AhlulBayt News Agency (ABNA): Reuters has revealed that Saudi Arabia has imposed additional measures to scrutinize and monitor financial transfers to the United Arab Emirates. According to these measures, transactions related to the UAE are placed in a category of transactions that require additional scrutiny due to the risk of illicit financial flows.
Three informed sources told Reuters that Saudi Arabia's central bank earlier this year informed the country's major banks of the implementation of additional supervisory measures on payments related to the UAE.
Also, six business operators told Reuters that Saudi banks have delayed or returned their companies' financial transfers in various currencies without providing an official explanation for the reason.
Tightening Banking Supervision
Saudi central bank regulations require financial institutions to conduct additional scrutiny when dealing with customers or jurisdictions deemed high-risk for money laundering, terrorist financing, and other financial crimes.
A fourth source, a CEO of a Western company operating in Saudi Arabia, said that his companies also received the same explanation when they asked their bank about the reason for transaction delays.
Two sources also stated that the new measures place the UAE alongside more than six other countries in the region among countries that Saudi Arabia has classified as high-risk for financial crimes.
Among these countries are Lebanon, South Sudan, and Iraq, all of which are on the Financial Action Task Force (FATF) grey list, which includes jurisdictions subject to enhanced monitoring.
The FATF removed the UAE from its grey list in 2024 after Abu Dhabi implemented reforms in its anti-money laundering system, a decision that some anti-corruption organizations at the time considered premature.
Riyadh and Abu Dhabi Deny Imposing Direct Restrictions
In response, Saudi Arabia's central bank denied the existence of direct restrictions against specific countries, telling Reuters that the country has a robust regulatory framework to combat money laundering and terrorist financing, consistent with FATF standards.
The bank added that all Saudi banks, based on internal assessments and each institution's risk appetite, apply necessary controls and preventive measures to mitigate risks, considering various factors including country and geographical risks.
On the other hand, a UAE official said the Ministry of Economy has not received any reports from private sector companies about unusual problems or delays in bank transfers between the two countries.
The official added that the UAE and Saudi Arabia have strong and longstanding economic and trade relations supported by significant trade and investment flows.
He emphasized that UAE officials are in continuous contact with the private sector and relevant institutions, and will examine any specific concerns raised through official channels.
Reuters, citing a Saudi informed source, reported that the aim of the additional supervisory measures is to send an implicit message to UAE leaders about the importance of maintaining good relations between the two countries. An interpretation that sources in the region's financial sector have also confirmed, although they were unaware of the exact reasons for these measures.
These financial measures come as disagreements between Riyadh and Abu Dhabi have increased over the past years, covering areas such as oil quotas, geopolitical influence, and competition for attracting foreign capital and skilled labor.
These disagreements intensified late last year following the Yemen war, where the two countries supported rival parties in the conflict.
Saudi Arabia accused the UAE of threatening its security by supporting southern Yemeni separatist forces seeking to advance toward Saudi borders.
Disagreements also emerged over the response and approach to the war between Iran on one side and the United States and Israel on the other, although Riyadh and Abu Dhabi have tried to show a united stance against Iranian attacks on Gulf countries.
What Does the UAE's Exit from OPEC Have to Do with Saudi Measures?
Business operators who spoke to Reuters stated that problems related to cross-border financial transfers began in the weeks following the UAE's announcement of its decision to exit the Organization of Petroleum Exporting Countries (OPEC), a decision the UAE announced on April 28. Saudi Arabia effectively leads OPEC.
The head of a consultancy firm based in Dubai said some Saudi clients of the company are now facing difficulties paying their debts, and he has been advised to move his business activities elsewhere.
An investor who holds shares in two UAE-based companies also said these two companies have faced similar requests from their clients, who have stated that Saudi officials have asked them not to cooperate with UAE-based companies.
He added that these two companies have been waiting for weeks to receive payments from Saudi Arabia, including amounts of less than one million dirhams, equivalent to about $272,000. This is while such transfers previously typically took a few days.
Three bankers also said the increased oversight has caused financial transfers to the UAE to pass through more institutions and undergo stricter scrutiny by bank compliance and regulatory units.
According to them, completing some transactions takes weeks, and some transfers essentially do not reach their destination.
Three business operators also stated that as a result of these problems, their companies are making payments through third countries to circumvent delays in direct transfers between Saudi Arabia and the UAE.
**************
End/ 345E
