Saudi banks apply enhanced compliance checks as businesses report delayed or rejected payments to companies in the Emirates

RIYADH: Saudi Arabia has subjected financial transfers to the United Arab Emirates to increased regulatory scrutiny, signalling fresh strains between the two Gulf economic powers, according to people familiar with the measures.

Saudi authorities have not publicly announced the move. However, sources said the central bank earlier this year notified major banks to conduct additional checks on settlements involving the UAE under rules designed to counter money laundering, terrorism financing and other financial crimes.

Consequently, six businesspeople told Reuters that Saudi banks had delayed or returned company transfers in several currencies without providing clear explanations.

Saudi Arabia’s central bank denied imposing direct restrictions on individual countries. It said banks apply preventive measures according to internal risk assessments, including geographical and country-related risks.

Meanwhile, a UAE official said authorities had received no private-sector reports about unusual transfer difficulties.

Economic Competition Adds Pressure to Political Differences

The increased scrutiny comes as relations between Riyadh and Abu Dhabi face mounting pressure over economic competition, regional influence, oil policy and Yemen.

Sources said the additional checks place UAE-related transactions under scrutiny similar to that applied to jurisdictions considered financially risky. However, the Financial Action Task Force removed the UAE from its increased-monitoring “grey list” in 2024 following reforms.

Moreover, some regional financial-sector sources interpreted the Saudi action as a political signal to Emirati leaders.

Businesses Report Weeks-Long Payment Delays

Tensions have intensified as Saudi Arabia and the UAE compete to attract multinational companies, investment and skilled workers. Riyadh has encouraged global businesses to establish regional headquarters in the kingdom, challenging Dubai’s longstanding position as the Gulf’s leading commercial centre.

Furthermore, some businesses said transfer difficulties emerged after the UAE announced its departure from OPEC in April.

Bankers said additional compliance procedures now require more officials to review UAE-bound transactions. As a result, some payments reportedly take weeks, while others fail altogether.

Several companies have consequently begun routing payments through third countries to complete transactions.