Dubai’s Financial Audit Law Amendments: Employees charged with Financial Misconduct Face Travel Ban and Asset Seizure

23 November 2024

Josleen Deeb

Dubai has recently amended Law No. 4/2018, which established the Financial Audit Authority (FAA). The revised law now imposes stricter penalties for financial misconduct, including travel bans and asset seizures, for employees involved in fraud or misuse of public funds.

Dubai: Under the original law, the FAA was set up to oversee the management of public funds in Dubai, ensuring transparency and accountability within government entities. The Authority operates with full financial and administrative independence and reports directly to the Ruler of Dubai. The law’s coverage extends to all government and public institutions, private companies linked to the government, and entities receiving financial support from the government, including companies with guaranteed government profits.

Financial misconduct within these “Controlled Entities” is subject to strict penalties as outlined in the law. Article 31 identifies several acts of financial fraud, including:

• Violating internal regulations of Controlled Entities.
• Mismanagement or misappropriation of public funds.
• Failure to provide required financial documentation on time.
• Abuse of office for personal gain or to benefit others.
• Committing tax-related crimes or bribery.
• Forging documents or engaging in fraudulent activities that damage the financial interests of Controlled Entities.

Recent amendments to the law, which replaced Articles 34, 35, and 36, have introduced new enforcement measures. These include:

• The authority to suspend employees under investigation until a resolution is reached.
• The power to confiscate documents related to the investigation.
• The ability to archive cases if there is insufficient evidence or if the violation is minor.
• The authority to refer cases to public prosecution when criminal offenses are identified.
• The ability to request the Public Prosecution to impose precautionary measures such as a travel ban (up to 3 months, extendable) or the confiscation of personal assets in cases of corruption or financial misconduct.

Employees who are placed under a travel ban or have their assets frozen can appeal these decisions in court. However, the law stipulates that a second appeal cannot be filed within three months, except in exceptional circumstances.

The law also allows the director of the FAA to settle matters with employees if they repay the misappropriated funds and accept disciplinary actions, avoiding a criminal prosecution in such cases.

As per Article 35, the penalties for financial misconduct may be approved by the Director-General of the FAA or reviewed by the Central Violations Committee, an independent body within the Authority. Employees or heads of Controlled Entities who disagree with the penalties can submit a grievance to the newly established Grievances Committee for further review.

These amendments strengthen the FAA’s role in maintaining public fund integrity, ensuring that violations are thoroughly investigated and dealt with through legal measures.

ALKETBI Touch:

ALKETBI team of experts will be able to provide you expert guidance in maintaining your company integrity and in line with the new legal amendments impacting both employers and employees.