New Legislation Toughens Penalties for Financial Crimes in Saudi Arabia

In a significant move against financial fraud and deceit, the Saudi Arabian government has recently approved a new law designed to enhance penalties for financial crimes in the Kingdom. Scheduled to take effect in September 2021, the new legislation, in accordance with Cabinet Decision No. 534/1442, is expected to bolster the legal framework against financial misconduct.

Defining Fraud

The Saudi Monetary Authority (SAMA), the central banking organization of Saudi Arabia, defines fraud as any act involving deception to secure a financial gain, resulting in a loss for the deceived party.

Key Provisions

Penalties for Individuals

The new legislation imposes stiff penalties on individuals found guilty of fraud. As per Article 1, offenders face imprisonment of up to seven years and fines of up to SAR 5 million (approximately USD 1.3 million). Those who incite fraud, provided the fraud occurs or the loss is incurred within Saudi Arabia, are subject to the same maximum penalties. Offenders residing outside the Kingdom, where the fraud does not take place, may be imprisoned for a maximum of 42 months and fined up to SAR 2.5 million (approximately USD 650,000).

Attempts to Commit Fraud

Article 4 applies penalties to individuals trying to commit fraud. Offenders face up to half the maximum penalties.

Repeat Offenders and Organized Crime Groups

Repeat offenders and organized financial crime groups, as described in Article 5, risk double the maximum penalties – a jail term of up to 14 years and a SAR 10 million fine (approximately USD 2.6 million).

Court Discretion and Exemptions

Courts retain the discretion to grant exemptions to the penalties under specific circumstances. Individuals who report a crime before any loss or report after a loss but lead to the arrest of all other parties involved may receive leniency.

Vision 2030 Alignment

This new legislation is consistent with the Kingdom’s Vision 2030 objectives of transparency, accountability, effective governance, and responsible enablement. It is anticipated that the new legislation will foster a favorable environment for both domestic and foreign investment, contributing to the strategic objectives of a flourishing economy and a lively society.