The Middle East regional director of Guardian Wealth Management noted that the majority of residents are unaware of what can lead to frozen accounts
A majority of UAE residents are unaware of the reasons that can lead to bank accounts in the country to be frozen and the potential knock-on effects on their short term finances, according to a Guardian Wealth Management.
According to the company, the most common reason around the world 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.
In the UAE, however, bank accounts are mostly frozen as a result of visa changes or expiries.
“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,” said Hamzah Shalchi, Guardian Wealth Management’s regional director 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.”
Guardian noted that there “is a strong correlation” between debt and bank accounts being frozen. Banks usually 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 depend on the bank,” Shalchi added. “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 bank accounts are frozen in the UAE is due to the death of the account holder, with even joint accounts only being re-activated again through an order from the UAE’s courts, which can take 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” said Shalchi.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.