Commercial Bribery in the Private Sector: Gifts, Agents and Kickbacks

Commercial bribery in the UAE private sector is a standalone criminal offence under Federal Decree-Law 31/2021. Executives, agents and intermediaries all face personal criminal liability when hospitality or commissions cross the line — and the threshold is lower than most boards assume.

The Legal Framework: Articles 278-279 of FDL 31/2021

Private sector bribery in the UAE is governed principally by Articles 278 and 279 of Federal Decree-Law No. 31 of 2021 (the Penal Code), which came into force on 2 January 2022 and was subsequently amended by Federal Decree-Law No. 36 of 2022. These provisions are doctrinally distinct from the public-official bribery offences in Articles 234-239 of the same Code, and they operate independently of any public-sector nexus. Understanding this separation is critical: many executives and their advisers erroneously assume that criminal bribery exposure only arises where a government official is involved.

Article 278 criminalises the act of offering, promising or giving any benefit — whether financial or otherwise — to an employee or agent acting on behalf of a private-sector entity, without the knowledge or authorisation of their principal, with the intent to induce that person to perform or refrain from performing an act in breach of their duties. Article 279 mirrors this on the passive side, criminalising the solicitation or acceptance of such a benefit by the employee or agent. The statutory penalty for both active and passive commercial bribery is imprisonment and/or a fine, with the sentencing court retaining discretion calibrated to the value of the benefit and the seriousness of the breach of duty. Critically, FDL 36/2022 reinforced the aggravated-penalty mechanism where the offender holds a position of trust, supervises other employees or acts as a director or senior manager of the entity concerned.

Three elements must coexist for criminal liability to crystallise under these articles: (i) a benefit — interpreted broadly to include cash, gifts, entertainment, discounts, preferential loan terms, future employment promises and non-monetary favours; (ii) absence of the principal's authorisation — meaning that a fully disclosed and board-approved commission or hospitality arrangement, properly recorded, will generally fall outside the criminal perimeter; and (iii) intention to induce a breach of duty — which is assessed subjectively but may be inferred from surrounding circumstances, including the timing of the benefit relative to a commercial decision and the absence of any legitimate business rationale. The prosecution does not need to prove that the act or omission in question was actually carried out; the mere solicitation or offer, once made, is sufficient to complete the offence.

It is worth noting that the Penal Code operates alongside sector-specific regulatory frameworks. Financial institutions are subject to Central Bank supervisory obligations under CBUAE Law No. 6/2025, which empowers the Central Bank to impose administrative fines of up to AED 1 billion for compliance failures — penalties that can compound criminal exposure. Capital-markets participants must also observe Federal Decree-Law No. 33/2025, which codifies market-abuse and corruption-adjacent offences with penalties reaching AED 200 million, effective from 1 January 2026 under the new CMA regime established by FDL 32/2025.

Where Hospitality and Gifts Become Criminal: Drawing the Line

The most persistent misconception in UAE corporate practice is that customary business hospitality — meals, event tickets, gifts during Eid or National Day — is categorically exempt from criminal scrutiny. It is not. The Penal Code contains no de minimis monetary threshold equivalent to those found in some common-law systems. What determines criminal character is not the value of the gift in isolation but the combination of (a) the absence of the principal's knowledge, (b) the timing and context of the giving, and (c) whether the benefit is connected — even loosely, by inference — to a business decision the recipient has power to influence.

In practice, UAE prosecutors and courts examine a sequence of facts: Did the gift coincide with a procurement cycle, a contract renewal or a competitive tender? Was it given discreetly or routed through a third party to obscure origin? Was it disproportionate to the legitimate relationship between the parties? A AED 500 dinner between long-standing counterparties at a routine industry event carries an entirely different risk profile from AED 50,000 of hospitality provided to a procurement officer one week before bid submissions close. Where the latter facts are present, prosecutors have sufficient material to charge under Article 278 regardless of the giver's subjective intent, because intent is routinely inferred from circumstantial evidence under UAE criminal procedure as governed by Federal Decree-Law No. 38/2022.

The principal's authorisation limb is the primary safe harbour — but it must be genuine and documented. A one-line email approval from a line manager does not constitute board-level authorisation if the company's own internal policy requires escalation for benefits above a certain threshold, or if the manager giving approval is the same person who stands to benefit commercially. Organisations should maintain a gifts and hospitality register, set clear monetary and contextual thresholds approved at board level, and require dual-sign-off for any benefit that coincides with an active commercial relationship or pending decision. Absence of this infrastructure is itself a governance red flag that regulators and prosecutors will highlight when investigating broader compliance failures.

