Opening A Bank Account in Dubai for Expats
Opening A Bank
Account in Dubai
To date, having a bank account is an essential financial instrument for both private individuals and for corporations. Many people who have just moved to Dubai face the necessity of setting up an account for day-to-day needs, for saving or investment purposes, and of course, so their salary can be deposited. As for corporations, it is simply impossible to run a business legally without a bank account. Lured by the credibility of the UAE’s banking system, more and more foreign entrepreneurs and individuals are making their money deposits with UAE banks, but not everybody knows the particularities. In this article, we will explain how to open a bank account in Dubai if you are both a resident/non-resident, what types of accounts you can choose from and the general outlines of the procedure for business entities.
To begin with, laws in the UAE allow opening accounts either for residents or non-residents, though with serious limitations for the latter. Both categories may use the accounts for personal purposes, as well as allowing companies to run international or local business. Note that, business owners, entrepreneurs or all those who intend to get dividends should opt for corporate accounts. Since personal accounts used for business are not allowed, they should establish and register a legal entity and open a subject account after the process has been finalised.
Advantages of The UAE’s Banking System
Advantages of The
UAE’s Banking System
The services provided by the UAE banks are highly ranked in the international financial scene. Having the most powerful and advanced banking infrastructure in the Middle East, with built-in processes, Dubai can even compare to the long-established financial hubs like Singapore, Switzerland and Hong Kong. Backed by the well-balanced state economics, the UAE banking system ensures free-floating of capital, a high level of confidentiality and low rates of bank processing payments. What’s more, cross-border investments is the key priority area for the UAE Government which is why banking policy is favorable for foreigners in terms of transparency, reliability and straightforwardness.
It is important to know that the state actively supports anti-money laundering and all its banks have high records. The Emirati banks invest in sound assets that guarantee stable yields.
The banking sector in Dubai is represented by a great variety of local private and state-owned banks, branches of international banks and rep offices. Local establishments such as Mashreq Bank, Noor Bank, Emirates NBD or international Standard Chartered offer an impressive advantage over the banks outside the UAE. This includes adequate document requirements, a high quality of service and advanced internet banking.
Types of Personal Bank Accounts in Dubai
Types of Personal Bank
Accounts in Dubai
A private individual may opt for current, savings or an investment account in the banks of Dubai. These are the most popular and most in demand types of accounts among expats and non-residents. The characteristics of each account type are specified by its designation. Though the terms of minimum deposit, period, special benefits, rates and perks all differ from bank to bank, we have tried to compile the data and provide the general outlines of personal bank accounts.
If you are a UAE resident, you will be provided wider opportunities for your personal account compared to non-residents. These main benefits include:
Foreign depositors interested in exclusive terms with the bank may consider a Priority Banking membership, which opens an array of privileges: personal manager, preferential currency exchange, a loan up to AED 1M with competitive rates, free ATM money withdrawal worldwide and more. For instance, Standard Chartered offers this service for current and saving accounts, term deposits and investments with an average monthly balance of no less than USD 100,000 or the equivalent of any other currency (across one or all accounts).
Current accounts are the most commonly used and most familiar to the majority of bank users, not only in the UAE, but worldwide. These accounts are used to settle day-to-day money transfers and payments, including receiving salary. In addition, current accounts are useful when settling bill payments to DEWA, Salik, traffic fines and recharging your NOL-card. Current accounts may be available in multiple currencies such as AED, USD, GBP, and the Euro, although these options vary from bank to bank. The minimum opening balance required by banks starts from AED 3,000 (USD 820).
Once you have opened a current account, you’ll benefit from:
Some banks may provide interest rates on special current accounts: for instance, Emirates NBD offers rates up to 0.10% which are calculated on the daily closing balance.
Visa and MasterCard credit or charge cards may be issued as well if requested by the client, though these cards usually have spending limits and demand separate coordination with the provider.
This type of account is subdivided into standard and current accounts with additional benefits. The latter implies various promotions (discounts on dining, shopping), travel insurance and so on. Each bank creates its own package of special privileges.
Savings accounts are purposed for accumulating money and generating certain dividends. This type of personal account is particularly popular among both citizens, expats and foreigners, since this financial option is convenient to save either a monthly or lump sum for major purchases such as a car, education or housing. The account holder has limited access to the funds, restricted separately within each package. Some banks do not issue debit cards and cheque books so that this money remains safe. One of the most popular offers for savings accounts is the Dubai Smart Saver Account by Emirates NBD which implies this very scheme: you transfer funds online or via cash deposit machines and can receive up to 1.25% on interest rates p.a. and have no means to withdraw the money earlier.
Interest rates on savings are higher than on current accounts and the trend is, the longer a holder keeps the money in the account, the higher the interest rate. Long tenure is perceived as exceeding 6 months up to several years. For example, Emirates NBD’s Steady Saver Deposit allows you to receive up to 3% on your balance paid upon account maturity. An important addition: the minimum balance required to maintain an account will be AED 10,000.
