Offshore bank account for UAE company (with cursed DMCC Crypto Trading license)

[Bill D]

Can you link to the post please?

Thanks

sure it was there is it possible to bank a day trading UAE FZ company

Consider cutting your losses and getting a license somewhere else.

Do you think it could be possible to open a bank account for an IFZA with license "Investment in Commercial Enterprises & Management" could fit for day trading ? (natural person resident+fz)

and as local bank I understand won't open any account for any financial FZ.
But are you more or less guaranteed that you will be able to proceed for example with a shitty foreign EMI ?

And will you be able to go this route for salary payment : Platform (tradfi or crypro) -> shitty EMI (adv bankera whatever) -> pay salary directly to personnal UAE bank account
I saw that in UAE salary payment are sometimes processed throught a special secured internal transfer, but if you don't have uae business bank acc can you pay your salary with this road and create an as good sof as an individual person?

 

[OffChance]

Some related news that just dropped:

> KRAKEN TO LAUNCH OWN CRYPTO BANK

https://twitter.com/x/status/1632682861487693827

 

[Sols]

Hmm I think I will first try amending the license to IT Services or similar. Costs only like $400 might as well give it a go. What do you guys think?

Are you still going to offer crypto exchange services or are you starting a completely new business?

Some related news that just dropped:

> KRAKEN TO LAUNCH OWN CRYPTO BANK

https://twitter.com/x/status/1632682861487693827

Kraken got a form of banking license in Wyoming in 2020. But it takes time to build a fully functional bank.

 

[OffChance]

Are you still going to offer crypto exchange services or are you starting a completely new business?

I have a Crypto Trading license not an exchange license. I'm just a trader, I trade with my own money.

 

[Sols]

I have a Crypto Trading license not an exchange license. I'm just a trader, I trade with my own money.

OK, well, are you going to do the same things as you previously determined you needed a license for? Changing license type won't mean easier access to banking. If the bank sees crypto activities, it'll regard your business as a crypto business, except now it'll be an unlicensed crypto business. If your plan is to deceive the bank and not tell them your true business activities, that comes with a whole host of other problems.

 

[khinkali]

Does anyone know of any genuine proprietary crypto trading firms operating in Dubai, from anywhere other than DMCC?

Maybe they exist, but I haven't seen one yet.

I came across a proprietary trader (market maker) with a DMCC + Swiss structure recently, which I guess might help if you need traditional banking.

 

[troubled soul]

Does anyone know of any genuine proprietary crypto trading firms operating in Dubai, from anywhere other than DMCC?

Maybe they exist, but I haven't seen one yet.

I came across a proprietary trader (market maker) with a DMCC + Swiss structure recently, which I guess might help if you need traditional banking.

https://activities.ifza.com/

I am not sure but many low key are exists....hard to find one

 

[khinkali]

Thanks @azb1

IFZA's website doesn't seem to have much info but I see one Lawyers Association talk about IFZA-DSOA having business activity 6599-92 which is the same as DMCC. I now see that DWTC and DAFZA seem to offer the same business activity, so it looks like it is catching on. I guess this all comes down to Law No. (4) of 2022 and now the VARA rules.

I've not seen any crypto prop shop / market maker based in these other FZs, but it does bode well to get some competition.

In terms of banking, I wonder if the best route is to have an associated company such as parent or subsidiary elsewhere.

Or even a separate business that can bill the prop trading business as a client and take care of services that require fiat such as hosting, API feeds, freelancers, etc. If it bills costs+20% for its work it is likely to be considered independet from a tax point of view, so if in say a 20% tax jurisdiction you'd only suffer 4% of the fiat operational costs, which for a prop trading business should be a small proportion of trading profit anyway.

 

[OffChance]

OK, well, are you going to do the same things as you previously determined you needed a license for? Changing license type won't mean easier access to banking. If the bank sees crypto activities, it'll regard your business as a crypto business, except now it'll be an unlicensed crypto business. If your plan is to deceive the bank and not tell them your true business activities, that comes with a whole host of other problems.