Entertainment at major sporting events, private aviation, resort accommodation and luxury goods represent particular pressure points. Even where the overall commercial budget for a trip or event might be legitimately justified, if the ultimate beneficiary is an individual employee of a counterparty whose employer has not consented, the criminal risk under Article 278/279 is live. General Counsel and compliance teams should audit these arrangements annually and ensure that counterparty consent — not just internal approval — is on record where practically obtainable.

Agent and Intermediary Liability: The Facilitation Problem

The intermediary problem is where private-sector bribery litigation most frequently originates in the UAE. Commercial agents, sales consultants, distributors and referral partners are embedded throughout UAE deal structures — particularly in real estate, construction, defence-adjacent procurement, healthcare capital equipment and financial services. Where an intermediary channels a payment that ultimately reaches a decision-maker at a private counterparty without that counterparty's employer's knowledge, both the intermediary and the ultimate principal who engaged and paid the intermediary face criminal exposure under Articles 278 and 279.

Article 278 expressly reaches persons who act through an intermediary. This is not a gap in the law that creative deal structuring can exploit. Prosecutors have consistently looked through agency arrangements where the commercial logic of the intermediary's fee is not independently explicable — for example, where an agent receives a 15% commission on a contract but has no demonstrable sales, market-access or technical function, and the commission is paid only upon contract award. In these circumstances, the inference available to a court is that the commission is, in substance, a transfer mechanism for a benefit to the ultimate decision-maker. The entity paying the agent cannot escape liability by pointing to the agency agreement; the question is what the agent did with the money.

Intermediary liability under the Penal Code intersects directly with the anti-money laundering framework. Under Federal Decree-Law No. 10/2025 (the AML/CFT/CPF Law, in force 14 October 2025, which repealed FDL 20/2018), proceeds of a commercial bribery offence constitute criminal proceeds, and any dealing with, concealment of or benefit from those proceeds constitutes a money-laundering offence. Cabinet Resolution No. 134/2025 (the Executive Regulations, issued 14 December 2025) confirms bribery as a predicate offence and introduces personal manager liability — meaning that a senior manager of an intermediary entity who knew or ought to have known that the entity was facilitating bribery payments is personally at risk of criminal sanction, not merely the entity itself. The combination of the Penal Code bribery charge and an AML charge is now the standard prosecutorial approach in complex intermediary cases; this doubles the criminal exposure and, critically, removes any statute of limitations on the money-laundering element.

For principals engaging agents in UAE-connected transactions, the practical imperatives are: conduct genuine, documented due diligence on the agent before engagement; ensure the agency agreement specifies permissible activities and prohibits sub-agent arrangements without written consent; require quarterly certifications from the agent confirming compliance; and build audit rights into the contract. Beneficial ownership disclosure under Cabinet Decision No. 109/2023 (the 25% threshold) is a minimum — the commercial due diligence should go further, mapping the agent's relationships with counterparty employees or officials and documenting any conflicts identified and mitigated.

Kickbacks and Secret Commissions: When Commercial Practice Becomes Criminal

A kickback in UAE law is not a term of art — it is a description of the transaction structure rather than a legal category. The operative legal concept under Articles 278-279 is a benefit conferred without the principal's knowledge to induce a breach of duty. A sales commission that flows from a vendor to an employee of the purchasing entity, unknown to the purchasing entity's management, satisfies that definition precisely. The frequency of this structure in UAE procurement, particularly in sectors such as hospitality, IT procurement, facilities management and logistics, should not be taken as evidence of legal acceptability.

Courts applying FDL 31/2021 focus on the absence of disclosure as the determinative element. Where a purchasing manager receives a percentage of contract value from a preferred supplier — routed through a personal consulting company, a spouse's account or a cash payment — and does not disclose this to their employer, every element of Article 279 is satisfied on the recipient's side. The supplier, having made the payment knowing the recipient is acting on behalf of a principal that has not consented, satisfies Article 278. Both parties are simultaneously guilty of the same transaction. Notably, the fact that the underlying contract was commercially fair — that the price paid was market rate and the goods or services were delivered — does not extinguish criminal liability. The offence is the secret benefit, not the commercial harm.

