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, causing measurements to be the strictest they’ve ever been. Opening a corporate bank account in any jurisdiction, including Dubai and the UAE, can be an admin-heavy task. Stringent new international regulations coming up over the last two years, coupled with stricter guidelines, can make opening and keeping a business account a challenging task to navigate.
What about the process of opening a bank account in Dubai and other areas of the UAE? We’ll walk you through some of the most burning questions you may have about this process.
Why is it so difficult to open a business bank account in Dubai and the UAE?
The 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 regulations in the most exact fashion, making them more cautious and rigorous as they vet and check people looking to open a bank account, whether an offshore account or otherwise. The role of corresponding international banks is vital in any bank’s operation, and this need for protection creates a downward pressure on customers as banks become more stringent to avoid global enquiries into their transfers.
Amid this watchful international context, banks in the UAE must be more careful than ever before with new and existing accounts, with the administrative overhead stemming from such enquiries being significant.
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 closed 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. At the same time, there are additional requirements to open a bank account 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 can you open a corporate bank account in Dubai and the UAE? Our recommendations
As you look to secure a business bank account in Dubai or other parts of the UAE, we recommend you take the following steps:
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. Plus, it’s often onerous to find a bank where a tourist can open a bank account in Dubai.
A signatory 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 and the 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. In this context, Emirati banks usually only want to offer their services to local offshore companies under certain strict and structured circumstances.
With all of this, how to successfully open 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. We at Europe Emirates Group have 36 different Free Zone options for you to choose from, along with advice about the right fit for you to achieve your desired end-result.
In some cases, it may benefit you to show commitment to the country by investing in the right free zone rather than a more affordable offshore option along with applying for a visa and Emirates ID with a local address.
But, why is the bank not classifying me as a resident for banking purposes?
Tightening 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) rules that require all participating jurisdictions to obtain information from their financial institutions, including banks, 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?
How to prove your commitment to the UAE and open a bank account in the UAE?
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 mobile 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 introduce you to them and set up initial meets and follow-ups. However, we must 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 for your account. If you would like to commence the process, don’t hesitate to contact us today.
CEO, Europe Emirates Group