Financial Crime World

Saudi Arabia’s Digital Economy Blossoms Amidst Anti-Financial Crime Regulatory Shifts

Saudi Arabia is making significant strides in transforming its economy into a digital one, driven by the government’s efforts to create a favorable business climate and implement swift legal reforms. Here’s an update on the latest regulatory developments in the Saudi digital economy, particularly in the realm of anti-financial crime.

Moving Towards a Cashless Economy

  • Saudi Arabia aims to move its economy towards cashless transactions as part of Vision 2030.
  • With over 70% of the population under 30 and highly digital literate, the country is well-positioned to achieve this goal.

FinTech Boom Amidst the Pandemic

  • The ongoing pandemic has intensified the need for online-based solutions and paved the way for a FinTech boom.
  • In June 2021, Saudi Arabia approved the licensing of two digital banks - STC Pay (STC Bank) and Saudi Digital Bank.

Addressing Challenges and Risks in the Digital Economy

  • Innovation in FinTech and the digital economy brings new challenges and risks, especially in the area of financial crime prevention.

Proactive Approach from the Saudi Central Bank (SAMA)

  • SAMA has taken a proactive approach to implementing regulatory changes in line with Vision 2030.

Payment Services Provider Regulations

  • Issued in January 2020, these regulations require Payment Service Providers to comply with the Saudi Anti-Money Laundering (AML) Law and SAMA’s anti-money laundering and counter-terrorism financing (CTF) regulations.

Licensing Guidelines and Criteria for Digital-Only Banks

  • Allows for the use of new regulatory technology (RegTech) for e-KYC processes.

Open Banking: Balancing Innovation and Managing Financial Crime Risks

  • Open banking, enabling third-party financial service providers access to consumer banking data, is on the horizon in the Kingdom.
  • This decision presents opportunities for FinTech companies, but also increases fraud risks.

New Financial Fraud Law

  • Issued earlier this year, criminalizes fraudulent activities and makes it essential for FinTech companies to comply with the Saudi AML law and SAMA’s regulations.

Staying Abreast of Regulatory Changes

  • RegTech providers must stay informed of these regulatory changes to effectively serve their clients.
  • FinTech companies eager to enter or already operating in the Saudi market are advised to seek expert legal counsel to navigate the complex anti-financial crime compliance landscape.
  • SAMA’s commitment to providing an effective anti-financial crime regulatory environment signals the kingdom’s dedication to continued regulatory advancements.