Saudi banks are subjecting transfers to the UAE to enhanced anti-money-laundering checks, delaying or returning some payments as tensions between Riyadh and Abu Dhabi widen across trade, oil and regional geopolitics.
Saudi Arabia has subjected financial transfers to the United Arab Emirates to enhanced regulatory scrutiny typically applied to jurisdictions considered higher-risk for illicit financial activity, according to people familiar with the matter, adding to signs of growing tensions between the Gulf’s two economic powers.
Saudi banks have delayed or returned some transfers to the UAE in recent months, with several businesses reporting that payments that previously took days are now taking weeks or failing altogether.
Three people with direct knowledge of the matter said Saudi Arabia’s central bank earlier this year notified key banks to apply enhanced checks when processing settlements involving the UAE. The measures were not publicly announced.
The additional scrutiny involves closer compliance checks and more layers of approval for UAE-bound transfers, according to three bankers familiar with the process. Some payments have taken weeks to clear, while others have not gone through, they said.
Saudi Arabia’s central bank said there were “no direct restrictions on specific countries”, adding that banks assess risks based on factors including geography, customers and their own institutional risk appetite.
The central bank said the kingdom maintains a robust framework to combat money laundering and terrorism financing in line with standards set by the Financial Action Task Force, or FATF.
More from BusinessA UAE government official said the economy ministry had not received reports from private-sector companies about unusual delays in transfers between the two countries. The official said Saudi Arabia and the UAE continued to have deep economic and commercial ties.
UAE placed under heightened scrutiny
The enhanced checks effectively place the UAE among more than half a dozen countries in the region that Saudi authorities regard as higher-risk for financial crime, according to two sources.
The development is notable because the FATF removed the UAE from its grey list in 2024 after the country made improvements to its anti-money-laundering framework.
The UAE has also emerged as a major global centre for real estate, precious metals and financial services, sectors that can attract heightened scrutiny over illicit financial flows.
One Saudi insider described the enhanced oversight as a “subtle message” to Emirati leaders amid deteriorating relations. Four regional financial-sector sources who were not briefed on the reasons for the measures shared a similar interpretation.
Saudi Arabia and the UAE have not publicly disclosed what prompted the additional scrutiny.
Economic rivalry adds to tensions
The latest development comes against a backdrop of widening differences between Riyadh and Abu Dhabi over oil policy, regional influence and economic strategy.
The two countries remain major trading partners, but their interests have increasingly diverged as both seek to build diversified economies and establish themselves as leading financial and business centres.
Dubai remains the Gulf’s dominant business hub, while Saudi Arabia has sought to attract multinational companies to Riyadh by requiring firms seeking major government contracts to establish regional headquarters in the kingdom.
Several businesses told Reuters their difficulties with Saudi-to-UAE transfers began in the weeks after the UAE announced in April that it would leave OPEC, the oil producers’ group effectively led by Saudi Arabia.
A Dubai-based consultancy said some Saudi clients had struggled to make payments and advised the company to establish operations outside the UAE.
Two other UAE-based companies received similar requests from Saudi clients, according to an investor with stakes in both businesses. Some payments, including amounts below 1 million dirhams ($272,257), have remained stuck for weeks.
Three businesspeople said their companies had begun routing payments through third countries to avoid delays.
Despite the growing friction, analysts say a full-scale economic rupture remains unlikely given the depth of trade, investment and logistical ties between the two countries.
Saudi Arabia remains the UAE’s largest trading partner in the Arab world, while the UAE was Riyadh’s fifth-largest export destination and fourth-largest source of imports in 2024.
The latest banking restrictions therefore signal a potentially important shift: even as Riyadh and Abu Dhabi continue to publicly stress their economic ties, financial channels between the two are facing greater scrutiny.
