The 8 pitfalls of opening a business bank account in the UAE

August 19, 2022.

Planning to set up a business bank account in the Emirates? In this blog, we look into some of the most common problems encountered by foreign entrepreneurs.

The 8 pitfalls of opening a business bank account in the UAE

Planning to set up a business bank account in the Emirates? In this blog, we look into some of the most common problems encountered by foreign entrepreneurs.

UAE is one of the most rapidly developing business hubs – one of the rare ones that experienced growth of foreign investment even in the times of Covid. Companies from all over the world enter this market, set up subsidiaries and build business communities. Being in a fantastic location for cross-border trade, this multinational multicultural place attracts entrepreneurs from all over the world. However, many of them meet obstacles when trying to set up a local business bank account that they wish they knew beforehand.

As a FinTech company specialising in cross-border business payments, it is surprising how many of our UAE-based customers have struggled with bank account opening before coming to MultiPass. Therefore, we decided to combine these stories with our own market experience and knowledge shared by our local company formation partners to compile a list of things to consider prior to applying for an account in one of the UAE banks. As they say, forewarned is forearmed.
- Sergey, Partnership Manager at MultiPass

Lack of local office

Local banks are unlikely to open you a business account if you don’t have a registered office in the UAE – they will require you to provide a lease agreement to prove it. This brings added expenses on office lease and its maintenance, utility bills, etc. which is inconvenient, especially if your business offers remote services and does not require a fixed location.

Physical presence

There’s no way to open a bank account for your business remotely. Although local retail banks have started stepping into the digital space, launching their digital-only brands, most of them are focused on personal banking. To open a business account in the UAE, you must be present and personally visit the bank branch. The business account opening process is quite complex and sometimes may take weeks or even months. If you’ve decided to commit to both incorporating a UAE company and opening a local bank account, plan a longer stay in the country.

Minimum monthly account balance

One of the unobvious obstacles to the account opening is that the UAE banks require you to fund your account with a certain minimum balance and always keep it available on your account. Depending on the bank and their business package, this amount can sometimes go to as high as one hundred thousand dollars or even more. This aspect alone makes the local banks not that friendly for start-ups and smaller companies.

Annual attestation of documents

Local UAE banks will require you to re-submit documents from the company register to verify its corporation’s status on an annual basis. These documents must be notarised which can be costly.

Unwillingness to work with SMEs

Upon trying to open a business bank account in the Emirates, you will quickly realise that local retail banks are only interested in the ‘big fish’ – large organisations with huge balances and transaction volumes. They are less likely to open an account for a small or a medium-sized company and generally do not offer start-up-friendly packages and cost-effective cross-border payment methods.

No direct personal support

One of the weak points of the local retail banking is the lack of personal assistance. Unless you have a huge business, you won’t be able to get prompt transaction support, investigate stuck or blocked payments or get advice on the best payment route. Personal managers are reserved only for top-tier clients.

Limited business industries accepted

In the last decade, UAE banks gradually became very meticulous about the business industries they accept. Therefore, some of the innovative companies coming from the IT, FinTech, telecommunications, cryptocurrency and other emerging technology sectors may have little chance of successful onboarding. You will have to work hard and provide lots of documentation to prove the legitimacy and financial viability of your business to the bank. They are not willing to deep dive into the specifics of your business model and money flows and will not onboard business customers from any industry that is considered even mildly risky by the conservative traditional bank standards.

No customer profile pre-check

Strange as it may sound, this is an inconvenience. Many regions and nations have their unique cultural differences, and the UAE is no exception. Saying a direct ‘no’ is not part of Islamic culture, therefore the bank will always willingly go ahead with your account application, even when there is no chance of it being successful. You may waste quite a bit of time and money with no result.

Despite these difficulties, do not give up the idea of expanding to the UAE market. There is no need to go through the hassle of opening a local retail bank account to start transacting across the UAE and beyond – consider banking alternatives such as MultiPass. MultiPass was created to battle the inconvenience of brick-and-mortar banks and facilitate cross-border operations for businesses worldwide. No matter if your business is registered in the UAE, UK, EU or Hong Kong, you’ll get dedicated IBANs to transact in Dirhams, Euros, Dollars, Pounds and many other currencies across 200 world countries and territories, all while enjoying personal manager support just a call or a message away.

There should be no barriers to international business – contact us today to enquire about your case.