UAE banks have been granted permission to move data abroad after a series of Iranian related strikes on digital infrastructure caused significant disruptions to regional operations, according to reports. The Central Bank of the UAE issued short term no objection certificates that allow financial institutions to use foreign based data centres, temporarily easing the strict requirement that customer data remain onshore. The decision marks an unusual response to mounting concerns over the resilience of the country’s digital backbone following operational outages tied to attacks on key facilities in the Gulf.
Under normal circumstances, banks in the UAE and other Gulf states must keep customer information and critical systems within national borders, a policy that has often frustrated international lenders required to duplicate data storage throughout the region. However, the recent disruption prompted regulators to adjust data sovereignty requirements to help maintain continuity of financial services. The Banker reported that the temporary approvals are designed to provide banks with flexibility as they navigate the fallout from strikes that affected major data hubs, including an Amazon facility in the UAE and a data centre in Bahrain. These incidents have heightened worries about the vulnerability of Gulf nations’ digital infrastructure at a time when the region is also seeking to develop as a global centre for artificial intelligence and advanced technology services.
Service outages at UAE banks followed the reported drone strikes that hit the Amazon cloud based data centre, where many institutions host critical systems. The disruptions interrupted access to online banking platforms, internal systems and customer services, underscoring the fragility of centralised digital infrastructure during times of heightened regional tensions. In response, regulators moved quickly to authorise the temporary relocation of some data processing and storage to foreign jurisdictions. This policy shift has not been mirrored elsewhere in the Gulf, as other countries maintain their onshore data rules while continuing to monitor security and operational risks.
The broader impact of regional hostilities is visible across multiple sectors beyond banking, with the conflict affecting shipping, energy, logistics and aviation. Iranian forces reportedly laid mines in the Strait of Hormuz, a critical shipping route, prompting the United States to strike mine laying vessels while refusing to escort merchant shipping due to fears of Iranian retaliation. The resulting disruption has hindered Gulf oil exports, forcing energy majors to scale back operations and causing knock on effects such as rising fuel costs for airlines and logistical challenges for international trade. Infrastructure damage has also been reported at the Ruwais Industrial Complex in Abu Dhabi, illustrating the varied vulnerabilities of key economic facilities in the region.
Amid these tensions, logistics companies including Cosco, Hapag Lloyd, Maersk and MSC have halted new voyages into Gulf waters, leaving major ports underutilised. To keep commerce moving, Abu Dhabi Ports and DP World have developed overland routes to transfer containers from eastern ports on the Gulf of Oman to those closer to consumer markets for customs clearance. Oman’s ports, including Salalah, Sohar and Duqm, are emerging as alternate hubs for international trade, offering refuge to cargo that would otherwise transit through disrupted maritime channels. Saudi Arabia’s Red Sea ports also provide additional overland access points, reflecting a shift in regional logistics strategies due to insecurity at sea.
The human toll of ongoing strikes has been felt widely across the Gulf, particularly among foreign workers who form a significant portion of the population. Reports indicate that at least nine civilians have been killed in strikes across Bahrain, Kuwait, Oman, Saudi Arabia and the UAE, with foreign residents accounting for most casualties. These developments highlight the complex and far reaching implications of regional conflict as authorities and commercial operators adapt policies and operations to maintain stability and service continuity in the face of escalating challenges.
Follow the SPIN IDG WhatsApp Channel for updates across the Smart Pakistan Insights Network covering all of Pakistan’s technology ecosystem.
