Riyadh: Saudi Arabia has quietly subjected bank transfers bound for the United Arab Emirates (UAE) to the kind of enhanced scrutiny normally applied to high-risk countries, pointing to a deepening rift between the two Gulf powers.
Reuters reported, citing three sources with direct knowledge of the move, that Saudi Arabia’s central bank had this year directed major banks to treat settlements with the UAE the way they would transactions with countries flagged for money-laundering or terror-financing risk.
The instruction was never made public and explains companies struggling for months to move money out of Saudi accounts into the UAE.
Saudi central bank denies targeting UAE
Asked about the matter, the Saudi central bank told Reuters it imposed “no direct restrictions on specific countries” and that its banks applied risk-based controls in line with Financial Action Task Force (FATF) standards.
A UAE official said the country’s economy ministry had received no complaints from businesses about transfer delays and described the two nations’ commercial ties as deep and longstanding.
According to Reuters, six businesspeople described transfers being delayed or returned by Saudi banks without explanation, three bankers said UAE-bound payments now pass through extra layers of compliance review, with some transactions stretching on for weeks and others failing entirely, and three business owners said they had begun routing payments through third countries to avoid the bottleneck.
One investor told the news agency that Saudi clients had been advised by their own authorities not to transact with UAE-based firms, even for sums as small as under AED 1 million that would once have cleared in days.
Rift traces back to Yemen, Iran, OPEC split
The tension has been building for a while. Saudi Arabia and the UAE clashed openly last year over their opposing camps in Yemen’s war, with Riyadh accusing Abu Dhabi of arming secessionists near its border, and again over how to respond to Iran’s conflict with the US and Israel. The difficulties businesses describe began soon after the UAE’s April 28 announcement that it was quitting OPEC, the oil cartel that Saudi Arabia effectively leads.
Sources described the new banking checks as less a formal sanction than a signal, placing the UAE alongside Lebanon, Iraq and South Sudan among jurisdictions Saudi banks now treat with added caution, according to Reuters. The UAE itself was removed from the FATF’s watch list in 2024.
Saudi Arabia is the UAE’s biggest trading partner in the Arab world, while the UAE ranked as Saudi Arabia’s fifth-largest export market and fourth-largest source of imports in 2024.
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