Saudi Arabia’s Legal Framework Against Money Laundering: A Closer Look at Royal Decree No. M/39
The Saudi Arabian authorities have taken significant strides in combating financial crimes, including money laundering and terrorist financing, through the issuance of Royal Decree No. M/39 on August 23, 2003. This article delves into the key definitions and provisions of the decree.
Terminology
The decree sets out various terms and phrases to clarify their meanings within the legal framework. These include:
- Money laundering
- Funds
- Proceeds
- Means
- Financial and non-financial institutions
- Transaction
- Criminal activity
For instance, money laundering is defined as an act that conceals or falsifies the true origin of illegally-gained funds, making them appear legitimate.
Prohibited Acts
Under Article Two, the decree outlines several acts that constitute money laundering:
- Knowingly conducting a transaction involving criminally-gained funds
- Transferring funds with knowledge of their illegal origin
- Concealing or falsifying the source of funds or proceeds
- Financing terrorism, terrorist acts, or terrorist organizations
Institutions and Institutional Obligations
Financial and non-financial institutions, as stated in Article Three, are required to implement comprehensive programs for combating money laundering transactions. These may include:
- Developing and implementing policies
- Auditing and control systems
- Continuous training for employees
- Cooperating with law enforcement agencies
Institutions must also adhere to regulations, such as:
- Prohibitions against dealing with clients under unknown or fake names
- Verification of client identities and origins of funds
- Maintenance of records and documents related to financial transactions for at least ten years
- Reporting transactions that raise suspicion of money laundering to the Financial Investigation Unit
Reporting Suspicious Transactions
Article Seven obliges financial and non-financial institutions to report suspicious transactions to the Financial Investigation Unit. Failure to report may result in criminal and financial penalties.
Confidentiality and International Cooperation
The decree maintains confidentiality of financial information exchanged between financial and non-financial institutions and competent authorities. However, confidentiality can be breached for investigations or lawsuits related to money laundering violations.
Additionally, the decree allows for international cooperation and information exchange with signatories of agreements and treaties in force with Saudi Arabia. Competent authorities may also request the seizure or tracking of funds, proceeds, or means associated with money laundering crimes.
Penalties
The decree sets forth criminal penalties, including imprisonment and fines, for individuals and institutions who commit money laundering crimes or violate the regulations set out in the decree.
Royal Decree No. M/39
The decrees establishes the legal framework against money laundering in Saudi Arabian law.
Money Laundering
Money laundering is an act that conceals or falsifies the true origin of illegally-gained funds, making them appear legitimate.
Article Two
Under the decree, several acts constitute money laundering, including knowingly conducting transactions involving criminally-gained funds and financing terrorism or terrorist organizations.
Article Three
Financial and non-financial institutions must implement comprehensive programs for combating money laundering transactions.
Article Seven
Financial and non-financial institutions are required to report suspicious transactions to the Financial Investigation Unit.
Confidentiality
The decree maintains the confidentiality of financial information exchanged between financial and non-financial institutions and competent authorities.
International Cooperation
The decree allows for international cooperation and information exchange with signatories of agreements and treaties in force with Saudi Arabia.
Criminal Penalties
The decree sets forth criminal penalties for individuals and institutions who commit money laundering crimes or violate the regulations set out in the decree.