The United Arab Emirates experiences an unprecedented interest by the global business community. At the same time, the UAE is working tirelessly to implement international compliance and business standards to avoid adverse treatment by authorities and banks of other countries.
Consequently, the banking sector in the UAE came under pressure with ever new directives and recommendations by the UAE government and the Central Bank.
The bottom line is: opening bank accounts in the UAE became more effortful, and more requirements are to be met.
Please note that the information provided in this article is valid at the time of publishing (end of January 2023). The UAE may change or amend legislation rapidly, often applicable from the day of announcement. This article focuses on corporate bank accounts.
2022: unprecedented demand in business setup in Dubai and other Emirates
In 2022, 88,235 new business licences have been issued by the authorities of Dubai alone, an increase of 22% compared to 2021. Dubai and the UAE are in demand as never before, businesses and business people from all the world are flocking to the United Arab Emirates to set up their businesses in free zones or outside of free zones.
People and companies prefer to set up free zone companies mainly in Dubai, but also in Sharjah, Ras Al Khaimah and Abu Dhabi for their international business and services, often serving the wider region.
Business persons and companies who aim to do business in the local market of the UAE as well are often preferring UAE mainland companies. UAE mainland companies are companies registered in the UAE, outside of free zones.
The changing business landscape in the United Arab Emirates
The extremely business-friendly environment of the UAE, Dubai and other Emirates has often been scrutinized by governments and tax authorities of mainly high-tax countries, and by the OECD. The main points of concern were the absence of any taxes, the lack of economic substance of foreigner-owned companies mainly in free zones, and the relatively loose control of banks and transactions.
The government of the United Arab Emirates and of Dubai, as well as of the other Emirates, decided that complying with international business and compliance standards will strengthen the country’s economic future. Consequently, the UAE government started to implement the BEPS recommendations (‘Base Erosion and Profit Shifting recommendations, an initiative proposed by the OECD to avoid tax evasion that has so far been adopted by 135 countries, including the UAE quite recently). In very brief, the following measures have been decided and already been implemented:
- Requirement for Economic Substance (ESR) of companies in certain industries;
- Establishment of a Beneficial Owner Registry;
- Taxation of business profits of corporates and individuals (at a rate of 9%, free zone companies are exempted as long as they do international business or business with other free zone companies);
- Obligation for bookkeeping and financial accounts, obligation for companies to file annual tax returns;
- Stricter control of banks in regard of compliance with the above and of transactions, including AML compliance;
- Introduction of automatic exchange of information where applicable.
The measures taken do concern banks as well. The UAE Central Bank issues internal rules and directives for banks, in order to make sure that the banks comply with the new measures when conducting their internal compliance. The UAE Central Bank is now supervising and controlling.
Bank account opening in Dubai and the other Emirates
A total of 62 banks is offering their services in the UAE. Approximately 40-45% of them are domestic banks, and approx. 55-60% are branches of foreign banks from various countries. All banks are supervised and controlled by the Central Bank of the United Arab Emirates. The list of currently licensed banks can be found on the website of the Central Bank of the UAE.
Some banks do only serve a specific clientele, like Bank of Baroda for example, which only serves Indian nationals.
Most of the businesses set up in Dubai by foreign nationals or companies are basically startups, meaning companies who are just starting their business. It is worth to know that most of the banks in Dubai and other Emirates do not wish to work with startups, unless they are startups of substantial size, allowing the banks to generate good profit from those customers. From all banks in the UAE, only around 8-10 banks are willing to open bank accounts for startups, depending on each specific case. That does indeed narrow the possibilities for newly incorporated companies.
Banks do have different policies when it comes to foreign currency accounts. Several banks do initially only open AED accounts and may open foreign currency accounts later, after some months.
It is important to know that the AED is pegged to the USD, avoiding any currency exchange rate risk of AED to USD transactions and vice versa.
Some banks do have further initial restrictions. Commercial Bank of Dubai (CBD), for example, only provides AED accounts for the first six months. The account is allowed to receive remittances from abroad, but the sending bank must have am AED correspondence account. CBD does not allow sending money abroad during this initial period. After six months, upon approval, this restriction may be lifted and the account holder may send money abroad and may also open foreign currency accounts.
Is personal presence required for an interview when applying for a bank account? The answer is yes or no. Many banks in the UAE provide the convenience to apply online for bank account opening. In this case, a personal visit to the bank will probably not be necessary. However, banks may still call an applicant for a personal interview, if they deem this to be necessary.
If an company’s capital and/or business turnover will be significant, applying personally is recommended. The bigger the business and account turnover, the more questions a bank may have. Apart from that, leaving a good personal impression might positively influence the due diligence and compliance procedures of a bank.
Must-haves when applying for a bank account in the UAE
With the UAE being in an ongoing process of adaptation to the OECD’s BEPS recommendations and international business and compliance standards, banks are obliged to adjust their own procedures based on rules and regulations imposed on banks be the UAE Central Bank.
Like in European and other countries, banks are following the so-called risk approach when implementing the Central Bank’s rules and regulations, which sometimes results in slightly varying compliance requirements of banks.
For example; when talking about corporate bank accounts, banks have to establish that a company that wishes to open a bank account is indeed managed from the Unites Arab Emirates.
