Can Your Employer Freeze Your Bank Account in The UAE?

Misconceptions About Employer Authority Over Bank Accounts

A common misconception among the residents of the UAE is the belief that employers have the authority to freeze their employees’ bank accounts. In reality, employers do not hold such control. They cannot freeze employees' accounts because they do not have the legal authority or operational control over personal banking matters. Employee bank accounts are private, and only financial institutions or legal bodies can initiate such actions under specific legal circumstances.

The UAE’s employment laws are made to protect workers’ rights and ensure they are treated fairly, especially regarding their personal finances. Bank accounts are controlled only by banks and financial institutions, and only authorized legal bodies; like banks or government agencies, can freeze these accounts. Freezing happens only in specific cases such as ongoing investigations, court orders, or serious debt issues.

If an employer wrongly interferes with an employee’s financial rights, the employee can file a complaint with the Ministry of Human Resources and Emiratisation or take legal action under Article 54 of Federal Decree Law No. 33 of 2021.

Legal Procedure for Freezing Bank Accounts

For individuals worried about their bank accounts being frozen wrongly, the UAE’s Anti-Money Laundering law provides clear rules. Article (5) of Federal Decree-Law No. (20) of 2018 explains the process for ordering and appealing account freezes. The Governor of the Central Bank or an authorized delegate can order the freezing of suspicious funds in a financial institution for up to seven working days, according to the Executive Regulations of the law. This freeze can be extended by the Public Prosecutor or their delegate if needed.

The law also sets out how to appeal a freeze. Any decision to freeze funds can be challenged in the relevant court under the jurisdiction of the Public Prosecution that issued the order. If the appeal is rejected, you must wait three months before filing a new appeal, unless there is a significant new reason. These rules ensure that freezing accounts follows due process, protecting the rights of the person affected while allowing important financial crime investigations to proceed.

Central Bank and Judicial Freezing Procedures

In fighting money laundering and financial crimes, the Central Bank and the judiciary have specific roles in freezing bank accounts. The Governor of the Central Bank or an authorized delegate can issue an initial temporary freeze on suspicious funds held in banks or financial institutions.

Besides this, the Public Prosecution or the competent court can order freezing and tracking of funds, proceeds, or tools related to crimes without informing the account holder beforehand. This prevents the funds from being moved or spent.

If you want to challenge a freezing decision, you can appeal to the same court that issued the freeze. In some cases, the Public Prosecution or court may appoint managers to handle the frozen or confiscated funds. These managers can also be authorized to sell or dispose of these funds before the final court decision, if necessary. This system makes sure that freezing orders are always controlled by legal authority and only used when justified.

Transactions That May Lead to Account Freezing Risks

Certain transactions can put individuals or businesses at risk of having their bank accounts frozen under UAE law. For example, if you make a payment to a person or company that is under sanctions or embargoes, this can trigger legal action. This also applies if payments are sent to individuals in sanctioned countries, even when their bank accounts are in countries not under sanctions. There is also risk if the movement of money or goods involves a party subject to sanctions, such as specific airlines, banks, shipping vessels, or ports.

Additionally, transshipment risks should be considered. Some sanctions affect how goods are classified, even if they are only passing through a sanctioned country. For instance, goods passing through Iran on their way to another country are considered to be of Iranian origin under US sanctions rules, which may lead to financial and legal consequences.

Circumvention of Sanctions

Circumvention means deliberately trying to hide the involvement of a sanctioned person, company, or country in a transaction. This can happen in several ways, such as leaving out or changing details in payment instructions, giving false information about where goods are loaded or unloaded on shipping papers, or changing airports listed on airway bills. It can also involve routing payments through unrelated third parties who have no real role in the transaction or using fake or altered documents to support a deal. UAE and international laws treat these actions seriously because they harm the financial system’s integrity and help illegal trade or money laundering.

Remedies for Frozen Accounts

If your bank account is frozen, you can file a complaint with the Central Bank of the UAE. The Central Bank supervises banks and financial institutions in the country and has a process to handle customer complaints. To submit a complaint, visit the Central Bank of UAE’s website and fill out their complaint form. You will need to provide details such as your bank’s name, your account number, and the reason the bank gave for freezing your account. The Central Bank will investigate your complaint and work with the bank to resolve the problem. They may also ask you for more information or documents to support your case. However, the Central Bank cannot help if your account was frozen because the bank suspects illegal activity or non-compliance with regulations. You can also contact your bank’s customer service or file a complaint with the UAE Consumer Protection Department.

Hypothetical Example:

Isha works for a company that is based in Dubai. Once, she hears something that makes her think her company can stop her from using her bank account if she messes up at work. Isha gets worried and talks to her boss, but her boss replies, "We can't stop you from using your bank account. Only the bank or the government can do that, and only if there are very important legal reasons."

Later, Isha gets a call from her bank, and they tell her that her account has been frozen because a court ordered it due to a financial investigation. Isha has not done anything wrong at work, and her company is not involved in this investigation. If Isha thinks that her company tried to unfairly freeze her account, she can make an official complaint to the Ministry of Human Resources or start a lawsuit.

If Isha wants to fight the freeze that the bank or court put in place, she can ask the court that made the order to change it. The law protects Isha’s rights and makes sure that bank accounts are only frozen carefully and only when it is really necessary.