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Can’t Open a Bank Account? Read this Blog and get rid of Your Problems Instantly!

Can’t Open a Bank Account? Read this Blog and get rid of Your Problems Instantly!

In the UAE, obtaining a bank account is a simple and uncomplicated process, but what if, despite your best efforts, a bank informs you that it is unable to register an account for you? Even though these events are uncommon here, they could nevertheless occur. Banks have a set criteria for assessing potential clients and the risks involved, and if your profile raises any concerns for the bank for any reason, they have the authority to refuse to open an account for you and reject you as a client.

Each bank also has extra rules governing the customer profile, their activities, the minimum number of transactions, account balances, etc. Due to the aforementioned, practically all banks whether in the UAE or other nations open accounts judiciously and in accordance with client demands.

This blog will therefore be very helpful for you if you intend to create a bank account in the UAE or have already been turned down. In this blog, Dhanguard will  look at a few common scenarios when a bank would probably decline to open an account for you and we'll explain how to stay out of trouble.

What can make a UAE Bank refuse to open an Account for you?

A successful transaction depends on trust. When choosing a provider of any service, including your bank, you want to discover as much as you can about your potential partner - customer testimonials, dependability, ease of contact, etc. In the same vein, the bank wants to assess your dependability; as a result, they want you to present a number of documents attesting to the stability of your income, the lack of debt, etc.

Actually, this information is divided into two main sections. 

  • The first section contains general information about you as the client, such as your name, address, contact information, and any papers pertaining to your business or other activities.

  • The second section of the information refers to financial transactions, including the origin of your funds, the anticipated type and frequency of account transfers, the typical account balance, papers on economic activity, etc.

  1. Both when opening the account and when interacting with the bank, this information is offered. For instance, you mentioned that trading between specific nations is your primary activity. 

  2. Then you included the activity for entirely distinct business transactions. Since such conduct was not initially disclosed when creating an account, the bank must be given this information.

  3. The bank will logically be unable to open an account for you if you do not supply the required information, and your application will be denied. This is similar to the opposite scenario, in which you ask a bank for key information about the bank's dependability and the bank declines to give it to you. How will you respond? Without a doubt, refuse to open a bank account there. The bank operates similarly.

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Preventive Steps to Avoid refusal of Bank Account opening in UAE

As a financial institution, a bank is subject to certain hazards; as a result, the management of the bank works to reduce these risks. They use the "KYC" strategy (know your client), which requires banks to obtain as much data as they can about potential clients in order to accurately identify any risks. And if bank officials have any doubts about your reliability as a result of this assessment, they will probably refuse to create the account. 

  1. Alternatively, if the account has already been opened and any doubts have previously surfaced through account activity, the existing account may be canceled.

  2. People frequently lack understanding of this risk assessment approach, making the rejection or termination of an account look illogical and callous. 

  3. As a result, banks have developed an image as cold, heartless organizations. However, this is not actually the case because it is beneficial for banks to have a large clientele because as the number of clients increases, so does operating profit (monthly fees, transfer fees, interest on loans, etc.). Naturally, the bank will not get the money if it rejects a client.

  4. In order to safeguard its current clients and workers, the bank frequently rejects due to the high risks. 

  5. The bank's reputation is crucial because it must be trusted. Dealing with dubious businesses, clients, or transactions can result in severe fines or even the loss of a license, which might put the bank's entire operation in danger.

  6. For this reason, the most important piece of advice for you to open an account and ensure that it won't be closed in the future is to provide the bank with all of the necessary paperwork as soon as possible.

Few Instances which can lead to Denial of Account Opening Request

Despite all the other information that identifies you as a trustworthy person, there are instances where a bank will immediately reject you the opportunity to create an account. This happens when a bank considers a complicated indicator that includes individual criteria when evaluating a potential client. A bank in the United Arab Emirates will most likely decline to open an account for you as a result of the following reasons:

  • The required documentation is either not there or the client claims not to have it.

  • Because of the suspicious nature of the transactions, your account has already been frozen by another bank in the UAE.

  • The business's owner declines to meet personally with a bank representative. A bank representative interview is a condition that must be fulfilled in order to open an account; otherwise, a bank in the United Arab Emirates will not open an account for you.

  • A client lacks documentation regarding the funding source and previous company ventures.

  • The bank's standards for minimum balances and account turnover cannot be met by a client.

  • There is a list of people in the UAE who are prohibited from working with banks (foreign politicians, those who have been noticed in violations, etc.). Rejection is assured if your name is on this list.

What to do when a Bank refuses to open your Account?

It is best to be ready in advance if you have even the slightest concern that a bank might question your reliability. 

  1. Verify the accuracy and completeness of the submitted information by reviewing all required papers. Additionally, you can use public resources to research yourself beforehand. 

  2. Check your business, yourself (as an individual), the directors of your business, and your partners.

  3. Additionally, it is advised to include any available supporting documentation for your company, such as contracts and recommendations. 

  4. The bank can more easily determine your credibility the more information you provide it about yourself.

  5. And what should you do if your company is just getting started, you haven't had much time to attract clients, and you only have a few employees? Do not fear, simply discuss your company's nature in detail when you meet with a bank representative. 

  6. More trust will be placed in you if your information is accurate and detailed.

Conclusion

Staying prepared for such kind of hindrance will save you an immense amount of time as well as money. The above mentioned information has been carefully curated by our team of experts so that you can open your bank account without any complications. Thus, we hope this blog provided you with insightful information. For more information on other related aspects, feel free to check out our website as well or get in touch with our Experts by visiting our Branch Office.

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Frequently Asked Questions

Yes, a foreign entity can open business account in the UAE. The registration of any organisation in the UAE is generally an easier and cost-effective way.

The requirement for opening any bank account in the UAE vary from one bank to another. Although, the existence of a major director or shareholder is generally required.

A limited company should have a dedicated bank account because they have a separate legal entity.

The benefits of having business account includes tracking of the expenses, easy calculation of the tax liabilities as well as management of cash flow.

Yes you can open a business account in various major currencies of the world other than the UAE dirhams.

Every bank has a unique internal procedure and timetable for opening accounts. For an LLC or a Free Zone company, obtaining a bank account in the UAE normally takes 2 to 4 weeks.

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