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Banking Services and the Obstacles that Face Dubai’s Free Zones

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Various banking services are available to companies operating in Dubai’s free zones. They may run into some challenges when trying to open and manage bank accounts, particularly for companies without UAE-based resident directors. The banking options available to businesses operating in free zones, as well as any potential challenges, will be covered in this section.

banking services for companies operating in free zones.

1. Businesses located in free zones in the UAE can open corporate bank accounts with local and international banks. These accounts provide access to a wide range of services, such as online banking, multi-currency accounts, and trade finance options.

2. Payment processing: Free zone businesses can accept payments from customers and pay suppliers and service providers both locally and internationally thanks to UAE banks’ payment processing services.

3. Trade finance: To streamline their international business dealings, free zone businesses can use trade finance services like letters of credit, guarantees, and documentary collections.

4. Working capital loans, term loans, and overdraft facilities are just a few of the loans and credit facilities that banks in the UAE offer to support the growth and expansion plans of free zone companies.

Banks in free zones face difficulties.

1. Companies operating in free zones that have non-resident directors in the UAE may find it difficult to open bank accounts for them. Banks frequently require the physical presence of the company’s shareholders or directors during account opening procedures, which can be challenging for businesses whose directors are based overseas.

2. Improved due diligence: Due to more stringent anti-money laundering (AML) and know-your-customer (KYC) regulations, banks in the UAE have implemented more rigorous due diligence procedures for account opening. This could result in more paperwork and longer processing times for businesses operating in free zones, particularly those with complex ownership structures or working in high-risk sectors.

3. Account maintenance specifications: Banks in the United Arab Emirates have the power to impose additional compliance reporting specifications, transaction limits, and minimum balance specifications on free zone companies. These requirements may be challenging for businesses that need to be able to manage their finances adaptably.

4. Although there aren’t any strict currency controls in the UAE, some banks might impose limitations on certain currency transactions, particularly for companies doing business with countries that are the target of international sanctions or embargoes. Businesses operating in free zones might not be able to access certain markets as a result.

If free zone businesses want to get past these obstacles, they should carefully research their options and select a bank that understands their particular needs and specifications. Additionally, by seeking the advice and assistance of financial consultants or corporate service providers, free zone businesses can successfully navigate the challenging banking environment and guarantee that they have access to the financial services required to support their operations. 


Author: Pooyan Ghamari, Swiss Economist


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