During 2023 the UAE implemented significant legislative and structural reforms in several areas including financial crime compliance, data protection, corporate accountability and whistleblowing, and virtual assets regulation. There has already been a dramatic increase in UAE enforcement activity and regulatory engagement throughout 2023 (compared with 2020) and this trend is expected to continue in 2024.
Increased regulatory protections for whistleblowers
The pivotal role played by employees in highlighting wrongdoing is coming into focus, and the view that whistleblower protection may enhance confidence in markets and promote good corporate governance is gaining acceptance.
In December 2022, the ADGM (Abu Dhabi Global Market) published non-binding principles for ADGM entities on implementing whistleblowing policies and encouraging whistleblowing disclosures, e.g., non-retaliation against whistleblowers, confidential disclosures, and good faith reporting.
The ADGM indicated in its 2024 Business Plan that it intends to introduce a comprehensive whistleblowing regime. These steps align with global trends in favour of increasing corporate accountability. We expect to see these trends develop further in the UAE’s onshore jurisdictions in 2024.
Whistleblowing regimes are already in place in the Dubai International Financial Centre (DIFC).
Laws protecting whistleblowers
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Financial Crime Law
The Financial Crime Law introduced a degree of whistleblower protection in the UAE.
The Dubai Financial Crimes Law offers protection to the reporter from discrimination or mistreatment in the workplace, from being considered in breach of any obligations, and from being subjected to any legal or disciplinary action unless the report is false.
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DIFC (Dubai International Financial Centre) Operating Law
In addition to the Financial Crime Law, further strides have been made by the DIFC Authority in the form of the DIFC Operating Law, which specifically includes both an obligation to disclose certain conduct and explicit whistleblower protection.
In terms of whistleblower protection, the DIFC Operating Law provides that those making good faith disclosures following the law shall not, as a result of making the disclosure, be:
- Subject to any legal or contractual liability;
- Subject to any other contractual, civil, or other remedy; and/or
- Dismissed from employment or otherwise subject to victimization by the employer or any related person.
- Any act in contravention of the above may result in a fine of USD30,000.
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UAE Labour Law
The new UAE Labour Law which came into effect on 2 February 2022 includes a provision on unlawful termination, which may be construed as providing some level of protection for whistleblowers. Article 47 provides that termination of an employee’s services by the employer is illegal if the termination of the employee was due to filing a serious complaint to the Ministry of Human Resources and Emiratisation, or filing a case against the employer that has been proven to be true. If the labour Court deems an employment termination as unlawful, the Court may award an employee compensation of up to three months' total salary. At present, this is the only available remedy under the labour Law, and there is no concept of reinstatement as in other jurisdictions.
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The Virtual Assets Regulatory Authority (VARA)
To oversee and regulate the virtual asset's industry, the government of Dubai established the Virtual Assets Regulatory Authority (VARA). VARA has issued several rules for virtual asset service providers (VASPs) operating in Dubai, including the Compliance and Risk Management Rulebook. An overview of the Compliance and Risk Management Rulebook is provided in this brief, as well as an analysis of its implications for Dubai-based VASPs.
Rewards for whistleblowers
To encourage all members of the society to report non-compliant business activities through the whistleblowing program, the UAE’s Cabinet of Ministers has decided to allow the FTA (The Federal Tax Authority) to pay monetary rewards to eligible informants. The amount of monetary rewards is directly proportionate to the amount of tax collected by the FTA as a result of the information and submitted lead. The FTA will notify eligible informants of the monetary reward and deposit such reward to the informant’s bank account after the matter is investigated, and the relevant tax is collected from the reported person.
The Central Bank of the UAE (CBUAE)
In June 2021, the Central Bank of the UAE (CBUAE) launched an online whistleblowing portal for reporting misconduct by CBUAE employees, contractors, and representatives. Reports can also be made by telephone or in writing, and anonymous reports are permitted.
The portal can be used to report corruption, fraud, undisclosed conflicts of interest, and ethical violations by CBUAE personnel, as well as breaches of specific laws and regulations. It can also be used to report violations by entities regulated by the CBUAE, provided that the person making the report did not receive a response through the appropriate regulatory channels.
In the UAE (save for the Dubai International Financial Centre (‘DIFC’)), no overarching law governs whistleblowing or deals with the protection of whistleblowers. However, some federal and emirate-specific legal mechanisms can be construed as offering some level of protection that extends to whistleblowing.
Social Perceptions and Obstacles
Whistleblowing in this region continues to face practical challenges, primarily stemming from cultural and legal factors that influence various stages, ranging from the initial disclosure to its enforcement.
On an individual level, there is often apprehension about potential consequences, including disciplinary action, dismissal, and even criminal implications as previously mentioned. The termination of employment not only has financial repercussions and impacts ongoing employment but can also jeopardize residency status in the UAE, particularly if the individual's residence visa is sponsored by their employer, leading to its cancellation upon termination.
While there is a noticeable increase in whistleblowing protections, the historical and, to some extent, the current challenge lies in the limited promotion of a 'speak up' culture that encourages individuals to come forward with disclosures. Reporting wrongdoings to authorities may carry reputational risks for both the individual and the organization. Moreover, publicizing a disclosure could potentially lead to defamation under the UAE Penal Code, constituting a criminal offence.
As the UAE consistently advances in enhancing whistleblowing protections, employers should establish comprehensive internal procedures to address whistleblowing.
Despite the aforementioned constraints, numerous multinational employers in the UAE have instituted whistleblowing hotlines. These hotlines empower employees to report potential or confirmed misconduct, either anonymously or by providing their details. Many employers adopt a hotline system, allowing employees to make protected disclosures confidentially. Additionally, a whistleblowing policy is often in place, guiding employees on how to make a protected disclosure, including details about any established hotline, and outlining the subsequent process after the disclosure has been reported.
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