The UAE has approved a new law that imposes stricter penalties for the practice of commercial fraud particularly in terms of counterfeiting goods and services.

Approved on 12 December 2016, the new law aims to enhance the existing intellectual property rights (IPR) enforcement mechanism.

Taking effect immediately, the law imposes a fine of up to AED1m ($272,000) or a maximum of two years of jail term on counterfeiters. The court may also close down the business establishment involved in trading these products for up to six months.

The law enhances brand owners’ rights by including articles that make it an offence to possess counterfeits, even where the IPR holder is unable to prove that the counterfeiter intends to sell them, a local media report said citing legal experts.

It is understood that a federal committee will be set up for the purpose of reducing or eliminating fraudulent commercial practices across the seven emirates. This committee, which will become part of the Economy Ministry, is envisaged to have “powers to close down offending businesses, be they inland or in free zones, and bring to task officials of these firms, once the existing draft bill turns into law.”

Sub-committees will be set up to follow-up destruction, recycling or return of confiscated goods to exporters.

The law is understood to impose maximum penalties for the counterfeiting of food and pharmaceutical products, with similar penalties intended for other types of counterfeit products and services.

The new law replaces the existing commercial fraud law. Drafted in 1979, the old law imposed a maximum two-year jail term and fine of AED10,000 for “cheating a customer by delivering goods that are different to what is ordered.”