As the world becomes more globalised and markets and economies are increasingly interdependent, there has been growing pressure on financial institutions to develop more comprehensive governance structures and to take measures to combat the prevalence of financial crimes such as money laundering, terrorist financing, tax evasion and corruption.
Heightened scrutiny from global regulators such as the Organisation for Economic Cooperation and Development (OECD) and the Financial Action Task Force (FATF) has led banks to implement stronger internal controls such as enhanced Anti-money Laundering (AML) and Know Your Customer (KYC).
The Common Reporting Standard (CRS) is another similar initiative that has been introduced to combat tax evasion and greater transparency in the financial sector.
What is the Common Reporting Standard?
The Common Reporting Standard (CRS) is an international standard developed by the OECD for the automatic exchange of financial account information between countries. CRS has been adopted in over 100 countries worldwide, though its implementation varies between jurisdictions, with some countries adopting it in full and others making modifications to better align with their local tax laws and regulations. The UAE has committed to implementing CRS as part of its ongoing efforts to combat tax evasion and improve transparency in the financial sector.
Under the CRS, financial institutions in the UAE are required to identify and report information on accounts held by non-residents to the UAE’s Federal Tax Authority (FTA), which will then be shared with the tax authorities of the relevant countries. The information reported includes the name and address of the account holder, the account number, the balance or value of the account, and any income or capital gains earned on the account.
The UAE first began implementing the CRS in 2017, and has since established a legal framework for reporting, as well as a secure system for exchanging information with other countries. All financial institutions in the UAE are required to comply with CRS reporting requirements, and failure to do so can result in penalties and fines.
How has CRS and other regulatory controls affected banking for non-UAE residents?
While CRS has undoubtedly improved the transparency of the UAE’s financial system and strengthened its relationship with other countries through its commitment to international cooperation on tax matters, it has added to the difficulty non-UAE residents face when trying to open a bank account in the country.
Prospective banking clients are now expected to provide extensive documentation to prove their identity, address, and tax residency which can be time-consuming and difficult to obtain. They may also face challenges such as meeting minimum balance requirements for opening and maintaining a bank account and will likely also have to face additional fees and charges associated with international transactions and currency exchange.
It also means that many banks may be more reticent to offer banking services to non-residents to avoid the added compliance burden and potential risks it may involve. That said, it is possible to open a bank account in the UAE as a non-resident, although the specific requirements and procedures may vary depending on the bank and the type of account you wish to open.
Can I have a bank account in a country that I don’t live in?
Yes, it is generally possible to open a bank account in a country where you do not reside, although the specific requirements and procedures may vary depending on the country and the financial institution.
In many cases, opening a bank account in a foreign country may require you to provide additional documentation and meet certain eligibility criteria. For example, you may need to provide proof of identity, such as a passport or national ID card, and proof of address, such as a utility bill or lease agreement.
You may also need to demonstrate that you have a legitimate reason for opening the account, such as conducting business or studying in the country. If you are a business owner in the country, you’ll have to provide relevant documentation that demonstrates your financial standing and that your business activities have sufficient economic substance in the country.
Can I have a bank account in the UAE without being a resident?
Yes, it is possible. However, not all banks in the country permit non-residents to hold an account and there may be restrictions on the types of transactions you can conduct or the amount of money you can deposit or withdraw. Additionally, non-residents may be subject to different fees and charges than residents.
To open a personal bank account, you’ll need the following documents:
- Passport copy with immigration
entry stamp - An updated copy of your CV
- A reference letter from the bank where you hold an account in your home country
- A bank statement from the last 6 months
- A recent utility bill
To open a corporate account, you’ll need:
- Company documents: This includes a copy of your company’s trade licence or registration documents, and a copy of the company’s memorandum and articles of association.
- Identification documents: You will need to provide a valid passport and proof of address, such as a recent utility bill or bank statement. If you are unable to provide proof of address in the UAE, you may need to provide proof of address in your home country.
- Proof of source of funds and business activities: You may be required to provide documentation to demonstrate the source of the company’s funds, such as bank statements or financial statements and other documentation that details the company’s business activities, such as contracts or invoices.
- Other documentation: Depending on the bank and the type of account you wish to open, it may also be necessary to provide additional documentation such as financial statements, references from other banks, or a letter of recommendation.
Final thoughts
The implementation of the Common Reporting Standard (CRS) has made the process of opening a bank account in the UAE more complex, particularly for non-residents. Many banks have become more cautious in their approach to opening new accounts and the additional documentation needed to comply with CRS requirements can be challenging to obtain without a physical presence in the country.