Key facts
- Saudi Arabia has implemented enhanced regulatory oversight on bank transfers to the UAE.
- Companies have experienced delays or returns of funds transferred from Saudi Arabia to the UAE.
- The Saudi central bank maintains that it applies risk-based controls without direct country restrictions.
- The UAE economy ministry has not received official complaints regarding transfer issues.
- The move is seen by some as a message related to escalating tensions between the two Gulf nations.
Saudi Arabia has intensified regulatory oversight on financial transfers destined for the United Arab Emirates, a move that signals a deepening rift between the two wealthy Gulf nations. This enhanced scrutiny, reserved for jurisdictions deemed high-risk for illicit money flows, has reportedly led to delays and rejections of transfers by Saudi banks, impacting businesses operating in both countries.
Sources familiar with the matter indicated that Saudi financial institutions were instructed earlier this year to apply stricter checks on settlements with the UAE. While the Saudi central bank stated it has no direct restrictions on specific countries and adheres to global anti-money laundering standards, it acknowledged that banks apply necessary controls based on their own risk assessments, including country-specific risks. The UAE's economy ministry reported no official complaints from private sector companies regarding transfer difficulties, emphasizing the strong economic ties between the nations.
The additional scrutiny places the UAE, a significant hub for real estate and precious metals trade, among a group of countries considered high-risk by Saudi Arabia for financial crimes, including Lebanon, South Sudan, and Iraq. The UAE was previously on the FATF's 'grey list' but was delisted in 2024. Some anti-corruption groups have questioned the timing of this delisting, especially given U.S. sanctions on UAE-based entities linked to illicit funding.
Insiders and regional financial sources suggest the enhanced oversight serves as a subtle message to Emirati leaders, reflecting escalating tensions over issues such as oil quotas, geopolitical influence, and regional conflicts. Despite these divergences, analysts consider a complete economic rupture unlikely due to the deep entanglement of trade, investment, and logistics between the two countries. However, economic competition persists as both seek to diversify away from oil revenues and establish themselves as global financial centers.
Businesspeople reported that transfer difficulties began shortly after the UAE announced its withdrawal from OPEC in late April. Some Saudi clients have reportedly advised UAE-based firms to seek operations elsewhere due to payment issues. To circumvent these obstacles, some businesses are now routing payments through third countries. The enhanced oversight means transfers can take weeks to process, with some never reaching their destination.