KYC for UAE Business: Due Diligence Explained
What KYC means for businesses in the UAE, how banks conduct due diligence checks, what to prepare, and how to handle enhanced scrutiny.
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KYC (Know Your Customer) is a mandatory compliance process that all UAE financial institutions must perform. It is part of the UAEโs AML (Anti-Money Laundering) framework aligned with FATF standards.
What Banks Check in KYC
For the Company:
- Corporate structure โ shareholders, directors, board members
- Ultimate Beneficial Owners (UBO โ any person owning 25%+ of the company)
- Source of business and capital
- Business activities and countries of operation
- History of previous licences and bank accounts
For Owners and Directors:
- Identity (passport)
- Country of citizenship and residence
- Source of personal wealth
- Sanctions screening (OFAC, EU, UN, UK lists)
- PEP status (Politically Exposed Person)
What is a UBO?
A UBO (Ultimate Beneficial Owner) is the natural person who ultimately owns or controls a company. UAE regulators and banks are legally required to identify all UBOs with 25%+ ownership.
Since 2020, the UAE maintains a Beneficial Ownership Register. UBO information must be submitted at incorporation and updated when ownership changes.
Risk Classification
| Risk Level | Typical Countries / Situations | Due Diligence Level |
|---|---|---|
| Low | EU, US, GCC, UK, Australia | Standard CDD |
| Medium | Most other countries | Enhanced CDD |
| High | Russia, Iran, FATF watchlist countries | EDD (Enhanced Due Diligence) |
Enhanced Due Diligence (EDD)
For high-risk clients (including Russian nationals since February 2022), banks typically require:
- A detailed Source of Funds (SOF) letter in English explaining the origin of capital
- Supporting documents โ property sale agreements, company liquidation records, dividend statements
- Tax declarations or income certificates for 2โ3 years
- Confirmation of absence of sanctions (statements from business partners if needed)
- Contracts with clients and suppliers
- Explanation of the business rationale for operating in the UAE
How to Prepare for KYC
Before applying for a bank account:
- Draft a clear Source of Funds letter โ a written English explanation of where your money comes from
- Gather supporting documents: property sales, business exits, dividends, inheritance, etc.
- Document the company history: when and where created, key clients, annual revenue
- Ensure the corporate structure is clean with no unnecessary holding layers
During the bank interview:
- Be specific โ the manager is filling in an internal questionnaire
- Donโt minimise what your business does โ the bank needs to understand fully
- Mention UAE-based partners or clients if you have them
- Provide professional, clean document sets
Ongoing KYC Reviews
KYC is not a one-time event. Banks conduct regular reviews:
- Annually for high-risk clients
- Every 2โ3 years for medium-risk clients
- Every 5 years for low-risk clients
If a client fails an ongoing KYC review, the account may be frozen without notice until documents are provided.
UAE AML Regulators
- CBUAE โ Central Bank of UAE (banks and payment services)
- DFSA โ Dubai Financial Services Authority (DIFC firms)
- FSRA โ Financial Services Regulatory Authority (ADGM firms)
- FTA โ Federal Tax Authority (tax-related compliance)
๐ข In 2024, the UAE was removed from the FATF grey list, significantly improving the UAEโs reputation in international banking and cross-border transactions.
We help clients prepare complete KYC documentation and successfully open accounts even in complex cases. Talk to our banking team.