced lawyers offer specialized advice and representation to help you protect your interests and achieve justice. Contact us for tailored legal solutions.
