Opening accounts in UAE banks: Guide for expats

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Christina
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09 Nov 2023
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article
09 Nov 2023
174 views
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In this article, we will delve into the intricacies of UAE banks. We will commence by elucidating the distinctive traits of the local banking system, followed by providing comprehensive guidelines for initiating the process of opening an account with any bank in the Emirates. Keep scrolling, as the information is both engaging and informative.

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Diverse account options in UAE banks

Within the UAE banking landscape, institutions offer two primary types of accounts: current and savings. Current accounts come with the added benefit of checkbooks, while savings accounts accrue interest on the deposited balance. Current accounts also grant the option for overdrafts, allowing quick access to short-term loans without the necessity of prior bank approval.

The utilization of checkbooks holds particular importance in the UAE, unlike in some other countries. They serve as a prevalent method of payment, notably in real estate rental transactions. Here's how it works: tenants write checks for the entire rental duration, specifying when the landlord can cash them. Subsequently, the landlord simply visits the bank at the designated time to collect the funds. In fact, checks are employed for various substantial transactions in the Emirates. Thus, if you plan to reside in the country, a current account becomes highly advantageous.

Savings accounts are accessible to all foreigners, but current accounts are exclusively available to those possessing a resident visa. Banks also establish minimum requirements for average monthly balances or monthly deposits. Falling short in any given month could result in a commission fee of up to 30 dirhams.

Additionally, account closure is feasible only after one year from the opening date, incurring an average cost of around 100 dirhams.

Advantages of opening a bank account in Dubai  

Reliable banking institutions  

The UAE serves as the Middle East's financial epicenter, attracting global players due to its diverse economy and favorable investment climate. The country's political stability and strategic location further foster rapid economic development. Local banks offer favorable terms and utmost transparency.

Modern financial infrastructure  

UAE banks are renowned for their advanced financial infrastructure, facilitating convenient account management and access to services through digital platforms. The recent emergence of neobanks has introduced personalized services and enhanced security measures.

Income tax exemption  

Tax residents in the UAE are exempt from personal income tax. This remarkable benefit applies to various forms of personal income, including wages, sales transactions, interest, dividends, royalties, wealth, luxury, inheritance, and donations.

Global market access  

UAE banks are part of the IBAN system, simplifying transactions with Europe. There are no restrictions on foreign money transfers within the country, and the Central Bank doesn't enforce currency controls. This makes the UAE an ideal destination for investors and entrepreneurs.

Data security  

The UAE places a strong emphasis on safeguarding the personal data of its residents, extending this commitment to the financial sector. With modern security protocols and a responsible approach, your financial information remains secure, shielding you from breaches and unwanted intrusions into your personal life.

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Top 5 banks in Dubai

Emirates National Bank of Dubai (ENDB)  

ENDB, a prominent bank with an extensive network of branches throughout the nation, stands out as a major player in the corporate banking sector. It's notably recognized for its growing Islamic services division, offering advanced services in investment, private banking, asset management, and mediation.

Dubai Islamic Bank  

As the pioneer in implementing Sharia principles across its entire spectrum of operations in the UAE, Dubai Islamic Bank provides a wide array of traditional services, including current accounts, car loans, mortgages, and investment deposit accounts. The bank has earned accolades across multiple sectors, spanning retail, corporate, investment banking, CSR, and consulting services.

Mashreq Dubai  

With its inaugural branch dating back to 1967, Mashreq Dubai has maintained a leading position not only within the UAE but also in the global market. Approximately 50% of Emirati families reportedly engage with the bank's services. Mashreq has a history of innovation, introducing the UAE's first ATM, gaining access to the Visa global network, and pioneering chip-enabled bank cards in the country.

First Abu Dhabi Bank  

Although headquartered in Abu Dhabi, First Abu Dhabi Bank has a widespread presence across all Emirates. This extensive reach is warranted, as FAB's international network spans more than 19 countries. The bank has consistently ranked among the world's top 50 most trustworthy banks, according to Global Finance magazine. FAB offers comprehensive investment solutions and an extensive range of private banking services.

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Commercial Bank of Dubai

Over its decades-long existence, the Commercial Bank of Dubai has transformed into a progressive institution, led by seasoned experts. Today, the bank offers a diverse range of retail and commercial banking services and products, encompassing both conventional and Islamic banking principles. Ranked among the top 40 largest banks in the Persian Gulf, it is also a constituent of the Dubai Financial Market stock index.

Opening personal and family accounts  

The process of establishing a personal account within any bank in the country becomes feasible once you secure a resident visa and an Emirates ID. It's important to note that UAE banks tend to exercise caution when dealing with non-residents due to stringent anti-money laundering regulations. Consequently, they diligently assess the credibility of all applicants, setting relatively high standards compared to other countries. However, much of this scrutiny takes place discreetly.

In addition to the visa and Emirates ID, many banks may request verification of your income sources. This can be accomplished via several means, such as:

  • statement from another financial institution;
  • salary certificate;
  • certificate from the tax service.

Typically, these documents should be translated into English or Arabic. While most organizations in Dubai readily accept documents in English, it's advisable to confirm this with your chosen bank's staff.

It's worth noting that certain banks have a mandatory deposit system, requiring you to deposit a sum into the account after your application is approved to signify your commitment to the bank. The amount and terms of this deposit vary by the specific institution, and the bank's personnel will provide you with precise details. Typically, plastic cards are issued within 7-10 days of opening an account.

Initiating a business checking account  

To open a business checking account in the UAE, the first step involves registering a company. To accomplish this, contact the General Directorate for Residents and Foreigners. The registration process entails signing a contract with a service agent, procuring or leasing an office, and selecting a suitable business format.

For unrestricted operations within the UAE, the Mainland company format is ideal, enabling the sale of goods and services throughout the Emirates. If your primary focus lies in the international market, you can establish an offshore company. However, bear in mind that while an offshore company can have a legal address in the UAE, it cannot conduct business in the country.

Irrespective of the chosen format, the subsequent step involves assembling the necessary documents, including:

  • constituent documents of the company, such as the charter, license, foundation agreement, and certificate of registration; 
  • decision from the general meeting of founders regarding the appointment of a director or a power of attorney; 
  • confirmation of the company's legal address;
  • company account statement or, for startups, an account statement of the founders.

The process for opening a business checking account closely parallels that of a personal account: document submission, awaiting approval, deposit placement, and account utilization.

Conclusion  

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