Yea my plan was to still be trading crypto but with a company that has a different license, like Online Marketing. That's what Fred's suggestion is and what basically everyone else does I believe. Is there any other "right" way to do this? Ideally, I just want to be able to withdraw from and deposit to crypto exchanges with no legal problems.

IFZA's website doesn't seem to have much info but I see one Lawyers Association talk about IFZA-DSOA having business activity 6599-92 which is the same as DMCC.

> One Swiss bank agrees to issue accounts for companies registered with the IFZA-DSOA. At the same time, the bank requires the director of the company to have a resident visa of the Emirates.

I actually contacted DMCC yesterday and asked if they have any solution such as direct contacts to a bank that could open an account for us without a minimum balance and such. Hopefully they have something.

 

[Sols]

Yea my plan was to still be trading crypto but with a company that has a different license, like Online Marketing. That's what Fred's suggestion is and what basically everyone else does I believe. Is there any other "right" way to do this? Ideally, I just want to be able to withdraw from and deposit to crypto exchanges with no legal problems.

It comes down to the exact details of how your business works. If you're not handling third party funds for buying, selling, investing, lending, et cetera in crypto, why did you get a license? And if you are handling third party funds, that's definitely not online marketing and you risk setting yourself up for failure if you go down the path of unlicensed (irrelevant license counting as unlicensed) and/or deceiving banks.

How many pure DMCC exchanges or traders are there? The ones I've come across only use the DMCC license for a portion of their business.

There's definitely a problem in how DMCC is marketed. It's nothing like the licenses or registrations found in Europe. I've had meetings with banks that prefer EU-based unlicensed over UAE licensed. A Swiss SRO member is worth more than a DMCC licensee.

 

[OffChance]

It comes down to the exact details of how your business works. If you're not handling third party funds for buying, selling, investing, lending, et cetera in crypto, why did you get a license? And if you are handling third party funds, that's definitely not online marketing and you risk setting yourself up for failure if you go down the path of unlicensed (irrelevant license counting as unlicensed) and/or deceiving banks.

How many pure DMCC exchanges or traders are there? The ones I've come across only use the DMCC license for a portion of their business.

There's definitely a problem in how DMCC is marketed. It's nothing like the licenses or registrations found in Europe. I've had meetings with banks that prefer EU-based unlicensed over UAE licensed. A Swiss SRO member is worth more than a DMCC licensee.

Yeah I am not handling any third-party funds. All the funds I trade with are mine. I actually think the Proprietary Trading in Crypto-commodities license I got prohibits me from using anything other than own funds. You're saying I can do this with any other license, and it won't be illegal? (Just risk losing access to bank account) Why does this license even exist, actual scam.

 

[khinkali]

If you're not handling third party funds for buying, selling, investing, lending, et cetera in crypto, why did you get a license?

I think this confusion might come down to the shareholders.

OP's situation might be a single-shareholder company, in which case I can see how most of the legal and other issues could be irrelevant. I also think the risks are a lot smaller if limited to spouse, parents, children - i.e. the "family office" which tends to be treated quite leniently.

That's not normal though. Proprietary trading businesses mostly have multiple shareholders and it is hard to identify the legal or other risks from masquerading as another type of business. Also it's typical to borrow trading capital which risks getting into a web of lies when it comes to the local jurisdiction, exchanges and banks if you're trying to disguise the business model.

I actually think the Proprietary Trading in Crypto-commodities license I got prohibits me from using anything other than own funds.

I'd be surprised if that were the case. The license should be for the business to trade its own funds. Or are you saying that the license defines that you can be the only shareholder, in which case I agree it seems very weird!

If it's only you and close family, did you look into DWTC's family office. I didn't look into crypto specifically (I'll have a dozen or so shareholders who aren't related) but otherwise it looked like a nice way to formalse things.

 

[Sols]

Yeah I am not handling any third-party funds. All the funds I trade with are mine. I actually think the Proprietary Trading in Crypto-commodities license I got prohibits me from using anything other than own funds. You're saying I can do this with any other license, and it won't be illegal? (Just risk losing access to bank account) Why does this license even exist, actual scam.

