In this publication, the questions that are most frequently asked by our clients regarding opening a bank account in the UAE for an offshore company will be answered.

HOW DO I OPEN AN OFFSHORE ACCOUNT IN THE UAE? 

It is possible to open an offshore bank account in the UAE as a company, i.e. corporate and private individuals. In the first case, an account is opened to secure the company's activities, in the second, to manage personal assets.

Before opening a corporate bank account, you must register the offshore company. If you are planning to engage in international trading activities, then the existing offshore jurisdictions in the UAE, like RAK ICC, will be to your advantage. Keep in mind that offshore activities in the UAE will be limited. For example, you will be able to provide financial services neither in the Emirates nor beyond its borders. Also, you can not get a visa as a resident of the United Arab Emirates, so you can not use the status of a tax resident of the country, etc. 

WHO WILL OPEN A COMPANY FOR AN OFFSHORE ACCOUNT IN THE UAE?

To register an offshore company in the Emirates, you will need to contact a registration agent. You can choose an Agent on the website of an offshore jurisdiction. The list of accredited agents is publicly available. Periodically, jurisdiction adds or removes agents from the list, depending on how they comply with the requirements of the offshore jurisdiction. For example, our company Garant Business Consultancy has been on the list of accredited agents since 2014. We conduct full preparation and verification of documents for submission to the registration chamber. The process of preparing and registering an offshore company is quite simple, it takes 2 to 4 working days, the value of all costs for the founders of an offshore company in the UAE varies in the range of USD 1.500..3.000.

BANK ACCOUNTS FOR OFFSHORE COMPANIES IN THE UAE

At this stage, the most interesting part begins. As we see in practice in the UAE, in almost 70% of cases, banks refuse to open corporate accounts for offshore companies. That is, various investors have offshore companies registered in the UAE, which do not open corporate accounts with either local banks or international banks.

The difficulties of opening bank accounts in the UAE were already discussed previously, but in the case of offshore companies, opening a bank account in the UAE becomes the exception rather than the practical norm.

The banks in Dubai and the other six Arab Emirates are now more open to talking about the sanctions lists of countries whose residents they rarely open accounts for, neither corporate nor private. So, for example, if you are from Iran, Ukraine, or Syria, then be prepared for the fact that you will encounter problems even at the early stage of submitting documents. Even the fact that these citizens have bank accounts in the United States of America does not soften Arab bankers.

In addition to sanction countries, banks have a list of high-risk countries. examples of countries on this list are citizens of Cyprus, Malta, China, Russia, and other countries. Documents of the founders from these countries will be reviewed extremely vigilantly. If the bank decided to refuse to open an offshore account, then you most likely will never know the reason as to why this occurred. As published in a previous article: “This is due to the fact that banks, by their own internal rules, cannot advise clients on how best to provide information.”

In order for residents from high-risk countries to successfully pass a bank check, it is necessary to carefully prepare a package of documents. Before filing documents, we recommend contacting specialists who work in the local Arab market, communicate daily with bankers, know the cause-effect relationship of failures, understand the expectations, and requirements of banks.

LIST OF NECESSARY DOCUMENTS FOR OFFSHORE BANK ACCOUNT OPENING IN UAE BANKS 

The number of documents for opening a bank account for an offshore company is very large. Below is a list of the main documents that will need to be prepared before applying for opening an offshore account in the United Arab Emirates:

• An extract from the bank account of the parent company and / or the personal account of the founder for the last six months;
• Accounts that will be used as evidence for some of the transactions in the statement (3-5 accounts will be enough);
• Letter of recommendation from the bank of the country of the founder;
• Documentary evidence of running a similar business (not offshore) at least for 3 years in either UAE or another country with audited financial statements;
• The business plan of the future company with forecasts for turnover, suppliers, and customers;
• Legal documents for a company in the UAE and identity cards of the owners;
• UAE entry stamp in the passport.

HOW DO I REMOTELY OPEN AN OFFSHORE BANK ACCOUNT IN THE UAE? 

We periodically receive such requests from customers from all over the world. In short, it’s not possible for anyone to open a corporate account in the UAE bank remotely. It does not matter if you open a bank account for a company registered on the Mainland, or a company in one of the Free Economic Zones of the UAE or for Offshore, the physical meeting of the founder or director of the company with a banker is obligatory.

IF SOMEONE PROMISES TO OPEN A UAE OFFSHORE BANK ACCOUNT TO YOU - WHAT CAN THIS MEAN AND ARE YOU BEING MISLED?

• This may mean, in practice, that you will not physically need to come to a bank branch, but you will need to meet with a banker. It does not matter if you are are going to open a bank account for an offshore or onshore company, you have to meet a banker. You can do this anywhere, depending on where the banker is willing to go. For the corporate sector, the meeting is likely to be held in the territory of the United Arab Emirates.

• You can delegate the process of meeting with a banker, but only if you are the owner of an onshore company. In this case, you hire an employee who also has a UAE visa, and he can meet with the banker instead of you. If you own an offshore company, then you still have to come to the UAE and meet with the banker.

• It is about opening a private account that is for personal purposes, and not for business. In this case, if you have a couple of million dollars and a diligent banker, it will come to you anywhere in the world.

As we see, in any case, a personal meeting of a bank representative and a company representative should occur physically. How to call this meeting is already a rhetorical question.

A few years ago, offshore companies and offshore transactions were popular. Today, the use of offshore companies naturally falls, as well as the reduction in profitability that they provided earlier. Currently, we register offshore companies and successfully open accounts for them in the case of a holding structure. In all other cases, especially with our clients from the list of risky countries, when it comes to foreign trade, we use other organizational, legal forms, and jurisdictions in the UAE to effectively implement our clients' business goals.

If you have any questions about opening an offshore account in the United Arab Emirates, want to get a free consultation, and find the best option for your business in the UAE - contact me, I will be happy to answer your questions and be useful to your business.

MARSEL SHADMANOV

Head of Corporate Services of Garant Business Consultancy