Generally, interest rates on savings lie in the range of 0.20%-1.75%. The rates are divided into fixed or variable, and interest will be calculated on the daily closing balance. These accounts may be kept in AED, USD, GBP, as well as EUR.
However, other banks may offer different package options. The United Arab Bank Ultra Savings account allows unlimited withdrawals and offers free debit cards, but at the same time, interests are earned on the account balance. So, it becomes essential to keep the balance high in order to gain the highest possible interest from the rate on offer. Keep in mind that the minimum balance should not fall behind a certain limit stated in the bank terms.
It’s also worth mentioning that there is no age limitation for a savings account. Which means parents/guardians can open these accounts on behalf of minors and control all transactions on the account, until the child reaches 18 years.
Salaries can be placed into both current and savings accounts. As was mentioned above, current accounts are best suited for day-to-day needs. Though the difficulty can be with the minimal salary amount: some banks require AED 3,500 as a minimum, others – no less than AED 5,000. So, if you are a business owner and plan to open accounts for your employees, we recommend doing your research beforehand, and looking into which banks would be more suitable to you and your business. If the size of wages still lies under the minimum amount required by banks, then it is advisable to use savings accounts.
The most preferable option for employees working for a company, would probably be to open a current account with the same bank as the company. For the first instance, salary enters the account the day it is paid (otherwise an employee has to wait for a couple of days or so) and for the second, banks offer additional privileges for a family of accounts. If you have a salaried account with the bank, it will significantly simplify the process in obtaining a personal loan. In this case an applicant avoids the task of having to confirm their source of income once again and saves processing time. Additionally, charges and commissions on salary accounts may be reduced or nominal, though this depends on the bank. For example, Emirates NBD charges around AED 60-90 for funds transfer to another country, while HSBC international transfer fee amounts to around AED 42.
An investment account is opened on the basis of an exclusive agreement with the bank. This agreement presumes that an investor puts money into an account and a bank uses the funds to buy stocks, bonds and a variety of assets which allows it to earn short-term and long-term profits. Dividends coming from investment accounts are higher than from savings accounts and vary from 3% to 7% annually.
Each bank defines the entry capital amount separately. Some banks demand a certain amount to be deposited into the account at the beginning of each year, while the others claim monthly installments. The term of the contract is usually no less than one year, commonly longer, between 5-10 years or more. Within this period, there is either no leeway in withdrawing money or withdrawals may be possible with limitations. So, the main purpose of this account is to accumulate and invest money rather than to spend it.
An investment account is an intra bank account, which is not reflected in internet banking of personal current or savings accounts. The account is only managed by the bank, which in turn will send you a statement of your account at the end of each quarter.
It is important for foreigners to know, the UAE complies with FATCA, CRS and participates in the automatic exchange of information AEOI. This means, if your bank is included in the list, your data will be automatically shared with tax authorities of the country you reside in.
If you don’t plan to obtain an Emirates ID, you’ll be very limited in the types of accounts and access to banking products that will be available to you. Interestingly, even a non-resident account is designed to support persons who have just started the process of applying for a visa or residency.
The majority of banks in the Emirates, in Dubai, namely, allow non-residents or tourists to open savings accounts rather than current ones. The fact is, to open a current account, a citizen must provide an array of documents confirming their resident status, which you can read about further in the article.
To date, a non-resident can open a personal savings account if he/she agrees with the bank to invest a certain amount of funds in shares, bonds and other financial instruments. Thus, the bank opens a savings account for an individual on the basis of an investment agreement.
Having opened a savings account, non-residents receive debit cards to withdraw and deposit funds via ATMs. Additionally, their customers also have access to online banking. These accounts are generally offered in multiple currencies, which is convenient for foreigners, who need to exchange AED to USD, GBP, etc. However, a debit card is assigned to an AED-account only.
As a rule, banks impose certain requirements to savings accounts, held by non-residents. Firstly, the physical presence of an applicant is obligatory. Secondly, it is necessary to maintain a definite balance on an account. Some providers define the maximum amount a holder may deposit on the account at the same time without confirmation of its source. For comparison, ADIB requires USD 20,000, other banks may mandate higher sums. A cheque book is unavailable for non-residents.
Opening a Bank Account: Step by Step
Opening a Bank
Account: Step by Step
Since expats take up a significant share of Dubai’s population, there are established pathways for foreigners to open accounts in local banks. Despite the extensive documentation needed and rather hefty income requirements, it is still a fairly simple process.
Requirements & Documents
It is no secret that banking standards in the UAE are on par with international requirements and increase with each passing year. An individual opting for a personal or corporate account should be prepared that banks will thoroughly research their personal background along with professional activity and sources of income and/or dividends. This is why it is crucial to enlist the help of a financial advisor and do your homework properly.
