Businessmen in Dubai used to be allowed to freely receive money by cash or bank transfer from numerous hidden sources outside of Dubai, UAE, in exchange for invoices. Businesses cannot receive money or bank transfers from undisclosed sources or high-risk countries after the implementation of Anti-Money Laundering (AML) Regulations, which means money must be transferred by an approved list of customers declared at the time of due diligence when opening the bank account.
It is now required that the transfer be accompanied by an invoice, and that the transfer be made by an approved customer. As a result of the new AML requirements, banks must guarantee that all clients, whether new and old, follow the due diligence guidelines. For existing and new customers, banks have issued new KYC forms and rules that demand all information such as top customers, top suppliers, region of business, and key items. The extra due diligence has complicated the firm creation procedure, particularly for startup entrepreneurs that work in co-working spaces in UAE free zones.
What is the process of forming a company in Dubai?
Starting a business the traditional method entails a series of phases, which include:
- Identifying a commercial activity
- Choosing a legal form that is appropriate
- Obtaining a trademark registration
- Obtaining a first approval
- Creating a Memorandum of Association and a contract with a local service agent
- Choose a location for your company.
- Obtain more government permissions
- Documents must be submitted and fees must be paid.
Therefore, you must know everything before company formation in Dubai.
The Herculean Task of Opening a Bank Account in the United Arab Emirates
The procedure of creating a bank account is a huge problem for startups in Dubai, especially since the AML Regulations were implemented. Under extreme compliance pressure, banks have made KYC procedures for startups extremely strict. Since the EU placed the UAE on its blacklist in 2017 and then moved it to its grey list in 2018 after the UAE committed to meet the EU’s standards, Dubai’s banks have gone crazy, closing accounts for existing customers who don’t meet the standards and rejecting new customer applications who don’t meet the standards, such as having no physical office or no UAE resident visas, or choosing to operate in a co-working space known as UA in Dubai.
New businesses and entrepreneurs seeking Flexi desks in free zones are finding it difficult to get a bank account in Dubai, United Arab Emirates. For the following reasons, the Bank may refuse to open the account:
- There is no information on the shareholder’s or entrepreneur’s history and experience.
- Visas for the United Arab Emirates are not required.
- There is no physical office with a tenancy agreement (ejari)
- 17 countries are considered high-risk trade partners (such as Africa, Iran, Iraq etc)
- Seventeen nationalities are considered to be at high risk (such as Africa, Iran, Afghanistan, Iraq etc)
- Managing High-Risk Products and Services (such as Gold, real estate and consultancy)
Therefore, you must go online for more information.