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UAE: When can a bank shut a customer’s account without prior notice?

Dubai - Banks in the UAE need to inform customers in writing at least 60 days in advance if they intend to close an account

Question: Can banks shut residents’ bank accounts without any explanations? A friend of mine had his account closed, with the bank citing ‘internal policy’. How can he complain against this?

Answer: Pursuant to your queries, as your friend’s bank account was closed without providing a valid explanation, the provisions of Circular No. 8 of 2020 of the Central Bank of UAE pertaining to Consumer Protection Regulation (the ‘Consumer Protection Regulations for UAE Banking Customers’) are applicable.

Banks or financial institutions in the UAE need to inform customers in writing at least 60 days in advance if they intend to close an account. This is in accordance with Article 5.1.2.2 (a) of the Consumer Protection Regulations for the UAE Banking Customers, which states: “Account closure by the Licensed Financial Institution:

a. Licensed Financial Institutions must inform Consumers in Writing of their decision to close a Consumer’s account 60 calendar days in advance of the account being closed.”

However, a bank or a financial institution may close an account of a customer without prior notice if they find or suspect illegal transactions or financial/white collar crimes. This is in accordance with Article 5.1.2.2(b) & (c) of the Consumer Protection Regulations for UAE Banking Customers, which states: “Account closure by the Licensed Financial Institution:

b. The Licensed Financial Institution must provide in Writing, the reasons for the closure except where the Licensed Financial Institution has suspicion as to the use of the account by the Consumer to carry out financial crimes; and

c. An exception is provided where the Licensed Financial Institution is acting in accordance with UAE’s Financial Crime Compliance requirements.”

Based on the aforementioned provisions of law, the bank is well within its right to close your friend’s account if it suspects or finds it was used to carry out financial crimes or illegal transactions.

But if your friend’s bank account has regular financial transactions and is closed without a valid reason, he may file a written complaint with the bank. In the event the bank does not respond to the complaint, he may approach the Consumer Protection Department of the Central Bank of UAE and file a written complaint.

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However, prior to filing a complaint, it is recommended your friend checks his registered email account to confirm that the bank hadn’t sent any notification about the account closure.

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.