The announcement ends a brief period of press speculation as to whether the change, announced in October 2012, would decriminalise 'bounced' cheques in their entirety. It will remain a criminal offence for expatriates based in the UAE to provide cheques which subsequently bounce.
The announcement was made by the Higher Committee of the Nationals Defaulted Debts Settlement Fund, a recently-established scheme which allows UAE nationals in serious financial difficulty to apply to have debts settled or written off provided that the applicant meets certain criteria.
"The mechanisms set by the fund will apply only to UAE citizens, and not others, and this includes the President's directives to decriminalise [bounced] security cheques presented by UAE citizens to banks and financial firms," the Committee said in a statement.
It also confirmed that bounced security cheques would still be accepted as valid evidence of criminal action in UAE courts, according to national press agency WAM.
Dubai-based payments law expert Alan Wood of Pinsent Masons, the law firm behind Out-Law.com, said that the law had led to a number of expatriates feeling obliged to leave the UAE in the past few years. Defaulting on a loan is a criminal offence, rather than a civil matter, in the UAE.
"The clarification that the decriminalisation of bounced cheques in the UAE will only apply to UAE citizens is not entirely unexpected but means that expatriates living in the UAE must remain very vigilant about the circumstances in which they sign cheques, either personally or on behalf of companies," he said.
"Particular care needs to continue to be applied in the case of security, and post-dated cheques issued either as security for borrowings or in respect of future rent or other payments. Without a change in the law expatriates must ensure that they or their businesses have readily-available funds to ensure that such cheques will be honoured on presentation, or risk imprisonment," he said.