UAE including Ras Al Kaimah (RAK ICC) Companies and their struggle for Bank Accounts

Getting a bank account for a UAE Offshore or Free-zone company in the United Arab Emirates is at present extremely stressful with very low or no change at all of getting an account opened.

Compliance has now become an operational expense felt globally by all banks including UAE Banks. Thus, banks are more careful while doing their enhanced due diligence and have to deploy extra human resource to achieve this. Hence ending up paying for extra compliance staffs - which is an additional fee to the bank. We have even witnessed banks closing customer accounts instead of spending time and efforts in providing adequate documentation to their correspondent banks; as following up with customers for documentation or KYC on their transactions have become a burden if such a customer is not bringing value to the bank. This is common with UAE Banks unfortunately.

The UAE Central Bank has also issued stricter policies for UAE banks to strengthen their due diligence to meet with international standards and comply with the EU/UN Financial and AML watchdogs.

UAE Banks now have a tendency of evaluating a UAE Offshore or Free-zone company as follow before taking a decision whether to open or reject the account application:

a. Are the directors or shareholders UAE residents (with a valid Emirates ID card & Ejiari - tenancy contract)?

b. Does the company have a physical office in the UAE? Which might not be the case at all if you have an offshore company. Flexi desks for offshore or free-zone companies are not considered as a valid physical office (as per the banks)

c. And the most important one, will the bank generate profits from the transactions of the client?

Some banks in the UAE might ignore point A & B above and open your account for a huge security deposit or "investment". We know a few banks asking for AED 100,000 (USD 30,000) as investment into securities or other investment funds. And if you are just a startup or a company with limited financial resources, this just does not make any sense to your business.

UAE Offshore and Free-zone companies are very common because they are mostly affordable, 100% foreign ownership, and above all tax free. And needless to say that you can operate your business from anywhere in the world.

Our recommendation

1. Talk to an expert like us to understand your business requirement and we can suggest the best corporate setup in the UAE for your business

2. If you already have an offshore company or free-zone company in the UAE e.g. a RAK ICC company, we can get you accounts outside of the UAE

Contact us at info@fintechinnovation.io