The government of Dubai has issued a new law to combat financial crime, trading irregularities and terrorism financing. Sheikh Mohammed bin Rashid Al Maktoum, Dubai's ruler and UAE vice president and premier, has also set up a new body, to be known as the Dubai Economic Security Centre, (DESC), to monitor financial impropriety in the emirate.

Dubai's Supreme Legislation Committee is thought to be the originator of the new law, which will cover government entities and licensed businesses. The committee did not respond to a request for comment from Thomson Reuters.

The law will also monitor licensed companies operating in special development zones, and in particular free zones, including the Dubai International Financial Centre, which has adopted an English law legal framework allowing some litigants to progress with cases that otherwise would have made little progress in Dubai's 'onshore' Sharia courts.

"Dubai aims to build upon its reputation as a serious player in international financial markets, so it is critical that measures are put in place to address conduct and behaviour, and combat malpractice," said Andrea Tithecott, Head of Regulatory Law at law firm Al Tamimi & Company's Abu Dhabi office. "Dubai cannot be left behind the curve in the drive to improve financial regulation and therefore must act now." 

Tithecott said she understood that the new law was to be published last week in the official gazette.

"Laws which build upon measures taken in the emirate of Dubai to improve good financial governance and increase scrutiny are bound to reduce incidents of misconduct," she said.

Others argued that the new legislation was needed in Dubai as legal infractions grow.

"There have been increasing reports of cybercrime, fraud and certain business malpractices in the UAE," said Ahmed Kalo, compliance and AML manager at Rasmala Investment Bank in Dubai. "This law better protects the financial services sector as well as clients. It will also increase investor confidence in line with increased scrutiny by regulators."

The government said the DESC was aimed at maintaining Dubai's position as a global financial and economic hub, ensuring its financial stability and protecting its investments from "crimes that may harm its economy", according to the official UAE news agency WAM.

It said the DESC would combat "corruption, fraud, crimes, bribery, embezzlement, destruction of public property, forgery, counterfeiting, money laundering , terrorism financing, illegal organisations or other crimes that may be committed by entities that are under the jurisdiction of the centre".