Maybe there's some weird quirk in UAE law but everywhere else I've done business or explored, you would not need a license to trade with your own company's money. If you have multiple shareholders, you just need to inform them about it. And the shareholding can't be such that it can be confused with an open market (i.e. frequently buying and selling shares as an alternative to taking on third-party money through normal customer onboarding and acquisition).

The directors decide what the company does. The shareholders are in for the ride. The shareholders can sue the directors if the directors are criminally negligent, which is why it would be important for the board to inform the shareholders about the company's plans to use its asset for crypto trading.

Again, it comes down to finer details. Maybe you're in a position where a license is necessary in UAE.

 

[OffChance]

I'd be surprised if that were the case. The license should be for the business to trade its own funds. Or are you saying that the license defines that you can be the only shareholder, in which case I agree it seems very weird!

No, it doesn't define that I have to be the only shareholder. I didn't consider a company that has multiple shareholders and trades its own funds etc, my bad. I don't know much about company structures and all this.

Maybe there's some weird quirk in UAE law but everywhere else I've done business or explored, you would not need a license to trade with your own company's money. If you have multiple shareholders, you just need to inform them about it. And the shareholding can't be such that it can be confused with an open market (i.e. frequently buying and selling shares as an alternative to taking on third-party money through normal customer onboarding and acquisition).

The directors decide what the company does. The shareholders are in for the ride. The shareholders can sue the directors if the directors are criminally negligent, which is why it would be important for the board to inform the shareholders about the company's plans to use its asset for crypto trading.

Again, it comes down to finer details. Maybe you're in a position where a license is necessary in UAE.

I see, thanks for explaining. In that case a license isn't needed. I only trade my own funds and I'm the only shareholder. I guess I will simply amend to IT Services activity and trade away.

 

[Bill D]

I guess I will simply amend to IT Services activity and trade away.

thanks for the discussion, it raised following questions to me

1)won't it be an issue everytime you want to open a bank account or even a financial broker like IB(even a crypto exchange account) ? (For the company)
Provided you will not deceive any of them with the real activity
You are licensed for IT and will just use it for trading, even if you can explain that you open the account only for investing the companies profits, there are no profits ?

2)in case local bank aren't possible, will there be in any case a business transactional bank account which can be a shitty EMI abroad which will accept to serve this business to transact between platforms? (I think a setup in EU (eu llc + EU residence gives you always that in worst case) but does that uae setup give it too ?

3)is it okay that you will collect a salary for being a trader while in fact you are licensed as a light bulb seller or a it consultant ? (From uae perspective- tax free salary deductible from fz profits)

4)it seems if I am not mistaking will not be tax free almost certainly to trade through the fz because it does not even match the FZ license activity

I start to think for day traders a direct EU structure with eu personnal residence + local company seems to come with more easiness and guarantees to access banking.
Provided you are not planning to deceive bank and enter a spiral of lie, I saw noone showing a clear method to access business banking anywhere in the world for day traders exclusiv with uae personal residence+fz setup

 

[OffChance]

thanks for the discussion, it raised following questions to me

1)won't it be an issue everytime you want to open a bank account or even a financial broker like IB(even a crypto exchange account) ? (For the company)
Provided you will not deceive any of them with the real activity
You are licensed for IT and will just use it for trading, even if you can explain that you open the account only for investing the companies profits, there are no profits ?

2)in case local bank aren't possible, will there be in any case a business transactional bank account which can be a shitty EMI abroad which will accept to serve this business to transact between platforms? (I think a setup in EU (eu llc + EU residence gives you always that in worst case) but does that uae setup give it too ?

3)is it okay that you will collect a salary for being a trader while in fact you are licensed as a light bulb seller or a it consultant ? (From uae perspective- tax free salary deductible from fz profits)

4)it seems if I am not mistaking will not be tax free almost certainly to trade through the fz because it does not even match the FZ license activity

I start to think for day traders a direct EU structure with eu personnal residence + local company seems to come with more easiness and guarantees to access banking.
Provided you are not planning to deceive bank and enter a spiral of lie, I saw noone showing a clear method to access business banking anywhere in the world for day traders exclusiv with uae personal residence+fz setup.

