UAB Magazine Issue October 2026

84 Study Union of Arab Banks - October - 2026 For the Arab banks, these issues also have an international dimension. A transaction may involve a foreign stablecoin issuer, a digital-asset service provider, an overseas technology company, and a correspondent bank. Each party may apply different standards, while the bank remains responsible for understanding its own legal and operational exposure. This makes it important to establish clear procedures for identifying relevant legal requirements, assessing counterparties, documenting decisions, and escalating concerns. It is equally important to distinguish binding regulatory obligations from proposed rules, supervisory guidance, and voluntary industry practices. Protecting correspondent banking relationships Access to correspondent banking remains a major concern for many Arab institutions. International banks need confidence that their partners can identify customers, monitor transactions, and manage exposure to sanctions and financial crime.Digital assets andstablecoins addcomplexity because transactions may involve intermediaries that are not part of the traditional banking system. AI introduces another dimension: banks may increasingly depend on external technology providers to screen transactions, analyse customer information, or automate compliance processes. If these arrangements are poorly controlled, a bank may struggle to explain how a transaction was assessed or how a compliance decision was reached. That can undermine confidence among international partners, even where no violation has been established. Therefore, the Arab banks should ensure that their technology investments strengthen, rather than fragment, their compliance frameworks. This includes maintaining reliable records, understanding the capabilities and limitations of external providers, and ensuring that responsibility for important decisions remains clear. The objective is not to eliminate every risk. It is to demonstrate that risks are understood, controls are proportionate, and potential problems can be identified and addressed promptly.