Questions & Answers
KYC: Why banks ask for your local sponsor documents to open a business account?
Hi,
I own a business in Abu Dhabi (a sole establishment) where I am the 100% shareholder as per trade license. The name of the Local Service Agent also appears on the Trade License as a Sponsor. The Local Service Agent is not an Owner, Partner or Manager.
While opening a business account, the bank asked me for the passport copy and Emirates ID of the Local Service Agent, is that mandatory? As the Local Service Agent is not an owner nor a partner or a manager, why the bank cannot open a business account with just my personal details?
A notarized Local Service Agent agreement was provided to the bank but they still insist on getting his passport and Emirates ID copies.
Banks run with a list of regulations, some of them are internal regulations put by their own legal departments which change from time to time, and other regulations are from the Central Bank of UAE. A very important part of those regulations are the Due Diligence regulations, where the banks must know very well their clients and to get enough documents and supporting documents to each and every account they open, known as KYC requirements.
KYC stands for "Know Your Client". It is a worldwide mandatory practice for all banks to be well equipped with enough information about the business and its main personnel. So, it is very normal to request the identification document for your local service agent. As long as you can get Sole control on your bank account then there is no problem with the bank's practice.
This is a very short and direct answer to your question. If you would like to understand more about banking in the UAE, get updated about the worldwide banking practices and to know how to protect yourself and your business, it would be wise to book an appointment for a proper legal advice.
Ahmed Elnaggar
+971505389394
ah_elnaggar@hotmail.com
