BANKING SANCTIONS, FINANCIAL INTERMEDIATION, AND ASYMMETRIC INTERDEPENDENCE The United Arab Emirates as an Intermediary Hub in a fragmenting Global Financial Order (2026)

Abstract

Objectives: This paper examines how contemporary banking sanctions reshape global finance and evaluates the UAE’s role as an intermediary hub under conditions of asymmetric interdependence. Methods: The study employs a qualitative historical–institutional design, combining legal analysis of EU and US sanctions authorities with process tracing of compliance mechanisms (correspondent banking, clearing access, AML/CFT risk management). It triangulates publicly available primary sources (legal texts and institutional documents) with credible reporting on 2026 regional shocks affecting energy and trade routes. Results: Banking sanctions operate through layered channels: (i) restrictions on settlement and correspondent access—especially in US dollars—rather than messaging alone; (ii) asset freezes and prohibitions implemented through private banks; and (iii) secondary-risk transmission via reputational and market-access threats. EU sanctions derive from Article 29 TEU and Article 215 TFEU, while US sanctions draw on IEEPA and related statutory authorities enabling expansive enforcement pressure. AML/CFT standards (notably FATF monitoring) act as a multiplier by incentivising de-risking beyond strict legal requirements. The UAE’s dual financial architecture and rapid regulatory adaptation—illustrated by FATF grey-listing in 2022 and delisting in 2024—support a model of “stratified compliance” that sustains connectivity across blocs. Conclusions: Banking sanctions rarely eliminate financial activity; they reorganise it geographically and institutionally, fostering hub formation and infrastructure diversification. The UAE exemplifies how intermediary jurisdictions become systemically salient in a more multipolar and fragmented financial order.