Saudi Arabia tightens rules on financial transfers to UAE

Saudi Arabia has tightened its oversight of financial transfers to the United Arab Emirates (UAE) in the latest sign of growing tensions between the two countries.

The extra layers of regulatory oversight are normally reserved for countries considered high-risk for illicit money flows, according to Reuters.

Three people with direct knowledge of the matter told the news agency that the measures, which have not been announced publicly, put the UAE among more than a half dozen countries in the region deemed high risk in Saudi Arabia for financial crime.

A number of businesspeople told Reuters that they had experienced difficulties making transactions, and that their companies had transfers in various currencies delayed or returned by Saudi banks with no official explanation.

The Saudi central bank told Reuters there were "no ​direct restrictions on specific countries," while a UAE official said its ​economy ministry had not received any reports from private-sector companies "regarding difficulties or unusual delays in completing bank transfers between the two nations".

Saudi Arabia and the UAE have had divergent interests and disagreements for years, but recently, they have been most pronounced in the oil sector, the war in Yemen and the US-Israeli war on Iran.

Last month, reports suggested Saudi Arabia had delayed or blocked money transfers to accounts in the UAE, raising fears that the rift between the Gulf neighbours was hitting trade.

Several sources told The Financial Times that payments from Saudi banks to UAE-based accounts belonging to companies and individuals in Dubai had been returned or held up since May, often without explanation.

One western executive at a Dubai-based healthcare company told the FT that Saudi banks had blocked and returned several payments from a long-standing Saudi client since mid-May.

Saudi Arabia’s central bank denied imposing any “direct restrictions on specific countries” in comments to the FT.

Conflict and attrition

In December, a Saudi air strike on a shipment of UAE military equipment to the Southern Transitional Council, the separatist Yemeni organisation Abu Dhabi is aligned with, was a major recent salvo in rising tensions. 

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Since then, several widely followed Saudi and Emirati social media accounts, pundits, and news organisations have had heated debates and feuds with each other. 

In March, the UAE banned Saudi TV Al-Arabiya’s X accounts. 

This rift only deepened during the war on Iran, which has imperilled the Gulf.

The UAE took a more hawkish approach to the war, reportedly carrying out dozens of air strikes on Iran, revealing a far deeper and earlier role in the conflict than previously acknowledged.

Saudi Arabia, on the other hand, hedged its position, condemning Iran’s strikes on Gulf countries and agreeing to open King Fahd Air Base in Taif to the Americans while simultaneously pushing for negotiations with Iran through Islamabad. 

Then in May, the UAE exited Opec, the intergovernmental oil producers’ cartel led by Riyadh, after almost 60 years as a member. The UAE massively boosted its oil production after its withdrawal. 

In July, Middle East Eye characterised the two neighbours as “embroiled in an economic war of attrition”, as business executives were reportedly making contingency plans in case of a growing feud between Saudi Arabia and the UAE.