Optimizing dormant account management in UAE banking: Legal gaps and proposed reforms

Abstract

The management of dormant accounts and unclaimed balances is a pressing challenge in the banking sector of the United Arab Emirates (UAE), particularly given the complex regulatory landscape. This study analyzes 150 dormant accounts across five major UAE banks (Emirates NBD, First Abu Dhabi Bank, Dubai Islamic Bank, Sharjah Islamic Bank, and Abu Dhabi Commercial Bank) and identifies gaps in the legal framework, including the absence of clear definitions and handling of non-monetary assets.The study investigates the legal framework governing dormant accounts, specifically focusing on the Dormant Accounts System No. 1 of 2020. The results highlight critical issues, including the lack of clear timelines for transferring unclaimed balances and inconsistencies in communication protocols for notifying account holders. Furthermore, the study emphasizes the need for standardized practices across financial institutions in the UAE.To address these challenges, the study proposes legislative amendments to improve asset management and consumer protection. Key recommendations include establishing standardized definitions, implementing automated tracking systems for dormant accounts, and integrating dormant balances into social welfare programs to enhance public trust. These reforms could significantly improve operational efficiency and legal clarity in the UAE banking sector, contributing to a more transparent and effective management of dormant accounts and unclaimed balances. Acknowledgments The authors are thankful to the Deanship of Graduate Studies and Scientific Research at the University of Bisha for supporting this work through the Fast-Track Research Support Program.