Compliance Guidelines:

Regulatory Bodies in Saudi Arabia

In Saudi Arabia, several major regulatory bodies are responsible for controlling and combating Anti-Money Laundering (AML) compliance regulations:

Saudi Arabian Monetary Authority (SAMA)

SAMA is the central bank of Saudi Arabia and plays a significant role in AML regulation. It issues AML rules and instructions, sets regulatory standards, and supervises financial institutions’ compliance with AML regulations.

Supreme Committee for Combating Money Laundering and Terrorist Financing (SCTF)

SCTF is responsible for implementing AML policies and supervising compliance in Saudi Arabia. It develops AML policies and guidelines and conducts risk assessments and audits.

Ministry of Justice (MOJ)

MOJ issues manuals and guidelines related to AML and Counter-Terrorism Financing (CFT). These manuals provide practical guidance to entities subject to AML regulations.

Grant Thornton Saudi Arabia

While not a regulatory body, Grant Thornton provides guides and resources to businesses and Chief Financial Officers (CFOs) to navigate AML regulations in Saudi Arabia.

ML/FT Definition in Saudi Arabia

 Cabinet Decision No. 80/1439

• Money laundering is not specifically defined in Saudi Arabia’s Cabinet Decision No. 80/1439, Approving the Anti-Money Laundering Law and its Implementing Regulations.
• Despite this, the offenses that are regarded as money laundering are listed in Article 2 of Saudi Arabia Cabinet Decision No. 80/1439, Approving the Anti-Money Laundering Law.
• These offenses include: Converting, transferring, or engaging in any other activity involving money that one knows is the product of a crime in order to disguise or conceal its illegal source or to assist a party involved in the commission of the crime that produced the money in avoiding legal repercussions; obtaining, possessing, or using money that one knows is the product of a crime from an illegal source.
• Concealing or masking the true nature, source, movement, ownership, location, disposition, or manner of disposing of money that the person knows are the proceeds of crime, as well as their rights with regard to those funds.
• Any attempt to carry out one of the actions listed in Subparagraphs (1), (2), or (3) of Article 2 of Saudi Arabia Cabinet Decision No. 80/1439, Approving the Anti-Money Laundering Law, or to take part in, agree to, or lend support to, or encourage, or offer counseling, advice, or facilitation, or engage in collusion, cover-up, or attempt to engage in any of the actions listed in this Article.
• Note: Saudi Arabia Cabinet Decision No. 80/1439, Approving the Anti‐Money Laundering Law, and its Implementing Regulations, are materially in line and compliant with most of the money laundering laws in other developed countries, international conventions, and UN Security Council Resolutions on combating terrorist financing.

Anti-Money Laundering Law (AML Law)

The Anti-Money Laundering Law of Saudi Arabia is a foundational piece of legislation that outlines the country’s AML framework.

Article 26

• According to Article 2 of the current Law, anyone found guilty of the crime of money laundering faces a sentence of up to 10 years in prison and a minimum of two years in jail, as well as a fine of no more than five million riyals, or both.

Article 27

• According to Article 2 of the Law, anyone found guilty of the crime of money laundering faces up to fifteen years in jail and a fine of no more than seven million riyals in addition to their sentence.

Article 28

• A Saudi native who has completed a sentence for a money laundering violation is prohibited from leaving the Kingdom for a time equivalent to the sentence served.
• After serving their sentence, non-Saudis are expelled from the Kingdom with little prospect of coming back.

Article 29

• If a perpetrator alerts law enforcement to a money laundering crime before other perpetrators are aware of it and if this alerting results in the arrest of the perpetrators or the seizure of crime-related tools or proceeds, the court may reduce the sentence of the convicted person as described in Article 30.

Secondary Regulations issued by agencies covering these regulations

• The Saudi Capital Market Authority’s (“CMA”) Anti-Money Laundering and Counter-Terrorist Financing Rules, as amended by CMA Board Resolution No. 1-85/2017.
• The 40 recommendations and 9 special recommendations made by the Financial Action Task Force (the “FATF”) of Saudi Arabia regarding countering money laundering and terrorism financing 2012.
• The Banking Inspection Department of the Saudi Arabian Monetary Agency (the “SAMA”) published the Second Edition of the Manual for Combating Embezzlement & Fraudulent Transactions in 2008, the Fourth Update of the Rules Governing the Opening of Bank Accounts & General Operation Guidelines in 2012.
• The Saudi Arabian Banks’ Guidelines Manual for Regulating Audit Committees, 1996.
• The Internal Control Manual for Kingdom-based Banks, 1989.
• The 2008 Saudi Arabian Kingdom of Saudi Arabia Manual of Compliance with Regulations for Banks.
• The Risk Based On Site Inspection “Policy Framework & Procedures” (2011) and The Rules of Electronic Banking Services (2010), both published by SAMA.
• SAMA’s 2012 Risk Based Approach for AML/CFT Supervision.

The Saudi Arabian Monetary Authority (SAMA)

It is responsible for regulating and supervising the financial sector in Saudi Arabia. Some of the major rules and regulations overseen by SAMA include:

Banking Rules and Regulations: SAMA enforces various banking regulations to ensure the stability and integrity of the banking sector. These regulations cover areas such as capital adequacy, risk management, corporate governance, and anti-money laundering.

Financial Institutions Supervision: SAMA supervises and regulates financial institutions, including banks, insurance companies, and financing companies. It ensures compliance with prudential standards and conducts regular audits.

Consumer Protection: SAMA is committed to protecting consumers’ rights in the financial sector. It establishes principles for banking consumer protection, ensuring fair treatment and transparency in financial transactions.

Anti-Money Laundering (AML): SAMA has a significant role in AML efforts in Saudi Arabia. It enforces AML regulations to prevent money laundering and the financing of terrorism.

References:

1. BSA Ahmad Bin Hezeem & Associates LLP
2. Central Bank of Saudi Arabia