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Short news and ideas

How to bank in the United Arab Emirates


01/04/2015

Today opening and operating offshore bank accounts is not easy anywhere in the world. Numerous banks have shut up shop when it comes to foreign companies, even closing existing accounts. This has been particularly noticeable in the Swiss banking system, but the situation is no better in other countries either. The United Arab Emirates is becoming more and more popular for the opening of bank accounts. However, going into this without doing your homework can lead to some nasty surprises, which can cause serious financial losses for the unprepared client who is just trying his luck. The first, and most important question is whether we should open an account in the Emirates for a private individual or for a company.

It is much easier to open an account for an individual than for a company, although there are also some idiosyncrasies here too. The most significant is that banks in the Emirates, almost without exception, will only open accounts for individuals with local papers (residence permit). They do not open accounts for foreigners in the country as tourists, and this rule is strictly adhered to. In many cases, they are not even prepared to change money for people who call in on the off chance, and who do not have accounts in the given bank.

The opening of accounts for companies can also be split into two groups. Opening accounts for local, or free trade zone companies is somewhat easier. Generally, they require the personal presence of the signatory and/or director of the company. The banks do not particularly like it when the director does not actively take part in the operation of the company (nominee). Having a nominee director is in itself a reason for rejecting an application quite regularly. As there are now 24 free trade zones within the UAE, and there are no standard rules covering all 24, we should not be surprised if a banker looks at us rather strangely when presented a pack of corporate documents with which he is totally unfamiliar.

Opening accounts for foreign companies, i.e. companies not registered within the UAE, is much more difficult. It is not impossible, but it will require a lot of time and money. The main problem is caused by the fact that the United Arab Emirates is not a member of the Hague Convention on Apostille, so documents certified with Apostille are not worth anything here. In the case of foreign companies, the banks have no choice but to insist on certification from a consulate of the UAE. Organising and obtaining this, however, can prove extremely costly, reaching as much as 2000-3000 US dollars in certain cases, making the whole thing basically pointless. For that amount, the client could practically buy a new company, which, furthermore, would not need to order a fresh Certificate of Good Standing either. Moreover, there is no guarantee that the bank will open the account, as the bank officers can reject an application by a foreign company at any time.

To summarise, a local company with an account in the Emirates may be the ideal solution. It is worth commissioning a company with experience and contacts with the opening of the account, as, although this service has to be paid for, it will save the client a great deal of time and anxiety, not to mention money.

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