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Major Problems while Opening and Maintaining Corporate Bank Account in UAE!

Starting a Corporate Bank Account is one of the most difficult obstacles business owners face when opening a business in Dubai and the UAE. You must adhere to a variety of stringent rules in order to open a corporate bank account in the UAE.Due to severe regulations and rigorous international legislation, opening a bank account takes a long time for business owners who want to start and operate a new business in the UAE.

But be rest assured, Dhanguard has got your back. In today's blog, Dhanguard will extensively discuss all the major problems that you might face, while you initiate the process of opening a Corporate Account in the UAE. The prime goal of our Experts is to keep you informed of the problems beforehand, so that you can go through the process without any hiccups and hindrances. So, without any further ado, let’s begin!

Along with a wide array of services provided, Dhanguard also helps with Mainland, Offshore and Freezone Business Account opening as well.

Why is it so hard to open a Business Bank Account?

The opening of a Corporate Bank Account is one of the most challenging tasks faced by business owners when opening a company in Dubai and the UAE. 

Below mentioned are the problems you might face, therefore knowing them beforehand will help you a great deal-

Business History of the Account Holder

You must establish your reputation with the bank while applying for a corporate bank account. The founder of the business must show that he or she has in-depth understanding of the sector in which the business will function. The process can be sped up by determining a person's or company's creditworthiness and debt history through prior commercial dealings.

Pressure to Comply with Strict Regulatory Requirements

The UAE is committed to preventing financial crimes like money laundering and supporting terrorism, and banks must follow this policy. The challenges of opening a bank account in the UAE are made more complex by the pressure on banks to adhere to regulatory requirements such as anti money laundering (AML) programmes and counter terrorist financing (CFT). Banks in the UAE are thus under a lot of pressure from regulatory and inspection agencies, which compels them to be tough with customers who are attempting to register an account for the foundation of a corporation.

Read More: How to Get Your Real Estate Agent License in Dubai?

Residence Visa

The majority of banks in the UAE demand a resident visa. Additionally, you could be required to provide a local address by a number of banks in the UAE. It's also a good idea to check to see if the bank requests documentation showing that the stockholders in your firm have current residency permits. Some banks want proof of this from at least one shareholder.

Lack of Physical Office Space

Your company must have a physical address to do business with banks in the UAE. To confirm that your company has a physical presence at the address listed in the papers, some banks will send an inspection officer there.

Conducting Business in High Risk Countries

You can have trouble opening a bank account for your business in the UAE if you do business with high risk or sanctioned nations. The UAE expects financial institutions (FIs) to abide by legislation that address the risks of money laundering and terrorism financing that come with doing business with high risk jurisdictions.

  • Additionally, FIs are required to carry out all special measures and countermeasures pertaining to High-Risk Countries as identified by the National Committee for Combating Money Laundering, Terrorism Financing, and Illegal Organizations. 

  • These measures and countermeasures include those pertaining to the execution of decisions made by the UN Security Council and Financial Action Task Force (FATF).

  • Higher levels of internal reporting and management approval, frequent transaction monitoring, and more frequent review/updating of clients due diligence data are all necessary as a result, and they all call for a higher level of scrutiny. 

  • Financial institutions must take appropriate internal regulations, processes, and controls into account when dealing with high risk jurisdictions.

A weak Business Plan with Insufficient Data

It's crucial to have a strong business strategy when beginning a business in Dubai or the UAE. Your company's financial stability is required by banks in the United Arab Emirates. A financial plan for your business, the founder’s background, a list of potential suppliers and clients, and other information will be extensively reviewed by banks.

The procedure for opening a business bank account in the UAE could be further delayed if a solid business plan and other financial documents proving the company's financial integrity are not provided.

Requirement of Minimum Balance

Most banks have a minimum balance requirement for all corporate accounts. The minimum deposit varies from AED 25,000 to AED 500,000 depending on the bank you decide to open an account with. It is also challenging to obtain the services of a relationship manager at some banks because of their minimum account balance requirements.

High Risk Individuals

It could be quite difficult to open a corporate bank account in the UAE if you are a citizen of a high risk country. Governments all across the world have the authority to impose sanctions on a specific individual. Banks do not permit the transfer of funds to or from Specifically Designated Nationals (SDNs). SDNs can exist anywhere on the globe and be made up of individuals. SDNs may be connected to transnational criminal groups, sanctioned regimes, terrorism, human rights violations, nuclear proliferation, and other crimes.

Is it financially advantageous for the bank or payment institution to work with you?

Banks take a big risk when dealing with new businesses since they are unsure of the direction of the company and do not know the directors. 

  • In order to decide if the consumer will make enough transactions to justify the risk, banks and payment institutions perform a profit and loss analysis before accepting the risk. 

  • Banks receive thousands of applications, so sometimes it isn't worthwhile for them to take a chance on a new company when they already have a long line of them.

Conclusion

For business owners wishing to launch a Business in the United Arab Emirates, opening a corporate bank account for a company takes some time. Dhanguard can help you speed up this process as our Experts have a deep knowledge of national and global regulations, as well as a great deal of expertise working with banks on a range of business accounts. Thus, we hope this blog provided you with insightful information. For more information on other related aspects, feel free to check out our website or visit our head office as well.

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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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