UNITED ARAB EMIRATES Trends and Developments Contributed by: Stuart Paterson, Janine Mallis and Tania Forichon, Herbert Smith Freehills (Dubai)
ticularly effective in situations where there is a lack of information about the perpetrators or the location of dissipated funds. It is encouraging to see the DIFC Courts adopt a proactive approach in combating international fraud. The UAE is a vital financial and business centre, serving as a hub for the broader region. As a result, proceeds from fraud may be funnelled into the UAE or held within its borders, potentially leading to the con - cealment of information by individuals and enti - ties in the country. This situation underscores the importance of safeguarding the integrity of financial systems and addressing the misuse of assets for illicit activities. Cryptocurrency and Virtual Assets As part of diversifying its economy, the UAE has embraced the economic potential of cryptocur - rency, blockchain technology, and digital assets. It has taken significant steps to create a robust but flexible legal and regulatory framework gov - erning digital assets, which is vital for combat - ting fraud and money laundering from the risks of digital asset transactions, such as anonymity. In June 2023, the UAE introduced a new virtu - al assets regulatory regime, the Virtual Assets and Related Activities Regulations 2023, which was the first of its kind at a federal level (virtual assets regulations have already been developed for select emirates and the ADGM and DIFC). As a result of this regulatory environment, the focus on innovation and other attractive aspects of the UAE’s business environment has made the UAE a preferred destination for cryptocurrency enter - prises in the region and globally. While the growth of crypto transactions in the UAE (reaching a value of USD34 billion in crypto value received) has caused an uptick in complex frauds by individuals willing to exploit victims who are keen to invest in ever-growing digital assets,
the UAE has been the site of a crackdown on crypto-fraudsters through the enactment of leg - islation and the increased activity of law enforce - ment authorities. In 2022, a new federal cyber - crime law came into force (Federal Decree-Law No 34 of 2021), which imposed tough penalties (including the possibility of imprisonment for up to five years) on fraudsters promoting crypto - currency scams online. In recent years, UAE law enforcement authorities have been quick to investigate crypto-related crimes and have con - tinuously issued reminders to the public to stay vigilant regarding social media scams. In 2024, the Dubai Economic Security Centre and Public Funds Prosecution disrupted an international network of crypto-related money laundering operations worth AED 180 million in the UK and UAE. The network of 30 individuals and three companies laundered cash (which were pro - ceeds from illegal activities such as drug traf - ficking, fraud and tax evasion in the UK) in the UK through unlicensed cryptocurrency interme - diaries present in the UK and Dubai. The Dubai Public Prosecution has referred the case to the Money Laundering Courts in Dubai. Most recently, the DIFC has now published a new Digital Assets Law (DIFC Law No 2 of 2024). Importantly, this law brings much-needed clarity to the status of digital assets under property law and sets out rules regarding title and the trans - fer of title in digital assets. The new law help - fully confirms that “Digital Asset” is intangible property. The text also introduces significant amendments to various other statutes within the DIFC. For example, the DIFC Contract Law now explicitly defines “Coded Contracts,” which refer to self-executing contracts commonly used in blockchain transactions. This development is beneficial, as there has been considerable litiga - tion in other jurisdictions, such as England, con -
422 CHAMBERS.COM
Powered by FlippingBook