Saudi Arabia has implemented stricter regulatory oversight on financial transfers destined for the United Arab Emirates, a move typically reserved for countries deemed high-risk for illicit financial activities. This development, revealed by sources with direct knowledge, signals a growing divergence between the two prominent Gulf nations and has reportedly led to delays and rejections of fund transfers for numerous companies.
The enhanced scrutiny, which has not been publicly announced, appears to correlate with reports from businesses experiencing difficulties in moving funds from Saudi Arabia to the UAE in recent months. Several business executives have indicated that their companies have faced delays or outright returns of transfers in various currencies from Saudi banks without explicit official explanations.
According to the Saudi central bank's established protocols, financial institutions are mandated to apply additional checks when engaging with clients or jurisdictions that present elevated risks for money laundering, terrorist financing, and other financial crimes. Sources indicate that key Saudi banks were recently instructed to implement these heightened measures for transactions involving the UAE.
In response to inquiries, the Saudi central bank stated that there are no direct restrictions targeting specific countries, emphasizing its robust regulatory framework for combating financial crimes, aligned with global standards. The bank also noted that financial institutions assess risks, including country-specific factors, as part of their operational procedures. A UAE official reported no direct reports from the private sector regarding transfer difficulties and affirmed the strong economic ties between the two nations.
The added oversight places the UAE, a significant hub for investment in real estate and precious commodities, alongside other regional countries like Lebanon, South Sudan, and Iraq, which Saudi Arabia identifies as high-risk for financial crimes. These countries are subject to greater regulatory monitoring. While the UAE was previously removed from the Financial Action Task Force's (FATF) "grey list" in 2024 following improvements in its anti-money laundering regime, some anti-corruption groups have questioned the timing of this delisting. The United States has previously imposed sanctions on certain UAE-based entities accused of supporting illicit financial activities.
Some analysts and individuals familiar with the situation suggest that the enhanced oversight may serve as a discreet message to Emirati leadership concerning the importance of maintaining stable bilateral relations, particularly following a period of escalating political and economic disagreements. Despite these tensions, the deep economic interdependence between Saudi Arabia and the UAE makes a significant rupture unlikely, as it would be detrimental to both economies. The Kingdom is the UAE's largest Arab trading partner, while the UAE remains a crucial import and export market for Saudi Arabia.
Underlying the current situation is a long-standing economic rivalry, as both nations strive to diversify their economies beyond oil and establish themselves as global financial centers. The difficulties in cross-border transfers reportedly intensified in the weeks following the UAE's announcement of its withdrawal from OPEC, a group effectively led by Saudi Arabia. Some Saudi clients have reportedly faced challenges in making payments to UAE-based firms, leading to delays and instances where companies are advised to seek alternative operational bases.
