What are the difficulties with opening a bank account in Dubai and the UAE? Why do banks in the Emirates not open corporate accounts? What causes failure? In this article, you will learn the main difficulties that business' most often faces when opening a bank account in the United Arab Emirates.

UAE BANK ACCOUNT FOR UAE RESIDENTS 

Both residents and non-residents of the country can open a bank account. In the first case, current income and savings account is possible. In the second case, the banks will open only the cumulative, deposit, or call account. In practice, it is quite common for banks to refuse to open current accounts in the UAE, even for residents. This is due to the fact that banks are trying to avoid customers from high-risk countries. Each bank has its own internal rating of nationalities. Therefore, if you decide to open a bank account in the UAE, it will be effective to submit documents to several banks at once.

CORPORATE BANK ACCOUNT IN THE UAE

In the Emirates, you can open bank accounts for various types of companies. These can be offshore companies, on the mainland, or in the free trade zone. In practice, we observe that in 50% of cases, companies are denied opening a corporate bank account in the Emirates. It doesn’t matter if you contact your local or international bank.

There are several options that will quickly solve the problem. Each of them has its pros and cons.

1. Buy a ready-made company with an existing bank account;
2. Prepare documents for the bank in such a way as to minimize issues and meet the requirements.

If in the first case, you will carry out the verification, in the second case, you will be checked.

WHAT DO UAE BANKS CHECK?

As mentioned earlier - banks check the reality of business, i.e., economic substance. The bank makes sure that your company has a real office and real economic costs of the business as a whole. Some banks send an employee to check the availability of the office at the address specified in the documents. The bank may request information about employees. The magnitude of the cost of rent and wages allows you to quickly understand the economic substance of the company. In addition, the bank will be happy to see audited reports, founders' biographies, a financial plan for a business that opens a bank account, their potential suppliers and planned customers, and etc.

WHY UAE BANKS REJECT OPENING CORPORATE BANK ACCOUNTS? 

Emirati banks are strict with customers because they are under pressure from regulatory and inspection bodies. The UAE is doing it most to comply with the requirements of the European Union and withdraw from the black sanctions list of jurisdictions not cooperating in tax matters. In other words, if an Arab bank sees that a corporate bank account in the UAE opens for tax optimization, then there is a high risk that the bank will not open an account due to the risks of losing its license.

WHAT IS THE MOST DIFFICULT THING IN NEGOTIATING WITH UAE BANKS?

The most inconvenient, and in our opinion, the most difficult thing to deal with during negotiations with banks in the Emirates, is that banks are laconic when dealing with customers. This is due to the fact that banks, by their own internal rules, cannot advise clients on how best to provide information. Bankers can request a standard list of documents. You will never get comments on these documents. You will never know the reason for the refusal to open a bank account in the UAE.

WHAT DO I DO IF THE BANK REFUSED TO OPEN AN ACCOUNT IN DUBAI, UAE?

It is necessary to analyze the documents that you show the bank, and if you already have repeated failures, we recommend contacting companies that operate in the local market to understand the specifics and internal requirements of banks. Order from such companies an internal preliminary verification of documents with detailed analysis and recommendations. Those companies that operate in the local market have their own trusted specialists, connections, and best practices. Together, this allows you to deal with each specific case, understand causation, eliminate weak points in the design and submission of documents, and, ultimately, to achieve what you want - to open a bank account in the UAE.

If you have any questions or want to get a comparative analysis of the advantages of bank account opening in the UAE for your business, please contact me.

MARSEL SHADMANOV

Head of Corporate Services of Garant Business Consultancy