The banking sector in the Middle East and North Africa (MENA) region is undergoing a period of significant regulatory and technological change, as financial institutions respond to evolving compliance demands and digital transformation opportunities.
Driven by both domestic regulators and international bodies such as the Financial Action Task Force (FATF), banks across the region are moving away from reactive compliance strategies. Instead, many are actively investing in AI-powered financial crime compliance solutions. This proactive shift has gained momentum in recent years, with FATF’s mutual evaluations acting as a strong catalyst for regulatory reform across the region.
In countries that have faced closer scrutiny, national compliance frameworks are being redesigned, while banks are strengthening internal systems to meet emerging expectations from global standard-setters like FATF.
Napier AI, a provider of a next generation intelligent compliance platform, recently outlined three central trends shaping the region’s compliance evolution.
One of the most significant developments has been the departure from simple checklist-style compliance models in favour of intelligence-led, risk-based oversight, it said. Regulators including the Saudi Central Bank (SAMA), Dubai Financial Services Authority (DFSA), and Abu Dhabi Global Market (ADGM) have been actively embedding these new supervisory approaches into their regulatory structures to better align with global standards.
Napier pointed to a recent example of this shift. Saudi Arabia’s new Ultimate Beneficial Ownership (UBO) regulations, which came into effect on 3 April 2025. These rules require nearly all companies operating in the Kingdom to disclose accurate UBO data into a central register managed by the Ministry of Commerce. Non-compliance with these measures could lead to penalties ranging from fines to licence suspensions or cancellations. The move highlights Saudi Arabia’s growing emphasis on corporate transparency, continuous due diligence, and real-time reporting as fundamental pillars of compliance.
Alongside regulatory reform, the adoption of artificial intelligence is gaining ground as a critical tool for enhancing compliance capabilities. Many MENA financial institutions are piloting or testing AI-powered RegTech platforms for monitoring transactions, screening customers, and streamlining onboarding processes. Technologies such as digital identity verification, electronic know your customer (eKYC), and blockchain are increasingly being deployed to boost both compliance efficiency and integrity.
Regulators across the region have generally been supportive of these innovations, provided that AI implementations are accompanied by strong governance, explainability, and transparency.
Despite this progress, widespread deployment of AI solutions within financial crime compliance remains limited. Many banks are still in the early stages, focusing on pilot projects rather than full-scale rollouts. The potential benefits, however, are substantial. According to the Napier AI / AML Index, Saudi Arabia is estimated to have lost 5.74% of its GDP to money laundering in 2023, while the UAE recorded a 9.32% loss. This comes despite significant compliance spending of over $1.1bn in Saudi Arabia and $700m in the UAE. Analysts suggest that adopting AI-driven systems could help banks cut these losses dramatically, potentially by as much as 50%.
Yet significant barriers persist. Fragmented regulatory frameworks across various onshore and free zone jurisdictions—such as SAMA, DFSA, ADGM, and the Qatar Financial Centre—create complexity for banks trying to implement unified compliance models, Napier AI explained.
Legacy technology infrastructure also presents challenges, limiting banks’ ability to integrate real-time monitoring or advanced risk models. At the same time, there remains a shortage of skilled compliance professionals who possess both regulatory expertise and technological fluency.
Looking ahead, banks will need to prioritise both technology modernisation and stronger internal governance to address high-risk compliance areas such as anti-money laundering and sanctions monitoring. The adoption of AI, machine learning, RegTech platforms, eKYC, blockchain, and digital identity solutions will be critical for enabling predictive analytics, automated due diligence, and efficient regulatory reporting.
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