Volume rebates, retrospective discounts and loyalty programmes present a more nuanced analysis. Where these arrangements are disclosed to and approved by the employer of the recipient, structured at the entity level rather than benefiting an individual personally, and reflected accurately in the entity's books, they are unlikely to constitute bribery. The moment they are structured to benefit an individual employee personally, or to flow to an entity connected to an employee without disclosure, the criminal analysis changes. Finance and procurement teams should map all such arrangements against these criteria annually.

The accounting dimension is significant. A UAE company that records a bribery payment as a legitimate business expense — commission, consulting fee, marketing cost — potentially commits a false-accounting offence under the commercial and corporate framework, and the entry becomes evidence of intent. Under Federal Decree-Law No. 47/2022 (Corporate Tax), deductions for payments that are, in substance, bribes will be disallowed; HMRC-equivalent scrutiny by the Federal Tax Authority on unusual commission payments is increasing as the UAE's post-FATF grey-listing remediation programme continues to mature following the UAE's removal from the grey list in February 2024 and anticipated mutual evaluation in 2026.

Investigation and Prosecution Procedure Under FDL 38/2022

Criminal investigations into private-sector bribery are conducted by the public prosecution under the framework established by Federal Decree-Law No. 38/2022 (the Criminal Procedure Law, in force 1 March 2023, as amended by FDL 45/2023). The prosecution has broad investigative powers including the authority to order asset restraint, require production of business records, compel digital device disclosure, and issue travel bans without prior judicial authorisation in certain circumstances. In practice, the first indication that a corporate executive has of a bribery investigation may be a travel ban at a UAE airport — an administrative measure that can be imposed before formal charges are filed.

Search and seizure of corporate premises requires a judicial warrant, but electronic surveillance and communications interception under FDL 38/2022 operate under a separate, lower threshold applicable in financial crime investigations. Once the prosecution has sufficient predicate evidence — which in kickback cases often originates from a whistleblower, a dismissed employee or a counterparty's voluntary disclosure — the investigation can move rapidly to formal questioning. There is no equivalent of the UK's Section 40 Serious Fraud Office powers compelling compulsory interview, but UAE prosecutors can and do require attendance for questioning under pain of arrest. The right to counsel attaches from the moment of formal questioning, but in practice counsel should be engaged the moment a travel ban or preliminary inquiry is identified.

The UAE operates on an inquisitorial model. The investigating prosecutor constructs the case file (the hafiza), and that file forms the basis of the court's analysis. Confessions carry significant weight under UAE criminal procedure, and the risk of a coerced or misunderstood confession — particularly for executives who are not Arabic speakers — is real. All communications with the prosecution should be conducted through qualified UAE criminal counsel, with translation verified by a court-registered interpreter rather than an in-house employee.

Corporate entities are not subject to criminal conviction in the same manner as natural persons under UAE law — criminal liability attaches to individuals — but regulatory consequences for entities are substantial. The CBUAE can impose administrative sanctions of up to AED 1 billion under CBUAE Law No. 6/2025 for compliance failures connected to bribery-adjacent conduct. The Economic Crimes prosecution, which handles complex commercial bribery cases, has demonstrated a willingness to use asset-freezing orders and travel bans as investigative tools even before a decision to prosecute is made. International mutual legal assistance is facilitated under Federal Law No. 39/2006 as amended by FDL 38/2023, enabling UAE prosecutors to obtain evidence from foreign jurisdictions and, increasingly, to receive evidence requests from foreign law enforcement agencies investigating UAE-connected commercial bribery.

The AML Overlay: Bribery Proceeds and Money-Laundering Risk

The intersection of private-sector bribery with anti-money laundering law is the most consequential development in UAE enforcement practice of the past three years, accelerated by the UAE's FATF remediation programme following grey-listing in 2022 and removal in February 2024. Under Federal Decree-Law No. 10/2025 — which repealed and replaced FDL 20/2018 in its entirety and entered into force on 14 October 2025 — commercial bribery is explicitly listed as a predicate offence for money laundering. Any dealing with the proceeds of a commercial bribery offence, including receiving, transferring, converting, concealing or acquiring assets derived from bribery, constitutes a money-laundering offence carrying its own penalties separate from and additional to the underlying bribery charge.

