How to Close a Bank Account in the UAE: Step-by-Step Guide

Every company must have a corporate bank account mandatorily to run a business in the UAE. You can obtain a trade license without opening the bank account. However, you are not permitted to trade legally before opening the account. All the business transactions should be through the said account. Your personal and business finances should be kept separate. Mixing the two violates Anti-Money Laundering norms.

Furthermore, the Wage Protection System (WPS) implemented by the Ministry of Human Resources and Emiratisation (MoHRE) and tax documentation require the company to have a corporate bank account. A company should close the corporate account if it is not in use.

Leaving the account open can lead to severe consequences, including penalties:

• Penalties: The majority of banks in the UAE charge a monthly minimum balance fee if the account balance falls below the threshold (minimum balance varies with banks). The subject fee ranges from AED 25 to AED 100. This penalty can accrue over time and become a heavy amount.
• Credit Score: Al Etihad Credit Bureau (AECB) maintains the credit profile of each individual. A delinquent corporate bank account can affect your credit score and your ability to obtain future loans.
• Legality: Flagged accounts can create legal complications for the account owner. Negative balance and accumulated penalties will be flagged. Your visa request might get rejected or may cause legal problems if you re-enter the UAE.

Let’s look into the core aspects related to bank account closure and the step-by-step process.

Avoid closing a bank account directly after withdrawing all funds. You need to confirm that there are no outstanding liabilities and the standing instructions have been cancelled. Funds expected must be redirected to an active account before closing the present account.

Key checklist before commencing the bank account closure:

• Clear all the liabilities: Pay credit card bills and other outstanding dues (if any). Loans must be repaid in full for closing the bank account. Get a clearance letter from the bank after clearing all the dues.
• Standing instructions and auto-debits: Most companies route the utility bill payments through the corporate account. Cancel the standing instructions and auto-debit feature to utility service providers such as TAQA Distribution, DEWA, SEWA, and DU.
• Unlink transportation account: Unlink the account from the transportation toll accounts such as Darb and Salik.
• Post-dated cheque: Is there any outstanding post-dated cheque? Confirm that no such cheques are pending.
• Future payments: Get the documentation done for redirecting all the future payments to an active account in the UAE or your preferred location.
• Withdraw the money: This is the final step before starting the account closure. Withdraw or transfer all the money and bring the account to zero. Leave a small amount only if you suspect additional transactions are pending settlement.

Now we will move to the documentation part. The next section tells you the documents required for bank account closure.

All banking processes have become digitised nowadays. Hence, the exact bank account closure process depends on your bank.

The procedure is:

• Determine the channel: You can visit the branch in person and close the bank account. Major banks either mandate or highly prefer this channel. Alternatively, bank account closure is possible via mobile banking/ apps in major banks such as HSBC and Emirates NBD. Those who have already left the UAE can submit a notarised account closure application through the prescribed channels. Finalise the method you want to pursue for the bank account closure. We suggest you visit the branch and complete the formalities.
• Fill the application: Make sure to fill the account closure form carefully. Mismatches and errors are not acceptable. This can be either online or at the branch depending on the chosen channel. Enter the exact account number and IBAN. The signature should not mismatch with the specimen signature held at the bank. Provide information, including the reason for closing the account and method for receiving the residual amount. Hand over the collaterals such as debit cards, credit cards, and unused cheque books. You may destroy the cards and cheque books if you are closing the account through an online channel.
• Pay fee: Account closure fee for accounts older than 06 (six) months is zero at major banks; however, an early closure fee, which is approx. AED 100 + VAT, is payable if the account was opened within 06 (six) months.
• Obtain closure document: The bank account closure process takes about 03 to 07 business days. The bank will send an email confirming the account closure along with an account closure letter. The formal confirmation must be kept safe. It will act as the evidence for your defence in case any legal complications related to account closure arise in the future.

Closing a frozen account is confusing for many. Local regulations approve freezing of an account if a person’s UAE residence visa is cancelled. Temporary freezing of the account is for recovering debts (if any). To unfreeze and close a frozen bank account, you must:

• Visit the bank and submit the visa cancellation paper, passport, and Emirates ID (all in originals).
• State your continued financial status with a new employment contract or present the end-of-service gratuity letter from the employer.
• The compliance authority will review the documents and unfreeze the account. On completion of the review, you can proceed with the bank account closure we outlined above.

Kiltons Business Setup Services has been supporting domestic and international investors since 1999. Our extensive experience and deep knowledge have been key to ensuring efficient assistance. Understanding even the subtlest aspect related to business setup, visa, immigration, and bank account procedures, we have been able to render services tailored to our client’s needs.

A few of the common concerns projected by our clients include:

• Can I close a UAE account online?

A few major banks allow an online account closure process. Nonetheless, it is generally limited to accounts with zero balance, nil liabilities, and without collaterals such as cheque books.

• How long does the process take?

Personal account closure processing time is 03 to 05 working days. For a corporate account, it is 03 to 07 days.

• What is the process for a corporate account closure before company cancellation?

Draining the account to zero is the first step in this case. Subsequently, the board resolution for account closure and trade license cancellation documents are to be submitted.

For any further assistance or support, do talk to us today.