Dh50,000 fine, over 1 year in prison for taking interest on illegal loans in UAE
Question: Taking interest on unauthorized loans in the United Arab Emirates carries a fine of Dh50,000 and a sentence of more than a year in prison.
Answer: I would like to borrow some cash from a friend. Although he has granted me the loan, he has stipulated that I must return the money plus interest. Is this enforceable by law? If yes, how?
The Federal Decree Law No. 31 of 2021 on the Issuance of Crimes and Penalties Law is relevant in response to your inquiries.
The Central Bank of the United Arab Emirates and other appropriate regulatory bodies only permit licensed banks and financial organizations to lend money to people or entities with interest-based repayment options. Moreover, it is against the law for an individual to lend money on interest to other people or organizations. This is in compliance with the following provisions of Articles 458 and 459 of the UAE Criminal Law:
According to UAE Criminal Law Article 458:
"Anyone who, in any form of civil or commercial transaction, lends another physical person a loan for an interest rate in exchange for late payments, and whether said interest is explicit or implicit, shall be liable to a jail sentence for a period not less than one year and a fine not less than Dh50,000."
By all means, the original debt and implicit interest can be established.
An aggravating circumstance exists when a criminal takes advantage of the debtor's necessity, weakness, or willingness to commit the crime specified in this article."
According to UAE Criminal Law Article 459:
"Any physical person who regularly engages in the practice of interest lending shall be sentenced to a fine not to exceed Dh100,000 and temporary imprisonment for a term not to exceed five years."
It is against the law for your acquaintance to lend you money in the United Arab Emirates on the condition of interest, as per the previously specified laws. As a result, if your acquaintance gives you money, you can let him know not to charge you interest. Alternatively, you two might form a loan agreement that has no interest and is witnessed by both you and your acquaintance.