The procedure for opening a bank account in the UAE is simple and straightforward, but what if, after all your efforts, a bank tell you the following: “Sorry, we cannot open an account for you in our bank.” Such situations are not typical here, but still, it may they happen. Banks have a standard well-established process for evaluating potential customers and associated risks, and if your profile for any reason causes doubts in the bank, they have the right not to open an account for you and reject you as client.
In addition, there are additional banking regulations in each bank regarding customer profile, his/her activities, the minimum amount of transactions and account balances, etc. Due to the above mentioned, almost all banks, whether in the UAE or in other countries, open accounts selectively and subject to fulfilling customer requirements.
So, if you are going to open a bank account in the UAE, or have already faced a rejection – this article will be very useful for you. Here we will examine some typical situations in which a bank will most likely refuse to open an account for you and we tell you how to avoid such troubles.
Why should a bank in the UAE deny to open an account for you?
Trust is the key to a successful deal. When you choose a supplier of any service, including your bank, you want to learn about your potential partner as much as possible – customers reviews, reliability, communication convenience, etc. In the same way, the bank wants to evaluate your reliability, and it’s for this reason they require you to provide a set of documents that confirm the stability of your income, absence of debt and so on.
This information, in fact, includes two main blocks – general information about you as the client – your data, address, documents of your company, your activity, etc.
The second part of the information relates to money movements – the source of your funds, the planned nature and frequency of transfers on the account, average account balance, documents on economic activities, etc.
This data is provided both at the time of opening the account and in the process of working with the bank. For example, you have stated your main activity as trading between certain countries. Then you added the activity for completely different commercial transactions. Such data must be provided to the bank since such activity was not originally declared when opening an account.
If you do not provide the necessary information, then the bank, logically, cannot open an account for you and will reject your application. This is similar to the reverse situation – imagine that you want to know main data about a bank regarding its reliability, and the bank refuses to provide you with this information. What will you do? Surely deny to open an account in such a bank. The bank does the same.
What should be done so that the bank in the UAE does not refuse to open an account or block it in the future?
A bank, as a financial institution, is exposed to certain risks; therefore, the bank’s management strives to minimize these risks. They practice the “KYC” strategy (know your client), according to which a bank strives to gather as much information as possible about a potential client in order to assess potential risks properly. And if representatives of the bank, after such an assessment, feels doubts about your reliability, most likely they the bank with deny the account opening or, if the account is already open, and some doubts arise already during account movements, the existing account can be closed.
Often people do not understand this principle of risk assessment, and the rejection or closing of an account seems an unreasonable and unfear decision to them, that’s why banks have got a reputation for indifferent and heartless institutions. But, in reality, this is not the case, because it is profitable for banks to have many clients: more clients – more profit from operations (monthly fees, transfer fees, interest on a loans, etc.). Naturally, if a bank refuses a client, it will not receive this money.
The bank often rejects because of the high risks in order to protect its existing clients and employees. Reputation is very important for the bank, it must be trusted, and working with suspicious companies, customers and transactions can result harsh fines, or even loss of a license, which can puts the entire bank business at risk.
For this reason, the main advice for you to open an account and making sure it would be not closed in the future is to submit the required documents and data to the bank in a timely manner and in full extend.
What does a bank verify by account opening?
So, what do bank employees pay attention at when checking your documents and profile? Naturally, they first check whether the company really exists, whether it really works in the market, and whether a potential client is trustful. There are quite a few sources of information, both public and professional ones. These are sites of government services, registers of legal entities, open sources, etc. You can check the information about yourself in open sources by yourself, and, accordingly, update, when applicable, your data. As for private sources, the situation is more complicated – you will not be able to track your performance.
When a bank in the UAE rejects to open an account
Evaluating a potential client, a bank will take into account a complex indicator, which includes individual factors, but there are situations when a bank will immediately deny you to open an account, despite all the other data that characterizes you as a reliable person. Here are the most common factors due to which a bank in the UAE will definitely refuse to open an account for you:
- A client denies to provide the necessary documents or simply does not have them.
- Another bank in the UAE has already blocked your account due to suspicious nature of the transactions.
- The owner of the company refuses to have a personal meeting with a representative of the bank. An interview with a bank representative is a mandatory requirement for opening an account, without such a bank in the UAE will not open an account for you.
- A client has no evidence of the source of funds and previous business activities.
- A client cannot fulfill the requirements of the bank for minimum balances or minimum account turnover.
- In the UAE, there is a list of persons who are restricted to work with banks (foreign politicians, those who have been noticed in violations, etc.). If you are on this list – rejection is guaranteed.
For any of the above reasons, a bank will refuse to open your account. Moreover, they will not tell you the exact reason for the refusal, since this is prohibited by law.
How to prepare and to not be in a situation when a bank does not open an account
If you have even the smallest doubt that a bank may question your trustworthiness, it is better to prepare in advance. Check all the necessary documents and make sure that the information provided is complete and accurate. You can also check in advance information about yourself from open sources. Check your company, yourself (as a private person), directors of your company and your partners.
It is also recommended to provide the available additional documents about your business – recommendations, contracts, etc. The more information about yourself you provided to the bank, the easier it is for the bank to verify your trustworthiness.
And what to do if your business is just beginning, you had no time to get your customers, and have very few operations? Do not worry, just describe in detail the nature of your business at a meeting with a bank representative. The more detailed and accurate your information is, the more trust you will have.
Another important aspect to which it is important to pay attention is the answers to the questions of the representative of the bank. During the interview, a bank representative will ask you questions, evaluating you and your business. Our advice is simple – be honest and do not worry about confidentiality, the protection of personal data is guaranteed by law.
