Comprehensive AML Laws and Regulations: Saudi Arabia

Saudi Arabia has developed a robust framework to combat money laundering (ML) and terrorist financing (TF), aligning with international standards. These regulations cover various sectors, including banking, insurance, asset management, wealth management, payment processors, fintech, lending, and crypto, ensuring the integrity of its financial system.

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Key Laws and Guidelines

• Anti-Money Laundering Law of 2017: The Anti-Money Laundering Law of 2017 is the primary legislation for combating money laundering in Saudi Arabia. The law mandates financial institutions to implement customer due diligence, maintain records, and report suspicious transactions. It also outlines the procedures for the confiscation of proceeds derived from money laundering activities.
• Combating Terrorism and Financing of Terrorism Law of 2017: This law criminalizes the financing of terrorism and mandates financial institutions to report transactions suspected to be linked to terrorist activities. It complements the Anti-Money Laundering Law by addressing the specific issue of terrorist financing.
• Saudi Arabian Monetary Authority (SAMA) Regulations: SAMA, the central bank, issues regulations to ensure compliance with AML/CFT standards within the financial sector. These regulations mandate the implementation of robust AML programs, customer due diligence, transaction monitoring, and the reporting of suspicious activities.
• Capital Market Authority (CMA) Guidelines: The CMA issues guidelines to support compliance with AML/CFT regulations within the securities sector. These guidelines provide specific instructions for various sectors on implementing effective AML/CFT measures. They also outline the responsibilities of reporting entities in conducting customer due diligence and reporting suspicious activities.

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Regulatory Bodies

• Financial Intelligence Unit (FIU): The FIU is the central agency responsible for receiving, analyzing, and disseminating reports on suspicious transactions. It coordinates AML efforts across various sectors and collaborates with international counterparts to enhance AML/CFT frameworks.
• Saudi Arabian Monetary Authority (SAMA): SAMA oversees the implementation of AML regulations within the financial sector. It issues directives and guidelines to ensure compliance with AML/CFT standards and conducts regular inspections to enforce these regulations.
• Capital Market Authority (CMA): The CMA regulates the securities market, ensuring that firms implement effective AML measures. It issues guidelines for customer due diligence, transaction monitoring, and reporting of suspicious activities within the securities sector.
• Ministry of Finance: The Ministry of Finance oversees the implementation of AML regulations for non-financial businesses and professions, including real estate and precious metals. It issues guidelines and conducts inspections to ensure compliance with AML/CFT standards.
• Saudi Police: The Saudi Police are responsible for investigating and prosecuting money laundering offenses. They collaborate with other Regulatory Bodies and law enforcement agencies to enforce AML laws and prevent financial crimes.

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History of Regulations

• 2003: Enactment of the first Anti-Money Laundering Law.
• 2012: Introduction of the Combating Terrorism and Financing of Terrorism Law.
• 2017: Enactment of the updated Anti-Money Laundering Law and Combating Terrorism and Financing of Terrorism Law.
• 2018: Issuance of guidelines by SAMA and the CMA for reporting entities to enhance AML compliance.
• 2019: Establishment of the Financial Intelligence Unit (FIU).

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Sector-specific Regulations

• Banking and Financial Institutions: Regulated by the Saudi Arabian Monetary Authority (SAMA), the banking and financial institutions sector is required to implement robust AML/CFT programs, including strict KYC protocols, continuous monitoring of transactions, and the reporting of suspicious activities. Banks and financial institutions must also maintain records for a minimum of five years.
• Insurance: The insurance sector, overseen by SAMA, mandates companies to implement effective AML measures. This includes customer due diligence, transaction monitoring, and the reporting of suspicious activities to the FIU.
• Asset Management and Wealth Management: Regulated by the Capital Market Authority (CMA), asset management and wealth management firms must adhere to stringent AML regulations. These firms are required to implement robust AML programs, conduct thorough customer due diligence, and monitor transactions for suspicious activities. They must also report any suspicious transactions and maintain detailed records.
• Payment Processors and Fintech: Payment processors and fintech companies are subject to regulations issued by SAMA. These entities must implement comprehensive AML measures, including customer verification, real-time transaction monitoring, and the reporting of suspicious transactions. They must also comply with guidelines issued by the CMA for non-bank financial activities.
• Lending: Lending institutions, both traditional and fintech-based, must adhere to AML regulations set by SAMA. These institutions are required to conduct customer due diligence, monitor transactions for suspicious activities, and report any suspicious transactions to the FIU. They must also maintain records of all transactions and customer information.‍
• Crypto: The crypto sector is regulated under guidelines issued by SAMA and the CMA. Virtual asset service providers (VASPs) are required to implement robust AML measures, including customer verification, transaction monitoring, and the reporting of suspicious activities. VASPs must also maintain detailed records of all transactions.