Financial Crime World

Saudi Arabia’s Anti-Money Laundering Landscape: Key Laws, Penalties, and Compliance Obligations for Professions

Saudi Arabia, as a significant player in the global economy, has imposed stringent measures to prevent money laundering and terrorist financing activities within its jurisdiction. In this article, we take a closer look at the main financial compliance legislation, offenses, duties for designated professions, and penalties in the Kingdom.

Pillars of Money Laundering Legislation in Saudi Arabia

  1. Saudi Arabia’s Primary Money Laundering Law: Saudi Arabia’s primary law against money laundering is the Saudi Arabia Cabinet Decision No. 80/1439, which took effect in 2017 and is supported by its Implementing Regulations.

  2. Defining Money Laundering: The Saudi Arabian anti-money laundering law does not explicitly define the term. However, it outlines various offenses that constitute money laundering:

    • Disguising or concealing illegitimately gained funds and aiding offenders in this regard.
    • Possessing or using funds from illicit activities, including proceeds from illegal sources.
    • Concealing the true nature of ill-gotten funds.
    • Attempting or facilitating money laundering.

  3. Comparing Saudi Arabia’s Anti-Money Laundering Legislation to Others: Saudi Arabia’s anti-money laundering legislation is largely compliant with international conventions and developed countries’ regulations.

Secondary Regulations Covering Money Laundering

Several regulatory bodies in Saudi Arabia have issued rules and guidelines related to anti-money laundering and combating the financing of terrorism:

  • Saudi Capital Market Authority (CMA)
  • Saudi Arabian Monetary Agency (SAMA)
  • Saudi Financial Action Task Force (FATF)

Industry and Profession-Specific Responsibilities (DNFBPs)

  1. Designated Non-Financial Businesses and Professions (DNFBPs): Professions and industries beyond finance service institutions are regulated by FATF as Designated Non-Financial Businesses and Professions (DNFBPs). These include:
    • Real estate agents
    • Lawyers and lawyers offering company services
    • Dealers in precious metals and precious stones
    • Accountants Two other categories, casinos and notaries, do not operate in Saudi Arabia.

Penalties for Money Laundering

Individuals

  • Imprisonment for up to 10 years (minimum 2 years)
  • Fine of up to 5 million riyals

Aggravated Money Laundering

  • Up to 15 years imprisonment (minimum 3 years)
  • Fine of up to 7 million riyals
  • Up to 50 million riyals in fines
  • Prohibition from engaging in licensed activities

Penalties include:

  • Prohibiting certain activities
  • Closing offices
  • Liquidation orders
  • Seizure and execution on property

Common Defenses against Money Laundering Charges

Defenses include:

  • Insufficient evidence
  • Lack of intent to commit a crime
  • Threats

Practical Compliance Measures for Businesses

  1. Proactive Due Diligence: Conducting due diligence proactively is crucial.
  2. Employing Triggering Events: Stay updated on clients by employing triggering events.
  3. Maintaining Impartiality and Reasonable Doubt: Maintaining impartiality and reasonable doubt is essential.

The Role of Amounts in Money Laundering

  1. Higher Amounts and Money Laundering: Higher amounts in money laundering transactions may attract more scrutiny.
  2. International Conventions and Detecting Offenses: International conventions emphasize the responsibility of financial institutions in detecting money laundering offenses and reporting suspicious transactions.