Project to ease financial transactions in GCC underway
The Gulf Cooperation Council (GCC) will soon study a proposal to integrate the banking system in the region, to make it easier for GCC citizens and companies to open bank accounts in all of the group's six-member countries.
The proposal is aimed at easing financial transactions for individuals and businesses, with the larger objective of building a powerful trading and economic bloc.
The proposal will allow any GCC citizen or company with a bank account in one country to open bank accounts in other GCC countries without filling in extra forms.
The current GCC members are Kuwait, Bahrain, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
There has been mixed reaction from business leaders and experts to the proposal currently being drawn up by a GCC committee, which will soon be handed to the GCC Secretariat for further study.
Some say it will boost intra-regional investment and trade, while others believe it may increase fraud and money laundering.
Mohammed Al-Nefaie, CEO of Al-Nefaie Investment Group, and head of the financial committee at the Jeddah Chamber of Commerce and Industry (JCCI), said the GCC banking system needs to be integrated further.
This would "increase the financial and economic power of the GCC" and "encourage investment opportunities," he said.
“As most Arab and GCC citizens struggle to open bank accounts in foreign countries, such a step will benefit GCC citizens and increase investment opportunities within the GCC area,” Al-Nefaie added.
Turki Fadaaq, head of research at Al-Bilad Investment, said that unifying banking procedures would help facilitate financial deals among GCC countries.
“If the new steps adhere to security requirements followed by all banks worldwide, it will be positive,” he said.
“In terms of the economy, this step will be useful because it will increase the efficiency of Gulf markets including stock markets. I think it would also pave the way for a common Gulf currency.” Fadhul Albuainain, an economist, was less optimistic and said there would be increased financial risk for GCC countries.
“Most GCC banks follow international standards in terms of security. However, some GCC banks have still not been strict in following international standards, so linking deals between Saudi banks and other GCC banks will increase the financial risk,” he said.
According to Albuainain, it is already easy to open an account in any of the GCC countries, but customers need to fill in and sign a form.
“In some countries such as Qatar and the UAE, non-national clients need to get a recommendation letter from their banks in their home countries,” he said.
He said that further integration was likely to “harm Saudi and GCC banks. As the Saudi banking sector is ranked the best in terms of security among GCC countries, I don’t support any proposal to link our local banks with other GCC banks.” Albuainain said that integration would see a rise in money laundering and terrorism funding cases. He said all GCC countries have to increase their safety measures to counter these issues.