Published: July 2022
Background
As part of Qatar’s ongoing commitment to reduce the risk of money laundering and terrorism financing within Qatar, Law No.4 of 2022 concerning the regulation of the use of cash in transactions (the “Cash Transactions Law”) was published in the Official Gazette No. 7 of 2022 dated 3 July 2022. The Cash Transactions Law is effective from the date of its publication. Pursuant to the Cash Transactions Law, it is prohibited to use cash in transactions that exceed the value of QAR50,000 (approximately US$ 13,732.5). The Council of Ministers have the right to amend this threshold. For transactions exceeding this threshold amount, alternative modes of payment such as cheques, bank transfers and bank cards must be used. Cash, as defined in the Cash Transactions Law, includes all banknotes, coins, and other monetary instruments issued by the Qatar Central Bank or any traded foreign currency.
Following the issuance of the Cash Transactions Law, all entities subject to the Cash Transactions Law must ensure compliance with its terms within a period not exceeding six months of the Cash Transaction Law’s enactment.
The scope of what constitutes a transaction for the purposes of the Cash Transactions Law is not yet determined, nor what trading outlets will be covered, with a decision of the Council of Ministers to follow to set out such details.
Requirements under the law
Subject to the Cash Transactions Law, all affected trading outlets must keep a record of all receipts and documentation to identify non-cash transactions.
It is important for the relevant authorities and lawyers (who assist in authenticating or registering contracts with the relevant authorities) to ensure and verify compliance with the prohibition on the use of cash in transactions exceeding the value of QAR50,000 and to include such a prohibition in the relevant contracts and documents. The relevant authorities are entitled to refuse any transaction if the parties to it have not specified the alternative payment method within the contract/document.
At the moment, the exact involvement of the relevant authorities to scrutinise the transactions or the relevant contracts is not entirely clear from the text of the Cash Transactions Law. These aspects may become more evident when the Council of Ministers issue further decisions in connection with the Cash Transactions Law.
Penalties for non-compliance
The Cash Transactions Law imposes stringent penalties for non-compliance. Failure to comply with the Cash Transactions Law subjects the non-compliant individual/entity to a penalty not exceeding thirty (30) per cent of the total value paid in cash. This penalty is doubled if the transaction value is purposely divided or reduced below its actual value. Additionally, failure by the requisite trading outlets to maintain record of all receipts and documents supporting the non-cash modes of payment could render the trading outlets liable to a penalty not exceeding QAR 1,000,000.
Moving Forward
The Council of Ministers will issue its decision regarding the interpretation of the types of trading outlets and transactions which will be covered by the Cash Transaction Law. We will issue a further update once this decision is published, in the meantime if you have any questions about this announcement please contact Al Tamimi.
Key Contacts
Matthew Heaton
Partner, Head of Office, Head of Banking & Finance - Qatar
m.heaton@tamimi.com
Muhammad Mitha
Senior Counsel
m.mitha@tamimi.com