How to Open a Corporate Bank Account in Dubai for Foreigners
A swathe of offshore banking scandals such as the Panama Papers has caused regulators to clamp down on banking compliance. Opening a corporate bank account in any jurisdiction, including Dubai and the UAE, can be an admin-heavy task. New stringent international regulations that have come up over the last two years, coupled with stricter guidelines, can make opening and maintaining a business account a challenging task to navigate.
We’ll walk you through some of the most burning questions you may have about opening a corporate bank account in Dubai or the UAE.
Challenges of Opening a Business Bank Account in Dubai and the UAE
Heightened global scrutiny has forced compliance to be a top priority for banks, with increased due diligence and growing sanctions adding operational burdens to companies’ day-to-day operations in all corners of the globe.
Banks often receive fines for not following business bank account regulations to the letter, making them more cautious and rigorous as they vet and check people looking to open any kind of bank account, be it offshore or not.
The role of corresponding international banks is vital to any bank’s operation and this need for protection creates a downward pressure on clients as banks employ more stringent methods to avoid global enquiries into their transfers.
Amid this watchful international context, banks in the UAE must be more careful than ever before with both new and existing accounts.
Why is it challenging to open a bank account in the UAE for certain types of companies like offshore?
With tighter regulations and requirements coming from the country’s central bank, Emirati banks have tightened up to ward off problems.
Increased requests for transfer data have caused many financial institutions to implement stricter rules and close accounts for companies in some free zones.
They have also banned some licence types that do not meet their upgraded compliance standards.
Today, banks are looking for economic substance and proof that companies are what they report to be. How does this work in practice?
Some banks have placed blanket due diligence requirements on free zones in the northern emirates.
There are also additional requirements to open a business bank account in Dubai for firms operating under specific activity licences.
Suppose you want to open an account at Mashreq, Emirates NBD and Abu Dhabi Islamic Bank. In that case, they will require physical offices as part of the account opening form and procedures, unless you are based at the Dubai Multi Commodities Centre (DMCC) or can demonstrate proof of a residential address.
How to Open a Corporate Bank Account in Dubai
As you look to secure a business bank account in Dubai or other parts of the UAE, we recommend you take note of what is needed to open a corporate bank account:
Maintain a Residential Address
Maintaining a local residential address is an essential piece of proof to your commitment to the country and the local economy. If you wish to be a bank signatory, you should also have a UAE visa and Emirates ID to increase your chances of getting your bank account application accepted. It can be challenging to find a bank where a tourist can open a bank account in Dubai.
Signatory/ies Should Hold Shares in the Firm
If you haven’t thought about share ownership until now, you must consider it as you work to set up a bank account in Dubai and the rest of the UAE. This factor is especially crucial for international corporate and holding structures because the bank account signatory should have the company’s shares to initially open the account. Once you successfully open the account, you can transfer the shares over to your chosen holding structure.
Have a Robust Business Plan
We also advise you to create a robust business plan to ensure the best chance of opening your bank account. While your plan does not have to be more than three pages, the document should have substantive information describing who you are, your background and your business goals.
We also recommend you build a landing page or website that shows proof of suppliers and customers, along with securing physical office space in the best location. Choosing a free zone that matches your brand and purpose can work to strengthen your application’s viability.
Consider Offshore vs Free Zone & Implications for Opening a Bank Account
Familiarising yourself with the differences between offshore and Free Zone companies in the UAE is an absolute must.
Can an offshore LLC open a bank account in Dubai? Given the notoriety of offshore banking scandals in recent years, UAE banks often take a negative view of both local and international offshore companies. This means that Emirati banks usually only want to offer their services to local offshore companies under certain strict and structured circumstances.
Successfully Opening a Corporate Bank Account in Dubai and the UAE
Successfully securing banking services in the UAE comes down to classifying your company in the right free zone with the proper visa and a residential address. At Europe Emirates Group, we have 36 different free zone options from which to choose, along with advice about the right fit for you.
Why is the bank not classifying me as a resident for banking purposes?
Tightened regulations mean that it’s more challenging for prospective banking customers in the UAE to achieve resident status. These include the UAE’s commitment to the Common Reporting Standards (CRS); these rules require all participating jurisdictions to obtain information from their financial institutions and automatically exchange it with other participating jurisdictions every year to combat tax evasion.
Most Emirati banks do not consider people with a visa and Emirates ID as residents for banking purposes. If a bank in the UAE is unsure of your residency status or your intentions, they will have to share your information with other institutions per the rules of CRS. What does this mean for you?
You must show you’re living in the UAE and spend a lot of time in the country to optimise your chances of opening a bank account for your business.
You must also acquire a residential address, through either renting or buying real estate.
You can meet these criteria while remaining globally active as your business grows.
Are You Ready to Open a Corporate Bank Account in the UAE?
Europe Emirates Group offers bank account opening and introduction services, where we introduce you to partner banks and set up initial meets and follow-ups. However, please note that we do not guarantee that your personal or corporate profile, nor the structure and activities, align with the onboarding processes at financial institutions. These services are separate from company formation.
We will guide you through the possible institutions and set up the initial meetings as you work to successfully apply and open your account. If you would like to start the process of opening a business bank account, don’t hesitate to contact us today.
CEO, Europe Emirates Group