RISK RADAR 2025 – Part 1: What’s keeping Middle East GCs awake and what to do about it

Part 1: Geopolitics, Fraud and Tension Points

This first part of our two-part series highlights five of the most pressing legal and regulatory flashpoints affecting companies operating in the GCC. These are the pressure points general counsel should be monitoring now to mitigate risk and respond with agility.

1. Sanctions Exposure: The secondary risk blind spot

As businesses continue to develop an increasingly global footprint, sanctions from the EU, UK and US are becoming ever more relevant as Middle Eastern governments face political pressure to implement and enforce overseas regimes.

What’s the risk?

• Secondary sanctions extend the reach of sanctions beyond the borders of the issuing country and are pulling Gulf-based businesses into global enforcement crosshairs.
• Opaque company ownership registers compound the risk. With beneficial ownership registers typically private in the UAE and the KSA, inadequate “Know Your Client” and customer or trading partner diligence measures also carry a heightened potential for exposure.

General Counsel game plan:

• Develop a cross-border sanctions control framework for monitoring and implementing sanctions updates across all operational jurisdictions. Legal AI tools can assist with identifying updates in real time so that action can be taken quickly.
• Audit trade partners and customers for any gaps in beneficial ownership and other KYC records – particularly in high risk sectors such as logistics, construction, energy and finance. Addressing areas of potential exposure should then be made a priority.

2. Internal fraud and kickbacks: Persistent and evolving

Key industries with high-value contracts such as the construction, energy, real estate and procurement sectors continue to face issues with kickbacks and internal frauds – despite efforts to mitigate these practices, such as through the introduction of a private sector bribery offence under the UAE’s Penal Code.

What’s the risk?

• Ghost vendors and inflated invoices still dominate, with internal frauds most commonly carried out with the assistance of an employee. It is critical that vendor onboarding and invoicing processes are subject to careful diligence.
• Enticing deals and repeat custom should raise alarm bells, particularly if certain suppliers are consistently favoured or if they offer excessive discounts that look too good to be true.

General Counsel game plan:

• Implement fraud controls such as regular and thorough auditing and routine training for all employees on anti-bribery and corruption policies.
• Rapid investigations that follow a clear protocol must be capable of being implemented at pace. Ensure that the investigations protocol is documented and rehearsed so that legal and HR teams are familiar with the process if an issue arises.

3. Shareholder and JV disputes: From boardroom to courtroom

While not new, shareholder and joint venture claims are on the rise, particularly with foreign investor angles. The issues are familiar: misaligned shareholder incentives, deadlocked boards and ambiguous exit clauses in JV agreements.

What’s the risk?

• Underlying tensions left unmanaged. JV and shareholder disputes are often rooted in long-simmering friction, whether over control, dividends, or strategy. The early warning signs are easy to miss and can have big consequences. Routine disagreements can quickly tip into litigation when communication breaks down.
• Strategic divergence post-investment. As regional markets open up, foreign capital is flowing into existing structures that weren’t designed for activist or exit-driven investors. Changes in leadership, direction, or commercial outlook can expose gaps in governance and dispute mechanisms.

General Counsel game plan:

• Create a clear record with thorough record-keeping. Ensure that all meetings, discussions, decisions and transactions are documented comprehensively. If a dispute crystallises, contemporaneous documents will be the most reliable evidence of what happened at the time.
• Brush up on corporate procedures. Review the shareholder agreement, joint venture agreement and articles of association regularly and ensure that meetings are quorate, notice requirements are complied with, and dispute resolution provisions are adhered to.
• Be proactive. If there are any areas of ambiguity in the shareholder agreement, now is the time to address them. Consider exit strategies.

4. Trade disruption: Shifting supply chains and rising risks

With President Trump’s re-election and global tariff tensions escalating, companies are re-thinking their supply chains. This creates both opportunity and risk – while GCC may benefit as alternative trade and logistics hubs, at the same time sudden shifts in global trade policy, compliance expectations and customs procedures can expose companies to disruption, penalties and contractual disputes.

What’s the risk?

• Regulatory lag and misalignment. As new trade routes and suppliers are adopted, gaps in documentation, import classifications or local licensing can trigger regulatory scrutiny and customs delays.
• Contractual exposure. Shifting supply chains often lead to rushed renegotiations with new partners, leaving companies vulnerable to delivery risk, payment disputes or unclear liability for compliance breaches.
• Compliance fatigue. Frequent trade rule changes across jurisdictions (and Comprehensive Economic Partnership Agreement (“CEPA”)-driven exceptions) can strain internal legal, compliance and procurement teams already managing cross-border complexity.

General Counsel game plan:

• Audit supply chain contracts. Review trade-related terms (e.g. delivery obligations, force majeure, tariffs, and import/export responsibilities) to ensure they reflect the reality of shifting suppliers and routes.
• Align with cross-functional teams. Work closely with procurement, logistics, and finance to ensure customs classifications, licensing, and documentation meet the latest compliance standards. This is especially critical as GCC ports implement new digitised clearance systems and introduce automation in customs processing.
• Map risk exposure across markets and stay on top of regional trade developments. Identify where the business is most reliant on high-risk corridors (e.g. politically exposed jurisdictions or sanctioned regions), and ensure contingency plans are in place for sudden trade disruption.

5. Whistleblower blind spots: no system, no signals

Internal reporting can be one of the most valuable tools in a business’ regulatory and compliance arsenal. However, whistleblowing remains uncommon across the GCC, largely due to cultural hesitancy and fears that complaints will be ignored or lead to retaliation.

What’s the risk?

• Missed misconduct. Without a trusted internal channel, wrongdoing often goes undetected until revealed by audits, external complaints, or regulators.
• Regulatory grey zones. Whistleblower protections vary across jurisdictions, and the divide between onshore and offshore rules (such as the DIFC and ADGM) creates confusion over obligations and safeguards.

General Counsel game plan:

• Establish – and encourage the use of – reporting channels. Establish clear protocols that protect anonymity and prohibit retaliation. Promote awareness to embed whistleblowing into corporate culture.
• Monitor regulatory developments. While no UAE federal whistleblower law currently exists, the DIFC and ADGM have adopted their own regimes. A federal law is anticipated, so in-house counsel should stay aligned with emerging standards and adopt best practice in the meantime.

Part 1 conclusion: The importance of preparedness

These issues reflect the shifting fault lines across the Middle East’s legal risk landscape. Whether driven by geopolitics, governance breakdowns or regulatory gaps, the cost of being reactive rather than prepared continues to rise.

In Part 2, we turn our attention to compliance infrastructure, digital regulation, and the operational risks that will define the rest of 2025.

Authored by Randall Walker, Imtiaz Shah, and Jessica Quinlan.