As previously stated, a citizen of almost any country has the right to set up an account in a UAE bank. The range of documents and requirements differs depending on the financial type of the applicant’s status and the type of account to be opened.
Here below we have rounded up the most common documents requested for UAE residents:
Non-residents applying for savings account should prepare to submit:
Since the official language of paper flow in the UAE is English, take care to make sure all documents are written or translated accordingly. You need to be personally present in the bank only when opening an account (you may come to the UAE on a tourist visa), and then you can perform all transactions remotely via the internet banking service or contact your personal bank manager via phone.
Important: when getting ready to apply for account opening, bear in mind that there are certain points that are negatively treated by the UAE banks. For example, they are not loyal to the countries where armed conflicts are currently taking place. These bank transfers are blocked altogether. Also, Emirati banks still do not work with Iran-based businesses and Iranian nationals. In addition, extra reports are required when dealing with U.S. companies. Operations with states, which are included on the sanction list: Syria, Afghanistan, Cuba, North Korea, etc. are considered especially scrupulous.
The procedure of opening an account comprises the following steps:
It will take 1-3 weeks to open an account with the UAE banks in total. The processing time really depends on how well you have prepared for the application.
About Offshore Bank Account
Offshore accounts in Dubai are popular in terms of the highest level of security and privacy, transparent jurisdictions and better regulations than some other countries can provide. Because of this many private individuals and companies choose Dubai’s banks as the best place to manage personal assets and protect corporate capital.
Before opening a corporate offshore account, the legal entity should be established under a designated jurisdiction. In Dubai, offshore can be registered in Jebel Ali Free Zone. What’s more, you will need to contact a registration agent to conduct the procedure. It is impossible to open an offshore remotely, as all banks insist on the physical presence of founders upon application. The list of necessary documents is very extensive and includes the founder’s personal data and the company’s financial and registration documents. The value of all costs for the founders ranges between AED 3,670-11,020 (USD 1,000-3,000).
Note: Offshore activities in the UAE will be limited. Also, an individual cannot get a residence visa and won’t be able to use the status of a tax resident of the country, etc.
Only a few banks offer non-residents the opening of offshore bank accounts, usually only for investment customers.
About A Company Account
If you own any type of legal entity such as LLC, Free Zone or Offshore, or a registered branch in the UAE, you can always apply to local banks to open a corporate account. A large advantage of opening an account in the UAE is that corporate bank accounts are tax-free, which undoubtedly attracts foreign entrepreneurs to the country.
Salaried current or savings accounts are opened for employees, meaning that each month a certain amount will be deposited into the account. For day-to-day financial transactions, a company can open a current account. The main corporate account is kept in dirhams, however some banks provide the opportunity to have up to two more sub-accounts in dollars and euros.
Each provider defines privately the minimal amount of an average daily or monthly balance and offers several categories: Low, Medium and High, with a minimum balance of AED 37,000 (USD 10,100) to AED 550,000 (USD 150,000). In relation to the arrangement you choose, the client will receive a package of privileges from the bank. For example, a personal manager, reduced interest rates on transactions, the ability to negotiate currency conversion rates and much more.
Note: The bank penalties for failing to keep the essential amount on the corporate account range in the brackets of USD 100-200.
The required documents for a legal entity should comprise:
To minimize time and efforts when opening accounts and to steer the process in the right direction from the very beginning, it is advisable to consider the following: the place of company registration and type of license.
Best Banks for Opening Accounts for Residents
Best Banks for
There are a lot of banks in Dubai, with both local and international branches to choose from. Probably, the most familiar to foreigners would be the ones with a worldwide presence such as City Bank, HSBC and Standard Chartered. To date, branches of 9 foreign banks are present in the UAE.
There are many local banks, including Emirates NBD, Mashreq Bank, Dubai Islamic Bank, Commercial Bank of Dubai, and First Gulf Bank, as well as many more. The main difference between these two groups is that the UAE national banks offer more adequate conditions in terms of lower entry barriers and offer Islamic banking. Strictly speaking, there is a separate category – Islamic banks, which operate under Sharia’s laws. These principles exclude interest charges and investments in prohibited fields, such as alcohol, gambling etc. In fact, all local banks may offer this kind of service.
Below we have selected the most reputable and popular banks to compare their main features:
Useful tip: Currently, two banks allow residents to open an account online through a smartphone app: Liv, provided by Emirates NBD and Neo, offered by Mashreq.
The majority of Emirati banks do not charge for opening an account or claim an annual maintenance fee, you should pay for these services separately instead. The account holder will have to pay for the use of ATMs of other financial branded banks which is around AED 2 (USD 0.5), cheque issuance is AED 30 (USD 8) and obtaining a bank statement can cost AED 50 (USD 14).