Bank Account Control Agreement Template for the United Arab Emirates

A Bank Account Control Agreement is a specialised security document that establishes control mechanisms over bank accounts in UAE financing transactions. Under this agreement, you grant a secured party (typically a lender or security agent) the right to control specified bank accounts as collateral security, ensuring compliance with UAE Federal Law No. 14 of 2018 and related banking regulations.

When do you need this document?

You need a Bank Account Control Agreement when entering into secured financing arrangements where cash control is essential. This typically occurs in project finance transactions where lenders require control over project revenues, corporate lending facilities where cash flow monitoring is critical, and structured finance deals involving multiple funding sources. The agreement is also necessary when refinancing existing facilities that require enhanced security arrangements, or when establishing escrow accounts for specific purposes such as debt service reserves or capital expenditure funding.

Key legal considerations

The agreement must clearly define the control mechanisms and triggering events that allow the secured party to exercise control over the account. Key provisions include the identification of controlled accounts, specification of permitted and prohibited transactions, and detailed procedures for issuing control notices. You must ensure the agreement addresses the account bank's obligations to freeze accounts upon receiving control notices, the secured party's rights to withdraw funds and redirect deposits, and the account holder's ongoing operational requirements. The document should also establish clear priority arrangements between multiple secured parties and include comprehensive default and enforcement provisions. Compliance with anti-money laundering requirements under UAE Federal Decree-Law No. 20 of 2018 must be explicitly addressed, including customer due diligence obligations and suspicious transaction reporting.

Legal requirements in United Arab Emirates

Under UAE Federal Law No. 14 of 2018, banks must comply with specific regulatory requirements when implementing account control arrangements. The agreement must satisfy the security interest provisions of UAE Federal Law No. 18 of 1993 regarding commercial pledges and ensure alignment with general contract principles under UAE Federal Law No. 5 of 1985. You must include proper authority provisions demonstrating that all parties have the legal capacity to enter into the agreement, with board resolutions and power of attorney documents as applicable. The document must specify governing law clauses, dispute resolution mechanisms, and jurisdiction provisions that comply with UAE court requirements. Additionally, the agreement should address Central Bank of UAE reporting obligations, foreign exchange compliance requirements, and any sector-specific regulations that may apply to the account holder's business activities.