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The compliance landscape in the Middle East and North Africa (MENA) region’s banking sector is evolving rapidly, driven by changing regulations and rising expectations from both local authorities and global standard-setters.
Banks across the region are no longer merely reacting to regulatory mandates — they are proactively investing in AI-powered financial crime compliance systems. This strategic shift has accelerated following recent FATF mutual evaluations, which continues to act as a catalyst for regulatory reform.
Countries under increased scrutiny are reshaping their national compliance strategies, while financial institutions are reconfiguring internal controls to anticipate — rather than merely respond to — FATF expectations. This article explores three key trends shaping the region and how financial institutions are responding.
1. From Checklists to Risk-Based Oversight
One of the most notable developments is the shift from static, checklist-style compliance to dynamic, intelligence-led supervision. Regulators such as the Saudi Central Bank (SAMA), Dubai Financial Services Authority (DFSA), and Abu Dhabi Global Market (ADGM) are embedding risk-based supervision into their frameworks, aligning with global standards.
A significant milestone in this transformation is the Kingdom of Saudi Arabia’s introduction of new rules and guidelines on Ultimate Beneficial Ownership (UBO). As of 3 April 2025, all companies in Saudi Arabia (unless exempted) are required to disclose and maintain accurate UBO information within a central register established by the Ministry of Commerce. This measure underscores the Kingdom’s growing commitment to corporate transparency and accountability. Non-compliance may result in penalties, including license suspension or cancellation.
This shift brings with it elevated expectations. Real-time reporting, transparency around beneficial ownership, and continuous due diligence are no longer aspirational — they are foundational.
2. AI Is Being Embraced
Broader investment in artificial intelligence is reshaping how MENA banks manage compliance. Financial institutions are increasingly deploying AI-powered RegTech solutions for transaction monitoring, customer screening, and onboarding. Tools such as digital identity verification, electronic know your customer (eKYC), and even blockchain are enhancing both the efficiency and integrity of compliance processes.
Regulators across the region are generally supportive of these innovations — so long as they are accompanied by robust governance, transparency, and explainability. The broader AI push is also reflective of national digital transformation agendas. For example, Saudi Arabia’s $600 billion partnership with NVIDIA and the UAE’s plan to develop the world’s largest AI campus outside the United States underscore ambitions to become global AI hubs.
That said, the direct application of AI in financial crime compliance is still in the early stages of adoption. Most banks remain in the pilot or proof-of-concept phase, with widespread deployment yet to be realised.
According to the Napier AI / AML Index, Saudi Arabia was estimated to have lost 5.74% of its GDP to money laundering in 2023, while the UAE recorded a 9.32% loss — despite substantial compliance spend of over $1.1 billion and $700 million, respectively. These figures, based on external modelling, suggest financial institutions could reduce such losses significantly — potentially by half — through the adoption of AI-driven compliance systems.
3. Infrastructure and Talent Remain Barriers
Despite notable progress, several hurdles remain. Chief among them is the fragmented regulatory landscape. Overlapping frameworks across onshore and free zone jurisdictions — including SAMA, DFSA, ADGM, and the Qatar Financial Centre — complicate the implementation of unified compliance strategies.
Many institutions continue to rely on outdated infrastructure, making it difficult to integrate real-time monitoring or implement AI-based risk models. This is further compounded by a shortage of compliance professionals with both regulatory knowledge and technological fluency. Although some regulators and institutions have initiated targeted training programmes, the skills gap remains substantial.
What’s Next for Financial Institutions?
Looking ahead, banks must prioritise technological transformation and internal governance, particularly in high-risk areas such as anti-money laundering and sanctions compliance. Adoption of tools such as AI, machine learning, RegTech platforms, digital identity verification, eKYC, and blockchain will be essential to enabling predictive analytics, automated due diligence, and streamlined regulatory reporting.
These tools are no longer optional — they are fast becoming core to effective compliance strategies.
Importantly, compliance must be embedded into the design of digital products and services — not bolted on as an afterthought. As fintech partnerships and product innovation gain momentum across the region, early and transparent engagement with regulators will be vital to maintaining trust and regulatory alignment.
While regulatory reform is progressing, long-term success will depend on sustained investment in modern infrastructure and human capital. Without this foundation, aligning with FATF’s risk-based expectations will remain a persistent challenge.
See where countries in the Middle East rank: Get your copy of the Napier AI / AML Index
