Financial experts warn UAE residents to be aware of the circumstances in which personal bank accounts can be frozen, and urges them to be better prepared for any adversaries.
Debt and visa changes are the most common reason for not being able to access funds short term
According to the experts at Guardian Wealth Management, most residents are not aware of the various reasons as to why bank accounts in the UAE can be frozen. When people are denied access to their bank account, even if it is just for a short period of time, it can ultimately have a knock-on effect on their short-term finances including the payment of rent, school fees and savings.
Suspicious or Illegal Transactions
The most common reason universally for a frozen bank account is when the bank feels that the transaction in the account is suspicious and may involve an illegitimate business transaction. However, specialists at Guardian Wealth Management claim that in the UAE, it is mostly as a result of visa changes or visa expires.
“Most people don’t know that in the UAE when a person changes, leaves or loses their job, the final salary payment which should include their end-of-service benefits, will also mention that this is the final payment to the bank” says Hamzah Shalchi, Regional Director of Guardian Wealth Management in the Middle East.
“The statement will highlight that the person is no longer working for the company which in turn, can automatically send warning signals if debts haven’t been paid. This can include anything from car and personal loans, parking fines or even a large unpaid credit card bill.”
“There is a strong correlation between debt and bank accounts being frozen, which shows the importance of seeking financial advice in order to eliminate as much debt as possible, especially whilst living in the U.A.E. The bank will continue to freeze the account until they are confident that all debts are able to be paid.”
“On the other hand, this is not always the case and does also highly depend on the bank. A lot of residents haven’t come across any problems whilst changing jobs, whereas many have had their total financial lives put on hold.”
Another common reason of a bank account being frozen in the UAE, is due to the tragic case of an account holder passing away. The account, which also includes his/her joint accounts, will only be active again through an order from the UAE’s Sharia courts, which could take up to several months.
“It is crucial that the surviving family are able to provide an up to date, valid will whilst making sure that all debts of the deceased have been cleared. Without a will, it may be an extremely long journey for families in an extremely hard time” says Hamzah.
Guardian Wealth Management also shares insights on additional reasons contributing to a frozen bank account.
“If a person is arrested, involved in a car accident and taken to prison for causing injuries or has even been charged with financial costs towards their employer, there is a huge risk that their bank account is frozen until all issues or charges have either been dropped or resolved.”
Awareness and Expert Advice
It can’t be stressed enough the importance of knowing and being aware of how and why bank accounts in the U.A.E can be frozen and taking measures to avoid these circumstances, and seeking expert financial advice.
“Second opinions from financial experts can be extremely worthwhile, alongside being aware of all the rules and regulation in the U.A.E. Disorganised or even no financial planning can be a key factor that contributes to a bank account being frozen, as the root of the problem does normally stem from debt” says Hamzah.
Guardian Wealth Management offers tailored financial planning for families including budgeting, short-term savings and long-term structured savings and investments. For information, .