The United Arab Emirates' central bank said on Thursday it is confident there will be a compromise to avert a US debt default by an August 2 deadline, adding that it holds no US Treasury bonds or US financial instruments. Image Credit: Ahmed Kutty/Gulf News

Dubai: The UAE Central Bank is introducing the International Bank Account Numbers (IBAN) system for all bank customers in the UAE from November 19, according to a communication sent out to banks recently.

"Banks have been communicated about the implementation of IBAN from November 19. The Central Bank is implementing the unique bank account numbers in the country with the intention of identifying the bank account numbers to minimise the risk of transcription errors in cross border transactions," said the retail banking head of a local bank.

IBAN is a standardised numbering system developed to identify bank accounts from around the world. It was originally developed by banks in Europe to simplify transactions involving bank accounts from other countries.

23-digit codes

IBAN implementation in the UAE could mean that all customers will have specific IBAN numbers in addition to their existing account numbers. The UAE Central Bank in consultation with major banks in the country has decided to keep the length of the IBAN at 23 digits that will include two-letter alphabetic country code — ‘AE' for all accounts in the UAE, two-digit cheque code, three-digit bank code and 16-digit account number.

The IBAN should not contain spaces when transmitted electronically. However, when printed on paper, the IBAN is expressed in groups of four characters separated by a single space.

As part of the implementation banks will have to create individual account numbers for all account holders. IBAN will be made mandatory for all interbank domestic transfers as well as all inward remittances.

The Central Bank has notified all banks operating in the country that it will reject transactions in the absence of IBAN after an initial grace period of three months from the launch date. There will be processing delays and charges for transfers and remittances not bearing IBAN during the grace period.

The Central Bank is expected to start a public awareness campaign about the new system through media advertisements this month.