Before opening an account, every bank worldwide must perform a thorough client screening — this is the compliance procedure. UAE banks take this process especially seriously. In line with international standards, financial institutions in the UAE work hard to prevent money laundering, follow “Know Your Customer” (KYC) protocols, and ensure tax compliance. As a result, anyone attempting to open an account, especially a foreigner, should be prepared for a detailed review of their business relationships.
This article will detail what compliance means in the banking industry and how you can successfully complete this somewhat challenging procedure in the UAE.
What is the bank compliance procedure?
Banking compliance means adhering to various international requirements, ethical standards, and regulations aimed at assessing and managing financial risks. This means banks not only protect their clients’ accounts but also work to prevent illegal and suspicious activities related to money laundering, tax evasion, and the financing of international terrorism.
The compliance process involves a thorough review of all documents provided by an individual or company when opening a bank account. During this process, the bank evaluates both the client’s financial capability and the legitimacy of their income. This is especially important if a client is opening a corporate account. In this case, the bank also checks for any connections with partners or suppliers under sanctions. If the bank suspects that an applicant might be involved in illegal financial schemes, it will refuse to provide service.
What types of compliance are used in UAE banks?
There are specific rules for meeting banking requirements, which can be categorized as follows:
- Company registry requirements — these include timely licensing, adherence to confidentiality policies, KYC compliance, and meeting certain financial indicators. The requirements vary depending on whether the company is registered in a Free Zone or on the mainland, as well as the sector: accounting, legal, financial or IT services, retail trade, tourism, etc.
- Compliance with the tax legislation of the country or Free Zone — this covers obtaining a tax ID, registering for VAT on schedule, submitting reports, and conducting annual audits for companies that are required to do so.
- Compliance with federal tax administration rules (NFS) — this covers conducting business legally, timely notification of updates or changes to the company’s charter, deregistration upon closure, the implementation of invoices in a specific format, and related matters.
- Compliance with the anti-money laundering rules — income must be “transparent” to the bank. That is, the source of funds and all transactions must be documented: if it’s revenue from commercial activities, receipts are required, if it’s investments, the source of funds (such as savings, inheritance, or the sale of real estate, etc.) must be verified.
The importance of following banking regulations in the UAE
As part of the compliance process when opening corporate accounts, banks in the UAE thoroughly check all information about the company’s owners, investors, and partners. At the same time, there are many cases when formally all documents are provided, but the forms are filled out incorrectly by applicants. As a result, the foreigner spends a lot of time and effort but is ultimately rejected because bank staff worry that they might be concealing something.
It’s essential to recognize the importance of full compliance in the banking sector, especially in the Emirates. To avoid unintentionally raising red flags or being blacklisted by UAE banks, Dynasty Business Adviser experts strongly recommend seeking professional assistance when opening an account. Especially if you are not fluent in Arabic or English and are unfamiliar with local laws.
The regulatory framework and laws
It’s important to note that banks impose requirements on depositors for a reason. UAE banks not only follow local rules but also adhere to international standards. The latter include:
| Name | Description |
|---|---|
| Banking Secrecy Law | Every bank is obligated to protect its clients’ confidential information. At the same time, they must adhere to KYC/KYB guidelines, verifying identities and the legitimacy of activities. This means banks must ensure that their clients are reliable or refuse services to those considered suspicious. |
| Dodd-Frank Act | This act protects consumers from fraudulent practices and helps manage financial risks. In practice, banks are required to monitor transactions and financial operations to detect any suspicious activity. |
| GDPR | Originally implemented in the EU, GDPR has become a global standard. Its key provisions include protecting customer data and informing clients about what data is processed by the bank and for what purposes. |
| Basel III International Standard | Many depositors wonder what measures banks can take to ensure that their money remains secure. This standard requires each bank to maintain a certain level of reserve capital and financial liquidity to ensure stability even in times of crisis. This provision directly protects consumers. |
Rules and requirements
To protect customer interests, UAE banks have two key departments dedicated to ensuring regulatory compliance: the Complaints Department and the Compliance Department.
The Complaints Department is responsible for:
- receiving and reviewing customer complaints;
- resolving conflicts;
- improving service quality.
The Compliance Department is responsible for:
- adhering to regulatory standards;
- verifying customer details;
- monitoring financial transactions.
In recent years, compliance procedures in the banking sector have intensified, especially for foreign clients. This is due to international sanctions and the commitment to global financial security standards.
How to go through the procedure of opening a bank account in the UAE?
Let’s discuss how regulatory standards affect the process of opening a bank account for potential bank clients. It is generally easier for an individual to open a bank account. You mainly need to prove that you are employed or have a legitimate source of income.
Required documents for individuals:
- passport or Emirates ID (for locals);
- utility bill receipts;
- information about your income sources;
- a brief biography.
If you are a legal entity, you need to prepare the following:
- documents for the company owners – similar to those required for opening an account for an individual;
- incorporation documents — a charter, the company agreement, the registration certificate, and a list of shareholders and directors;
- documents related to your business operations — contracts, details about partners and suppliers, financial statements, etc.
Keep in mind that compliance procedures may vary across banks. So, be prepared that additional documents might be requested.
How to simplify the bank account opening process?
Let’s summarize. Since banks must follow all regulatory standards, they will ask questions about. They concern:
- your income sources;
- your business activities;
- details about your partners;
- your business model.
To meet these compliance requirements, we strongly suggest consulting with professionals. You can contact our experts directly. They have many years of experience in the UAE and expertise in finance and international law and can assist you.
After our consultation, you’ll know how to answer these questions without triggering unnecessary concerns from bank officials. We can also help you with all the required documentation and form filling, so you pass all the checks quickly and easily!
