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Akbar Novruz

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Saudi Arabia has tightened regulatory oversight of financial transfers to the United Arab Emirates, in a further sign of growing tensions between the two Gulf neighbours.

According to three people with direct knowledge of the matter, Saudi authorities have introduced additional layers of scrutiny for transfers involving the UAE. Such measures are normally applied to countries considered high-risk for illicit financial flows.

The measures have not been publicly announced, but sources told Reuters that the UAE is now among more than half a dozen countries in the region treated as high-risk for financial crime under Saudi Arabia's banking controls.

Several businesspeople also reported difficulties conducting transactions between the two countries. They said Saudi banks had delayed or returned transfers in different currencies, in some cases without providing an official explanation.

The Saudi Central Bank, however, told Reuters that there were “no direct restrictions on specific countries.” A UAE government official likewise said the country's Economy Ministry had received no reports from private-sector companies concerning difficulties or unusual delays in bank transfers between Saudi Arabia and the UAE.

The reported measures come amid increasingly visible differences between Riyadh and Abu Dhabi, which have pursued divergent interests on several regional and economic issues in recent years.

The two countries have particularly disagreed over oil policy, the war in Yemen and the US-Israeli conflict with Iran.

Concerns over financial restrictions emerged publicly last month after reports indicated that Saudi banks had delayed or blocked payments to UAE-based accounts. Several sources subsequently told the Financial Times that transfers from Saudi banks to companies and individuals in Dubai had been held up or returned since May.

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

Saudi Arabia's central bank also denied to the Financial Times that it had imposed any “direct restrictions on specific countries.”