During previous years, the Emirates ID of a company’s Manager (CEO, Managing Director, or other type of manager authorized to sign on behalf of a company) was widely considered and accepted as a proof that a company is managed from the UAE. However, during the year 2022, one after the other, banks started to request proof that the manager of a company is indeed living in the UAE. Now, most banks, require a proof of a manager’s dwelling. For some banks, a rental contract suffices, while many other banks require a so-called ‘ejari’, which is a confirmation of the mandatory registration of a rental contract with municipality.
However, a very few banks would also accept a temporary but long-term accommodation agreement with a hotel or a company operating serviced apartments. Depending on the bank, long-term might be a period of three or six months.
On the other hand, there are a few banks that do alternatively accept the proof of adequate economic substance of a company. If economic substance of a company is proven, then the provision of the manager’s Emirates ID suffices.
The above examples provide a comprehensive insight into the varying ways how banks may implement the Central Bank’s rules and regulations, based on the banks’ own risk policies.
Without the following in place, banks do not accept applications for corporate bank accounts. The below are required for both mainland and free zone companies in Dubai or the other Emirates.
- Emirates ID of the account signatory or signatories of a UAE company
The signatory is typically the manager of a company. As most newly incorporated companies in the UAE are entrepreneurial companies, the beneficial owner is the shareholder or one of the shareholders, director or one of the directors, and appointed manager as well. In such cases, he or her needs to have obtained his or her Emirates ID in physical form.
If a company has more than one shareholders, a few banks require that the other shareholders or the majority shareholders are holders of Emirates IDs as well.
Without holding an Emirates ID, signatories do not need to apply for a bank account, because banks would not even accept the receipt of the application.And:
- Proof of the account signatory’s or signatories’ accommodation
Most banks require the proof of a leased or owned flat our house, while a very few banks also accept accommodation contracts for periods of three or six months, signed with a hotel or an operator of serviced apartments.
In case of an owned property, the title deed is required as proof. In case if a leased property, most banks require a confirmation of the mandatory registration of a rental contract with municipality, called ‘ejari’. A few banks are satisfied with the rental contract in original.
In case of owned or leased property, most banks will require a utility bill in the name of the account signatory or signatories of the UAE company.
Exceptions may apply, please see below under “Documents required”.And:
- UAE mobile number with contract
All banks are communicating with their clients via SMS messages, often including a link. However, banks do send SMS messages only to UAE phone numbers.
The UAE tourist SIM cards provided for free at the passport control when entering the UAE are not permanent SIM cards and will automatically be deactivated a few days after the tourist or visitor left the country.
Therefore, bank account signatories must be in possession of a permanent UAE SIM card.
Permanent UAE SIM cards are provided by mobile operators against local proof of address.
Documents required for bank account opening in the UAE
The following list is neither exhaustive nor do all banks necessarily ask for each of the below documents. Documents that are always mandatory are referred to as such.
It is worth to mention that documents provided for bank account opening are serving one specific goal, which is a bank’s KYC due diligence obligation. KYC stands for ‘Know Your Customer’. Any bank wants to know and has to know its customers by law.
Therefore, the better an applicant introduces himself or herself and his or her business, the better a bank will know its future customer and the more satisfied a bank’s compliance officer and other decisionmakers will be. When asked to submit a CV, a comprehensive CV should be sent. Even if a bank does not ask for a CV, adding an expressive CV will definitely have a positive impact. The same goes for a robust and detailed business description, even if a bank does not explicitly ask for it. And if there is a brief business plan submitted to a bank, that is only better.
It will always pay out to spent some extra time & effort and diligence on the preparation of the bank account opening application.
List of documents required for bank account opening in Dubai and the other Emirates (please see remarks above):
- Trade Licence (mandatory);
- Memorandum of Association with all historical amendments, signed by all shareholders and stamped by the free zone, if free zone company (mandatory);
- Board Resolution (BR), some banks do require a BR only if a company has more than one shareholder, must be on company’s letterhead and be signed on all pages, some banks require testation of signatures if not signed in front of a banker (might be mandatory);
- Power of Attorney by the Board to the manager being signatory
- Passport with visa copy and Emirates ID of all shareholders, in case of non-resident shareholders: passport, bank statement from bank in home country, comprising six months (see also below under “bank account statements”), tax registration confirmation with TIC or TIN from home country, and proof of address from home country (mandatory)
- Personal profile/CV and possibly LinkedIn profile of all shareholders (mandatory for most banks);
- Company profile and website, if the latter is available (we advise to have a website, even if it is simple; mandatory for some banks);
- Proof of office address of the company – tenancy contract of office or Flexi Desk rental agreement (mandatory)
- Proof of private address in the UAE – tenancy contract or title teed or ‘ejari’ and last utility bill (DEWA bill, SEWA bill etc.), since a few months, sub-letting is allowed in Dubai – in such case, tenancy contract or title teed or ‘ejari’ and last DEWA bill together with a written confirmation signed by lessor and sub-lessee suffices, some banks accept an accommodation agreement with a hotel or a company operating serviced apartments, very few banks may not require signatories’ proof of address in the UAE if the company maintains adequate economic substance (mandatory for most banks);
- Bank account statements – if the company exists since less than 12 months at the date of bank account application: 6-month (some banks 3-month) bank statement from a personal account (abroad or in the UAE) of all shareholders, if the company exists since 12 months or more at the date of bank account application: bank account statement from a business account or the aforementioned statements of personal accounts (mandatory for some banks);
- Company stamp (mandatory for many banks);
- Largest three customers and suppliers, if already existing (some banks may ask for this information).
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