The difficulty in opening a business bank account is one of the top hurdles that business owners face while setting up a business in Dubai & across UAE. Several stringent criteria need to be followed to get a corporate bank account opened in UAE.
Strict guidelines, tough international regulations make the process of bank account opening a time-consuming process for those entrepreneurs planning to set up a new company in UAE.
Major Hurdles While Opening a Company Bank Account in UAE
1. Tough Regulatory Requirements & Compliance Pressure:
Banks need to comply with UAE’s commitment towards fighting financial crimes like money laundering and Financing of Terrorism. The pressure on banks to comply with regulatory measures like Anti Money Laundering (AML) programmes and Combating the Financing of Terrorism (CFT) adds to the difficulty in opening bank accounts in the UAE. This is why Banks in the UAE face a lot of pressure from the regulatory and inspection bodies and this make them act strictly with the customers who are trying to open an account for company formation.
2. Business History of client:
Proving your credibility to the bank is necessary while applying for opening of a bank account. The founder of the business needs to prove that he or she possesses sound knowledge about the industry in which they are going to open the business. Previous business history helps in getting the process done quickly as it ensures the credibility and debt history of a person or the company.
3. Lack of Physical Office Space:
Banks in the UAE mandates that your company has a physical office. Some banks often send their inspection officer to the address given in the documents to check if your company has a physical office at the particular address.
4. UAE Resident Visa:
Most banks in the UAE require you to have a residence visa. In addition, certain banks may ask you to provide a local address in the UAE.
It is also recommended to check if the bank requires you to ensure that your company shareholders have residency visas. Some banks request proof for this from at least one shareholder.
5. Insufficient information/Weak Business Plan:
Having a sound business plan is indispensable while setting up a business in Dubai or across the UAE. Banks in the UAE insist on knowing the economic substance of your company.
Banks will be glad to go through founders’ biographies, a financial plan for a business that opens a bank account, their potential suppliers and planned customers, etc. Failure to furnish a strong business plan and other information that shows the company’s financial integrity might further delay the process of opening a business bank account in the UAE.
6. Business with High-Risk Countries
You are likely to have a tough time while opening a bank account for your company in UAE if you are having business with sanctioned or high-risk countries. In the UAE, Financial Institutions (FIs) are required to adhere to regulations in accordance with the Money laundering and Financing of Terrorism risks associated with businesses dealing with high-risk countries.
FIs are also obliged to implement all specific measures and countermeasures regarding High-Risk Countries as defined by the National Committee for Combating Money Laundering and the Financing of Terrorism and Illegal Organisations, including those related to the implementation of the decisions of the UN Security Council, the Financial Action Task Force (FATF).
This entails an increased level of scrutinies like detailed supervision of the Business Relationship, the requirement for higher levels of internal reporting and management approval, more frequent monitoring of transactions, and more frequent review/ updating of customer’s due diligence information. FIs are required to consider establishing adequate internal policies, procedures, and controls while dealing with high-risk countries.
Cuba, Myanmar, Iran, North Korea, Ukraine (Crimea), Sudan and Syria are amongst in the list sanctioned countries.
Whereas Nigeria, Somalia, Ethiopia, Serbia, Yemen, Kenya, Uganda, Saint Kitts, Nevis, Anguilla, Malta, Cyprus, Zimbabwe, China and Libya are considered as major high-risk countries in the process of opening a company bank account in UAE.
7. High-Risk Individuals
Hailing from a high-risk country may prove to be a big hurdle for your intentions of opening an account in UAE. Governments across the world may put sanctions on a specific person also.
Banks are prohibited to transfer funds to and/or from Specifically Designated Nationals (SDNs). SDNs can be individuals and they can be located anywhere in the world. SDNs may be linked to human rights abuses, nuclear proliferation, terrorism, narcotics trafficking, transnational criminal organisations, or they may support sanctioned regimes.
In the UAE, non-resident Russians cannot make transfers to Russia currently. For non-resident Syrians, USD account is not been offered by the banks. Meanwhile, non-resident Chinese are temporarily blocked from import & export, general trading and Textiles business in UAE.
8. Minimum Balance Requirement:
Most banks require all corporate accounts to maintain a minimum balance. Minimum balance ranges typically from AED 25,000 to AED 500,000 depending on the bank you pick to open an account. It is also hard to avail the services of a relationship manager in case of certain banks that show leniency in the minimum account balance requirement.
The stringent regulatory reforms adopted by the UAE authorities ensure that the economy is progressing in the right trajectory. Tough reforms are also necessary to curb financial crimes like money laundering and financing of terrorist activities. However, this toughness in the process is only due to the stringent regulations which are necessary for any country hell-bent on making the system more efficient and free from corruption.
The process of opening a bank account for businesses in the UAE is a time-consuming process for entrepreneurs who want to form a company in the region. This is where Jitendra Business Consultants (JBC) come to help. With extensive knowledge of international & local regulations and with vast experience of dealing with banks for various company accounts. JBC is considered as one of the top business consultants that offer company bank account opening services in Dubai & across the UAE.