Saudi Arabia’s Financial Services Sector Braces for New Fraud Prevention Rules: An Overview of the SAMA Counter-Fraud Framework

The financial services sector in Saudi Arabia is undergoing digital transformation with initiatives like Open Banking to fuel economic growth and provide essential services. This digital shift, however, broadens the attack surface for financially-motivated fraudsters. In 2021, the Saudi Arabian Monetary Authority (SAMA) reported:

• Over 4.84 million unverified bank accounts, totaling approximately SAR1.17 billion (~USD324 million) in potential fraud losses.
• 4,377 financial fraud cases, causing approximately SAR765 million (~USD204 million) in total losses – an increase of 34.1% compared to 2019.

To combat these fraudulent activities, SAMA introduced an updated Counter Fraud Framework to strengthen the financial sector’s defenses against fraud. Here’s what you need to know about this new regulation.

Understanding the SAMA Counter Fraud Framework

The Counter Fraud Framework is designed to proactively combat financial fraud in the financial services sector. Its objectives include:

1. Creating a common approach for managing fraud risks.
2. Achieving an appropriate maturity level of fraud controls.
3. Ensuring fraud risks are effectively managed.

The framework covers topics such as fraud detection, prevention, governance, and response and remediation.

New Expectations in the Updated Framework

Financial services companies must comply with the regulations by the June 29, 2023, deadline. The key requirement is reaching a minimum maturity level of three in their fraud controls, which includes having:

• Structured and formalized counter-fraud controls.
• A fraud detection system in place.
• The ability to demonstrate the implementation and effectiveness of these controls.

Traditional fraud prevention methods may no longer provide adequate protection against evolving fraud tactics. To meet SAMA’s requirements, financial services companies must adopt advanced fraud detection and prevention solutions like:

1. Device Intelligence: Solutions like Bureau Device Intelligence identify devices and combat sophisticated attack techniques, ensuring legitimate users enjoy a seamless experience while being alerted to potential threats in real-time.
2. Behavioral Biometrics: Bureau Behavioral Biometrics uses consumers’ unique interaction patterns with their devices to establish trustworthy behavioral patterns and verify their identities in real-time, making it an effective anti-fraud measure as fraudsters find it challenging to replicate these unique behavioral patterns.

Failure to comply with the deadline may result in severe consequences, including significant fines, damaged reputation, customer loss, and regulatory action, potentially threatening companies’ operations in the financial services industry.

Taking Action to Meet the SAMA Counter-Fraud Framework Compliance Deadline

Financial institutions must urgently deploy advanced fraud detection and prevention solutions such as device intelligence and behavioral biometrics to meet the SAMA Counter-Fraud Framework’s requirements and protect their customers from a variety of fraudulent activities.

Discovering the Right Fraud Detection and Prevention Solutions for Your Business

Bureau’s sophisticated solutions provide the necessary capabilities to help businesses meet SAMA’s regulatory requirements while effectively protecting their customers from fraudulent activities. To learn more about how Bureau can help your business achieve compliance with the SAMA Counter-Fraud Framework and safeguard your customers, contact us today.