Riyadh, Aug. 18 -- Saudi Arabia has quietly subjected bank transfers bound for the United Arab Emirates (UAE) to the kind of enhanced scrutiny normally applied to high-risk countries, pointing to a deepening rift between the two Gulf powers.

Reuters reported, citing three sources with direct knowledge of the move, that Saudi Arabia's central bank had this year directed major banks to treat settlements with the UAE the way they would transactions with countries flagged for money-laundering or terror-financing risk.

The instruction was never made public and explains companies struggling for months to move money out of Saudi accounts into the UAE.

Saudi central bank denies targeting UAE

Asked about the matter, the Saudi central bank told...