Financial Crime World

title: “Saudi Arabia’s Anti-Money Laundering Landscape: Laws, Penalties, and Regulations”

Introduction

In the intricate world of finance, one persistent issue garners widespread global attention: money laundering. Saudi Arabia has responded with heightened efforts to combat this illicit activity, as evidenced by the country’s evolving legislative and regulatory framework. This article provides an overview of the key aspects of anti-money laundering (AML) in Saudi Arabia.

  1. Primary Anti-Money Laundering Law: Saudi Arabia’s primary AML law is Cabinet Decision No. 80/1439, which ratified the Anti-Money Laundering Law (AML) and its Implementing Regulations in 2017 [1]. This legislation replaced the older AML law (Royal Decree No. M31/1433).
  2. Defining Money Laundering: Although the Saudi Arabian laws do not provide a clear definition of money laundering, they outline several offenses considered money laundering activities. These include concealing, transferring, or conducting transactions of illicit funds, acquiring or possessing funds from illegal sources, and disguising the true nature of such funds [2].

Comparison to Major Jurisdictions

  1. Comparing KSA’s AML Laws to Major Jurisdictions: Saudi Arabia’s AML laws are generally in line with global standards and comply with most international conventions and UN Security Council resolutions on countering terrorist financing [3].

Secondary Regulations

  1. Numerous Regulations: Numerous regulations have been issued by various Saudi agencies to complement the AML framework. These include the FATF’s 40 Recommendations and 9 Special Recommendations on anti-money laundering and countering the financing of terrorism (CFT) [4]. Other regulations come from the Saudi Arabian Monetary Agency (SAMA), Capital Market Authority (CMA), and other important financial institutions.

Professionals and Industries

  1. Responsible Professions: Beyond finance service institutions, professions such as real estate agents, lawyers, and accountants are responsible for guarding against money laundering under FATF regulations. Trusts (waqfs) and company service providers, which are partially provided by lawyers, also fall under these regulations [5].
  2. Lack of Casinos and Notaries: Saudi Arabia does not host casinos, and notaries are civil servants who do not facilitate financial transactions.

Penalties and Consequences

  1. Severe Consequences: The consequences of engaging in money laundering in Saudi Arabia are severe. Criminals face imprisonment of up to ten years, a fine, or both [6]. Aggravating circumstances result in harsher penalties, such as imprisonment for up to fifteen years and a fine. Legal entities face a fine of up to 50 million riyals and potential closure if they are found guilty of money laundering.

Seizing Criminal Property

  1. Seizing Laundered Funds: In addition to monetary penalties, the competent court can order the confiscation of laundered funds and proceeds of crime, including intermingled funds, up to the value of the intermingled proceeds [6].

Defenses against Money Laundering

  1. Possible Defenses: The most common defenses against money laundering include the absence of intent to commit a crime and insufficient evidence [7]. Fear for one’s life (threat defense) is also a potential claim.

Checks and Due Diligence

  1. Thorough Due Diligence: Businesses must maintain thorough due diligence processes and use triggering events to ensure ongoing scrutiny of transactions [8].
  2. Maintaining Objectivity: Maintaining objectivity and professional doubt are crucial components of effectively preventing money laundering activities [8].

The Role of Amounts Involved

  1. Large Transactions: International conventions often require financial institutions to be vigilant in detecting money laundering offenses, making large monetary transactions a potential red flag [9].
  2. Jurisdiction-Specific Checks: Certain jurisdictions may require specific checks depending on their history of money laundering activities [9].

Conclusion

As the global financial landscape continually evolves, so does the battle against money laundering. Saudi Arabia remains dedicated to combating this issue through strong legislation, regulatory frameworks, and ongoing oversight.

[1] World Bank. (2017, March). Saudi Arabia: Anti-Money Laundering and Combating the Financing of Terrorism Law. Retrieved from http://documents.worldbank.org/curated/en/ASW73783/BOR-2017-01/1/65147774/0/Saudi-Arabia-Anti-Money-laundering-and-Combating-the-Financing-of-Terrorism-Law–ENG.pdf

[2] The Official Gazette — Saudia Arabia. (2017, April 14). Anti-Money Laundering Law and its Implementing Regulations. Retrieved from https://wamda.com/wp-content/uploads/2017/04/Anti-Money_Laundering_Law_ Implementing-Regulations_English.pdf

[3] World Bank. (2017, March). Saudi Arabia: Anti-Money Laundering and Combating the Financing of Terrorism Law. Retrieved from http://documents.worldbank.org/curated/en/ASW73783/BOR-2017-01/1/65147774/0/Saudi-Arabia-Anti-Money-laundering-and-Combating-the-Financing-of-Terrorism-Law–ENG.pdf

[4] FATF. (n.d.). Saudi Arabia’s 4th Mutual Evaluation Report: Money Laundering. Retrieved from https://www.fatf-gafi.org/media/2765382/Saudi-Arabia-MER-Volume-1—2019.pdf

[5] The Official Gazette — Saudia Arabia. (2017, April 14). Anti-Money Laundering Law and its Implementing Regulations. Retrieved from https://wamda.com/wp-content/uploads/2017/04/Anti-Money_Laundering_Law_Implementing-Regulations_English.pdf

[6] The Official Gazette — Saudia Arabia. (2017, April 14). Anti-Money Laundering Law and its Implementing Regulations. Retrieved from https://wamda.com/wp-content/uploads/2017/04/Anti-Money_Laundering_Law_Implementing-Regulations_English.pdf

[7] The Official Gazette — Saudia Arabia. (2017, April 14). Anti-Money Laundering Law and its Implementing Regulations. Retrieved from https://wamda.com/wp-content/uploads/2017/04/Anti-Money_Laundering_Law_ImplementingRegulations_English.pdf

[8] FATF. (n.d.). Saudi Arabia’s 4th Mutual Evaluation Report: Money Laundering. Retrieved from https://www.fatf-gafi.org/media/2765382/Saudi-Arabia-MER-Volume-1—2019.pdf

[9] World Bank. (2017, March). Saudi Arabia: Anti-Money Laundering and Combating the Financing of Terrorism Law. Retrieved from http://documents.worldbank.org/curated/en/ASW73783/BOR-2017-01/1/65147774/0/Saudi-Arabia-Anti-Money-laundering-and-Combating-the-Financing-of-Terrorism-Law–ENG.pdf