Saudi Arabia tightens oversight on UAE-bound bank transfers amid growing rift

Saudi Arabia has intensified its oversight of financial transfers to the United Arab Emirates, a move that signals growing tensions between the two Gulf nations. This enhanced scrutiny, typically reserved for jurisdictions considered 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 told Reuters that the measures, which have not been publicly announced, place the UAE among more than a half dozen countries in the region deemed high-risk by Saudi Arabia for financial crime, including Lebanon, South Sudan, and Iraq. Businesspeople have reported difficulties making transactions, with transfers in various currencies being delayed or returned by Saudi banks without official explanation.

The Saudi central bank told Reuters there were "no ​direct restrictions on specific countries," while a UAE official stated its economy ministry had not received any reports from private-sector companies "regarding difficulties or unusual delays in completing bank transfers between the two nations."

Saudi Arabia and the UAE have had divergent interests for years, with recent pronounced disagreements in the oil sector, the war in Yemen, and the broader regional conflict. Reports last month suggested Saudi Arabia had delayed or blocked money transfers to UAE accounts, raising fears that the rift was impacting trade. Several sources told The Financial Times that payments from Saudi banks to UAE-based accounts belonging to companies and individuals in Dubai had been returned or held up since May, often without explanation.

In December, a Saudi air strike on a shipment of UAE military equipment to a separatist Yemeni organization aligned with Abu Dhabi was seen as a significant salvo in rising tensions. Heated debates have also occurred between Saudi and Emirati social media accounts, pundits, and news organizations. In March, the UAE banned Saudi TV Al-Arabiya's X accounts.

The rift deepened during the war on Iran, with the UAE reportedly taking a more hawkish approach and carrying out air strikes, while Saudi Arabia pursued negotiations. In May, the UAE exited Opec after nearly 60 years as a member, subsequently boosting its oil production. In July, Middle East Eye characterized the two neighbors as "embroiled in an economic war of attrition."