AED-denominated interbank local transfers from and to individual as well as business accounts will be routed through the UAE Funds Transfer System starting April 14, 2012, according to a directive received by UAE banks from the UAE Central Bank. The UAEFTS is the new UAE Central Bank portal to be used for execution of all inward and outward AED payments within UAE.
According to a banker, the system functions as a Real Time Gross Settlement System which "enables execution of transactions much faster compared to the current system".
Banks are expected to introduce a new form for telegraphic transfer requests, which will include all the requirements mandated by central bank. Non-AED payments can be requested using the earlier form.
The new settlement system follows the introduction of the International Bank Account Numbers, or IBAN, as a mandatory requirement for transfers into and out of UAE bank accounts. The UAE Central Bank, in consultation with major banks in the country, has decided to keep the length of the IBAN at 23 digits. This is broken down into a two-letter alphabetic country code that will be 'AE' for all accounts in the UAE, a two-digit check code, three-digit bank code and 16-digit account number.
The use of IBAN "becomes mandatory for all inward and outward AED payments within UAE from April 14, 2012, including late submissions done on April 12, 2012, except for credit card payments", Emirates NBD, the UAE's largest bank by assets, told customers in a communiqué.
It advised customers to advise the bank of the correct equivalent IBAN in case they have standing orders effecting payments to beneficiary accounts held in banks within the UAE, "in absence of which the standing orders will fail to get executed". It added: "Similarly, if you are receiving funds through standing instructions from any of the banks in UAE, please advise your IBAN to the remitter."
As mandated by the UAE Central Bank, a remitter should provide the "transaction type" along with the purpose of remittance as additional details. In the absence of these details, the central bank will not accept transfer instructions.
© Zawya 2012
