Saudi Arabia’s War on Financial Crime: Robust Regulations and Key Players in the Kingdom

Saudi Arabia, a major player in the global economy and a champion of economic diversification and entrepreneurship, has long grappled with money laundering challenges alongside numerous other nations. In response, the Saudi Arabian government has implementing a robust regulatory framework to prevent money laundering and counter terrorism financing.

Money Laundering Threat: A Lengthy Battle

Saudi Arabia recognized the menace of money laundering and illicit financial activities as far back as the 1990s. In response, the Saudi Arabian government took several steps to address these issues through various financial regulations.

Significant Milestones: Anti-Money Laundering Law & FATF Membership

A milestone achievement for Saudi Arabia was the introduction of its Anti-Money Laundering (AML) Law in 2017. This comprehensive legal framework provides the cornerstone for combating money laundering and terrorist financing activities within the country, while emphasizing international cooperation and adherence to global standards. In 2019, the kingdom joined the Financial Action Task Force (FATF), a global money laundering and terrorist financing watchdog. This membership signified the country’s unwavering commitment to aligning its AML efforts with international best practices.

Recognition: Mutual Evaluation Report

In the 2018 Mutual Evaluation Report published by FATF, Saudi Arabia was praised for its dedication to AML efforts. The report commended the nation for achieving compliance with all 40 FATF Recommendations and implementing the Forty Plus Nine Recommendations.

Key Regulatory Bodies and AML Measures in Saudi Arabia

1. Anti-Money Laundering Law (AML Law) The cornerstone of AML efforts in Saudi Arabia is the Anti-Money Laundering Law legislated by the Saudi Arabian Council of Ministers. This comprehensive law outlines the legal foundation and framework for enforcing AML measures and aligns with international standards.

2. International Standards and FATF Forty Recommendations Saudi Arabia adheres closely to international AML standards, including FATF’s Forty Recommendations. The country’s authorities work diligently to ensure compliance with the latest FATF guidelines.

3. Local Regulations Several other regulations fortify Saudi Arabia’s AML framework:

   • Finances Companies Control Law
   • Banking Control Law
   • Payment Service Provider Laws (PSP)
   • Communication and Information Technology Commission (CITC)

All these regulations provide additional measures to maintain the integrity of the financial sector and prevent money laundering through various channels.

4. Regulatory Bodies Several bodies play instrumental roles in ensuring that financial institutions and relevant entities comply with AML regulations:
   • Ministry of Anti-Money Laundering (MOAML)
   • Saudi Arabian Monetary Agency (SAMA)
   • Capital Markets Authority (CMA)
   • Ministry of Foreign Affairs
   • Ministry of Justice
   • Ministry of Commerce and Industrial
   • Ministry of Finance
   • Department of Customs
   • Commission for Investigation and Prosecution

Continuing Challenges and Future AML Trends in Saudi Arabia

Despite significant progress, the financial sector in Saudi Arabia faces ongoing money laundering risks due to its strategic position in the global economy and regional challenges. These risks include:

• Oil and petrochemicals industry
• Financial services sector
• Trade-based money laundering
• Hawala system
• Terrorist financing

To combat these challenges, Saudi Arabia is embracing technology integration, enhanced data sharing, regulatory updates, international cooperation, public and private sector collaboration, and increased customer awareness.

Conclusion

Saudi Arabia has made substantial progress in its AML efforts and remains committed to combating financial crimes. Keeping informed about evolving AML regulations and best practices is essential for businesses and individuals operating within the Kingdom of Saudi Arabia to maintain an effective financial compliance framework.

Through ongoing collaborations with international partners and regulatory bodies, Saudi Arabia will continue striving to counter emerging financial threats and create a more robust AML landscape.