Al Tamimi & Company

UAE: liability of banks and financial institutions for fund transfers when financial sanctions are involved

Fund transfers for commercial and consumer transactions are widespread today. Nevertheless, fund transfers are influenced by international political and economic factors and considerations that may result in imposing sanctions against certain countries or entities that affect the transfer of funds across borders.

In a fund transfer, an originator instructs his/her financial institution to transfer a specified amount of money to a beneficiary either domestically or internationally. Typically, the most commonly used currency to transfer funds internationally is US dollars or Euros. In order to execute the remittance of the transfer, the originator’s financial institution transfers the funds through an intermediary (correspondence) if not the beneficiary bank. A transfer of funds in US dollars is executed through US financial institutions. The question that such transactions raise is that to what extent sanctions affect the liability of the originator’s domestic bank or financial institution? The below judgment involves a scenario and the approach adopted by Dubai Courts…

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Al Sila Tower
Level 26
Al Sowwah Square
Al Maryah Island
Abu Dhabi
PO Box 440
United Arab Emirates

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