Central Bank of the UAE regulates the following:
- commercial banks
- investment banks
- Islamic banks
- financial and monetary intermediaries
- financial investment companies
- finance companies.
As per Federal Law No. 10 of 1980, investment banks cannot accept deposits whose maturities are less than two years, but may borrow from its head office, from local or foreign banks, or from financial markets. Investment banks are licensed under the Regulation No. 21/2/88 dated 14/6/1988.
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The UAE offers Islamic banking services. It is governed by Shari'a law and Federal Law No. 6 of 1985 regarding Islamic banks, financial institutions and investment companies. According to Article 3 of the law, Islamic banks have the right to carry on all or part of banking, commercial, financial and investment services and operations. They have the right to engage in all types of services and operations practised by banks and referred to in Federal Law No. 10 of 1980.
Islamic banking in Dubai
In October 2013, H. H. Sheikh Mohammed bin Rashid Al Maktoum launched a strategic plan for developing the Islamic economy sector. The plan includes 7 key pillars and 46 strategic initiatives. One of the initiatives is the establishment of Islamic banking centre in Dubai.
Opening a bank account
Citizens and residents can open accounts in banks in the UAE.
To open a bank account, citizens need to provide a copy of their family book, a salary letter or a letter of NOC (No Objection) from the employer.
Expatriate residents need to provide a copy of their passport, a copy of work or residence visa, a copy of their Emirates ID, a salary letter or a letter of NOC (No Objection) from the employer or sponsor.
Citizens and expatriate residents can open a joint account with another legitimate resident of the UAE. Procedure and requirement to open a bank account may differ from bank to bank.
From April 14, 2012, the use of International Bank Account Number (IBAN) is mandatory for all electronic payments and receipts within and outside the UAE (except for making payments through a credit card). IBAN is a unique to the account. So, you will have a distinct IBAN for each of the accounts you hold in the same or different banks. Banks are required to inform their account holders of their unique IBAN.
Exchanging foreign currency and remitting money is common in the UAE. Hence, the business of moneychangers is big in the UAE. Central Bank issued new Resolution No. 123/7/1992, dated 29 November 1992 for moneychangers.
As per the resolution, only those institutions and companies that are established as per provisions of the Commercial Companies' Law are licensed to change money as business. The company should have a national shareholding of a minimum of 60 per cent of the total paid-up capital. The minimum capital was set at AED one or two million depending on the scope of activities the company wishes to undertake.
In case a natural person wants to conduct money-changing business, he must be an Emirati citizen of not less than 21 years of age.
Expatriate residents can send money to their home countries through one of these moneychangers in the UAE or through their banks. When remitting money through moneychangers, they need to provide a copy of their Emirates ID and proof of income in some cases.
The Central Bank's Board of Directors' Resolution No. 164/8/94 dated 18 April 1995. The resolution defines financial investment companies as those conducting one or more than one of the following business:
- Opening investment accounts and managing portfolios on behalf of others, whether individuals or companies
- Preparing feasibility studies for projects and marketing allotments and stocks of shareholding companies
- Establishing and/or managing investment trust funds
- Establishing and/or managing other investment funds and acting as trustee of funds entrusted to it by a trust to manage on behalf of a beneficiary
- Subscribing to companies capital and participating in syndicated loans
- A financial investment company should be a juridical person with a minimum capital of AED 25 million liable to be increased according to the business the company intends to undertake. The resolution also requires that the national shareholding should not be less than 51 per cent of the paid-up capital, in addition to other terms and conditions set forth in the regulation.
The Central Bank's Board of Directors Resolution No. 58/3/96 dated 14 April 1996 and Resolution No. 165/06/2004 dated 6 December 2004 regulate the business of conventional and Islamic finance companies. Finance companies undertake one or more of the following major financing activities:
- Extend advances and/or personal loans for personal various consumption purposes
- Finance trade and business, opening credit and issuing guarantees in favour of customers
- Subscribe to the capital of projects and/or issues of stocks, bonds and/or certificates of deposit
However, contribution of the financing company to the capital of projects, issues of stocks and/or bonds, or certificates of deposit should not exceed 7 per cent of its own capital. The paid-up capital of a finance company should not be less than AED 35 million and national shareholding should not be less than 60 per cent of total paid-up capital, without prejudice to provisions of Federal Law No. 8 of 1984 and any subsequent amendments thereto.
Laws and regulations
Foreign exchange and remittances
Updated on 13 Jun 2021