FDL 10/2025 introduces two significant enhancements relevant to private-sector bribery cases. First, it establishes personal liability for senior managers of corporate entities who knew or ought to have known that the entity was involved in money laundering or predicate offences. This means a CFO, compliance officer or board member of a company that structured bribery payments and obscured them in accounts faces personal criminal exposure even if they did not themselves make or receive the bribe. Second, the law increases maximum fines to AED 100 million for corporate-level AML violations, and Cabinet Resolution No. 134/2025 confirms that there is no statute of limitations for money-laundering offences — a critical point for historic transactions that may only now be surfacing under regulatory scrutiny.

Designated non-financial businesses and professions — including legal professionals, accountants, real estate brokers and trust-service providers — are required under FDL 10/2025 and Cabinet Resolution 134/2025 to file suspicious transaction reports where they identify or suspect that a client transaction involves bribery proceeds. The Travel Rule, codified in Cabinet Resolution 134/2025 at a AED 3,500 threshold for virtual asset transfers, applies to any crypto-denominated bribery payment and imposes identification and reporting obligations on virtual asset service providers licensed under VARA. Financial institutions should note that the CBUAE's supervisory expectations — operationalised through CBUAE Law No. 6/2025 — require documented risk assessments of corporate clients' bribery-risk profiles as part of ongoing customer due diligence, not merely at onboarding.

Defence Strategy and Mitigation: Practical Considerations

Early legal engagement is the single most important factor in a favourable outcome for executives and entities facing private-sector bribery exposure in the UAE. The window between the imposition of a travel ban and formal charge is the period of maximum strategic value — it is the point at which the prosecution's case is still being constructed, cooperation may be offered on terms, and the characterisation of transactions is still open to credible challenge. Once a formal charge is filed and the case file is assembled, the scope for influencing the factual narrative narrows materially.

The principal defences available under Articles 278-279 of FDL 31/2021 are: (i) principal authorisation — evidence that the benefit was disclosed to and approved by the relevant principal at the appropriate level; (ii) absence of intent — demonstrating that the benefit had a legitimate, documented business rationale unconnected to any decision the recipient had power to influence; and (iii) challenge to the benefit characterisation — establishing that the arrangement was a properly structured commercial transaction (for example, a disclosed market-rate commission) rather than a covert benefit. Each of these defences is document-intensive, which is why contemporaneous paper trails — gift registers, approval chains, conflict-of-interest declarations, agency due-diligence files — are determinative long before any investigation begins.

Voluntary disclosure and cooperation with the prosecution is an available mitigation strategy. UAE criminal procedure under FDL 38/2022 recognises cooperation as a sentencing factor, and the prosecution has discretion to recommend reduced charges or suspended sentences where a suspect provides material assistance. In AML-adjacent cases under FDL 10/2025, voluntary reporting of suspicious transactions prior to investigation can constitute a complete defence to the AML charge if the report was genuine and timely. However, the decision to cooperate must be taken with full awareness of its consequences, including the potential implications for co-defendants and counterparties who may also face charges on the basis of information disclosed.

For corporate entities concerned about systemic historical exposure — for example, following an internal investigation that has surfaced historic agent payments — a structured remediation programme implemented prior to regulatory engagement can materially influence both the prosecutor's charging decision and any CBUAE or FTA administrative action. This should include: independent forensic review of the transaction population, a written remediation plan approved at board level, restitution where legally and commercially possible, and documented enhancements to the compliance framework. The UAE's improved standing with FATF following its removal from the grey list in February 2024, and the anticipated mutual evaluation in 2026, means that regulators are actively rewarding substantive compliance upgrades over cosmetic responses.

Practical checklist

• Document all hospitality above any internal threshold with dual approval and a record of business purpose.
• Obtain board-level written authorisation for any benefit to a counterparty employee before it is provided.
• Conduct and record genuine due diligence on every commercial agent, including beneficial ownership under Cabinet Decision 109/2023.
• Map all volume rebates and retrospective discounts to confirm they benefit the entity, not individual employees personally.
• Audit agency commission structures annually: fee must be explicable by demonstrated services, not merely contract award.
• Engage criminal counsel immediately upon identification of a travel ban or preliminary prosecution inquiry.
• Ensure all suspicious-transaction reports required under FDL 10/2025 are filed promptly — timely filing can constitute a complete AML defence.
• Review historic agent payment populations before the 2026 FATF mutual evaluation intensifies regulatory scrutiny.

Frequently asked questions

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Published 15 July 2026. General information only — not legal advice. Contact us for matter-specific advice.