1) Yea I guess u'll have to lie whenever you open up any sort of account but what's the alternative really.
2) I tried many and all of them will reject. Except Bankera maybe but they're basically a scam and a mess according to many people on this forum.
3) No idea
4) No idea as well

I don't know about other EU countries but I tried making a company in Andorra a long while ago and the bank told me I have to pay 5k EUR just for them to audit my previous activity (trades, crypto wallets, transactions, etc) and only then maybe they'll accept. I have more than 50k trades and more than 10k transactions so I know damn right they are just gonna take the 5k and give up when they see the numbers lol.

 

[Bill D]

1) Yea I guess u'll have to lie whenever you open up any sort of account but what's the alternative really.

2) I tried many and all of them will reject. Except Bankera maybe but they're basically a scam and a mess according to many people on this forum.

anyways bankera is charging a 0.04% fee I think on sepa (capped tho to 200 eur) which make is not so interesting as a transactional bank account

3) No idea
4) No idea as well

I don't know about other EU countries but I tried making a company in Andorra a long while ago and the bank told me I have to pay 5k EUR just for them to audit my previous activity (trades, crypto wallets, transactions, etc) and only then maybe they'll accept. I have more than 50k trades and more than 10k transactions so I know damn right they are just gonna take the 5k and give up when they see the numbers lol.

Yes I heard that too about Andorra.

I was thinking that a basic llc without license in Eu (estonia, romania, bulgaria, cyprus, ...)simply for proprietary day trading financial assets (including cryptos), will always leave you some access to some cheap transactional bank account here or there, could it be Transferwise or equivalent (not necessarily in the country but at least in EU or equivalent), (if you are resident full year in that same country as incorporated, onshore companies). It will come at the cost to have to pay the tax 9-20% depending countries, and audit, but anyways as you saw with andorra bank what they are requiring seem to be worst than an auditr


However it doesn't seem to be the same case with uae, you don't have that certainty, it seems, you can end up without being able to open absolutely any business EMI or bank account for transaction or salary payment provided you are not going to deceive the bank that you are a proprietary day trader ? (I let professionals confirm here but it's what seems to be and what I fear)


For audit, if doing it in good faith, I think Koinly which cost few hundred euros a year, reporting thousands of page of transaction no tax administration would really be able to defeat that and it could help forever with banking (as a business +natural person).
Then getting a salary as an individual person for some time could help forever with banking/brokers(as a natural person).


It's a pity because it would be really great if in UAE you could (assuming you also get personal all year residence+tax residence)
1)open a fz or onshore for proprietary trading
2)lend your assets (fiat stocks cryptos) to that firm to day trade (fiats, stocks, cryptos)
3)get a corporate bank account in UAE for salary payment in good faith and get a corporate bank account in EU or equivalent for transaction banking between platforms in good faith, for your activity
4)pay a salary+interests tax free (so in any case not affected by the CT) which will build good SOF for when you will leave and forever, better than "trading crypto and stocks under your own name for years and then keep the issue forever whenever you will open a new account and will have to say as source of funds : "day trading financial assets while being tax resident in dubai" which it seems could lock some doors.

For proprietary trading of financial assets (one shareholder trading his own funds) in UAE, any idea how much could be the cost for audit ? (thousands of transactions)
And any confirmation on the impossiblity to get banking assuming you are not deceiving the bank ?

 

[OffChance]

Good news I guess, I was finally able to open a bank account for my DMCC prop crypto trading company with SEBA. I can finally do as I please (hopefully) with my crypto-related money. Only issue is that it costs about $1.1k a month plus $350k minimum balance but no other option really lol. It also took about 1-2 months to go through compliance and gathering documents & signing and filling forms.

pinging you as you were interested: @Bill D

 

[khinkali]

it costs about $1.1k a month plus $350k minimum balance but no other option really lol. It also took about 1-2 months to go through compliance

Thanks for the information @OffChance that is really useful information.

 

[Sols]

Good news I guess, I was finally able to open a bank account for my DMCC prop crypto trading company with SEBA.

Congrats, glad to hear it! Thanks for sharing the update.

It also took about 1-2 months to go through compliance and gathering documents & signing and filling forms.

All things considered, that's quite fast.