Saudi Arabia has implemented additional regulatory reviews on bank settlements flowing to the UAE, with multiple companies reporting delays or returns of payments.

Three informed sources stated that the Saudi central bank notified key domestic banks earlier this year to activate enhanced due diligence procedures for settlements involving the UAE, similar to those applied to high-risk jurisdictions for money laundering and terrorist financing; this measure had not been publicly disclosed before.

Six businesspeople indicated that multi-currency remittances initiated by their companies were delayed or returned by Saudi banks, without clear official explanations. A Western executive operating in Saudi Arabia mentioned that banks cited similar compliance review reasons for the transaction delays.

The Saudi central bank denied imposing direct restrictions on the UAE, stating that banks must take control measures based on their own risk assessments, risk preferences, and factors such as national and geographical risks, asserting that the system complies with the Financial Action Task Force's anti-money laundering and counter-terrorist financing standards.

Two insiders noted that the UAE has been included in the review scope of over six high-risk financial crime countries or regions within Saudi Arabia. The UAE Ministry of Economy stated that it has not received any complaints from the private sector regarding difficulties or unusual delays in transfers between the two countries.

Market Mechanism: Saudi enterprises, individuals, and their corresponding banks are the remittance senders, while Dubai companies and individual accounts are the recipients; enhanced reviews will raise the thresholds for compliance documentation, beneficial ownership verification, and proof of transaction purposes, causing operational funds for cross-border trade, service fees, and investment settlements to be held up in the Saudi banking system. Compliance, alternative settlement, and localized operational service providers will benefit, while traders, real estate, and precious metals-related businesses relying on UAE accounts to receive Saudi funds will face cash flow pressures.

Source: Public Information