Saudi Arabia tightens regulations on money flow to UAE, in latest sign of deepening rift

Saudi Arabia has placed financial transfers to the UAE under additional regulatory oversight reserved for high-risk jurisdictions, according to three people with direct knowledge. The unannounced measures may explain why companies report delays or returns on transfers from Saudi accounts to the UAE. Six businesspeople told Reuters their transfers were delayed or returned without official explanation. The Saudi central bank denied direct restrictions, citing a robust framework against money laundering. A UAE official said its economy ministry had not received reports of difficulties. The oversight puts the UAE among countries like Lebanon, South Sudan, and Iraq deemed high risk. A Saudi insider said the measures were a 'subtle message' amid tensions over Yemen, Iran, and economic competition. The UAE announced its exit from OPEC on April 28, after which transfer difficulties began. Analysts consider a full economic rupture unlikely.

Saudi Arabia has placed financial transfers to the United Arab Emirates under additional regulatory oversight reserved for countries considered high-risk for illicit money flows, according to three people with direct knowledge of the matter. The measures, which were not announced publicly, could explain why companies report difficulties transferring funds from Saudi accounts to the UAE in recent months. Six businesspeople told Reuters their transfers in various currencies were delayed or returned by Saudi banks with no official explanation. The Saudi central bank requires financial institutions to apply more checks when dealing with jurisdictions posing greater risks for money laundering and terrorism financing. Earlier this year, it notified key banks to apply such measures when handling settlements with the UAE. The Saudi central bank denied direct restrictions on specific countries, citing a robust regulatory framework in line with FATF standards. A UAE official said its economy ministry had not received reports of difficulties. The additional scrutiny puts the UAE among more than a half dozen countries in the region deemed high risk, including Lebanon, South Sudan, and Iraq. The FATF delisted the UAE in 2024 after improvements to its anti-money laundering regime. A Saudi insider said the enhanced oversight was intended as a 'subtle message' to Emirati leaders about maintaining good relations following escalating tensions. The two are major trading partners, but their interests have diverged over oil quotas, geopolitical influence, and the race for foreign talent and capital. Disagreements came into the open over the Yemen war and how to respond to Iran's war with the United States and Israel. Analysts consider a full-blown economic rupture unlikely, given their deep economic enmeshment. The businesspeople said their difficulties began in the weeks after the UAE announced on April 28 that it was leaving OPEC.