Breach of Trust Crime

Individuals who violate the terms of the contract have breached the contract. This is a huge crime in the United Arab Emirates (UAE). People abusing their responsibilities in a business setup for their personal gain usually breach the trust of other stakeholders. Breach of trust is a crime and has several legal implications and penalties.

When a person who is in charge of assets and secret information misuses the authority that they are entrusted with, this is known as a breach of trust crime. There could be various forms of such criminal activities, including financial fraud, breach of fiduciary duty, and employee fraud.

Every emirate has a law for breach of trust; however, the core principles are constant in the UAE legal system. The common law of breach of trust states it as a criminal and civil offense. Following is the perspective of common law:

• The fiduciary relationship between two parties.
• Violation of the entrusted assets, finances and confidential information.
• Any harmful act conducted to the trustor, intentionally or due to negligence
• Legal penalties such as fines and imprisonment are imposed on the offender

The breach of trust may happen in various ways. Under different categories, trust can be breached, especially in the business world:

• Corporate Fraud

Corporate fraud happens when the financial officer steals money from company accounts and deposits it in their personal accounts, breaching the company’s trust.

• Corruption on the National Level

When a government body steals finance from a development project and does not invest

appropriate money in it, it shows a breach of trust. This is also known as political corruption.

• Fraud in Charitable Organisations

Non-profit organisations can be held liable in fraud cases where donations are used for personal gain and do not benefit the organisation’s beneficiaries.

• Fraud in the Banking System

Individuals are often manipulated by investment bankers, who make unapproved financial operations and misdirect the clients.

The UAE government has stringent criminal laws, whether they are related to fraud, murder or robbery. However, the breach of trust is a corporate crime, which is considered severe misconduct in the business. The legal implications of the criminal offense are serious:

• Fines and Restitution

Individuals who have stolen assets should return or reimburse the financial amount of the property through fines or restitution, as per court orders.

• Long-Term Imprisonment

In case of a serious offence, the offender can be sent to prison for a long term.

• Professional Disqualification

Individuals who have misconducted in their position as finance officers or breached the fiduciary role in their organisation may not be able to rely on those authorities in the future.

• Civil Litigation

The victim of a breach of trust can go for litigation to seek compensation for their financial losses.

The breach of trust can be an exhaustive experience for an individual. However, they can avoid having such a traumatic experience if they oversee the legal and internal controls of their organisation. Besides that, the ethical code of conduct shall also be demonstrated in the business culture. The following preventive are effective:

• Strict Corporate Governance Policies

The company must maintain an ethical code of conduct, ensuring accountability and transparency in the workplace. However, social audits should be regular to keep up with the organisation’s financial system. A committed body should be created to oversee the financial operations and make necessary decisions for the company.

• Legal Compliance and Mitigating Risks

Employees, fiduciaries, and trustees must know their legal responsibilities. Contracts and policies should be updated with changes in corporate regulatory systems. Nevertheless, suspicious activities shall be reported, ensuring the implementation of whistleblower protection programmes.

• Protection with Technology

Unauthorized access to your financial records can be prevented through cybersecurity measures. AI tools can detect financial fraud by monitoring transactions online. However, they can also restrict individuals from accessing the financial record without permission from the entrusted authority.

Breaching trust in corporate culture can have severe legal consequences. However, to avoid these penalties, you must understand the activities that can breach trust. You can book the legal appointment with our lawyers to grab more details about breach of trust in UAE.