Financial Crime World

Saudi Arabia’s Anti-Money Laundering Law: Defining Terms and Punishing Crime

Saudi Arabia’s Royal Decree No. M/39, issued on 23 August 2003, aims to combat money laundering and other financial crimes within the Kingdom. This article explains the key definitions and punishments outlined in the decree.

Article One: Definitions

The following terms and phrases hold specific meanings under this Law:

  1. Money laundering: Actions meant to conceal or falsify the true origin of illicit funds, making them seem legitimate.
  2. Funds: Assets or properties, as well as their associated legal documents and proofs of ownership.
  3. Proceeds: Money gained directly or indirectly through criminal activities.
  4. Means: Anything used to facilitate a money laundering crime.
  5. Financial and non-financial institutions: Institutions engaged in financial, commercial, or economic activities, such as banks, insurance companies, and commercial enterprises.
  6. Transaction: Transfer or disposal of funds, properties, or proceeds, including deposit, withdrawal, or lending.
  7. Criminal activity: Any illegal act punishable under Shari’ah or Saudi law.
  8. Preventive Seizure: A court or competent authority’s temporary restriction of funds, proceeds, or means associated with a criminal activity.
  9. Confiscation: Permanent forfeiture of funds, proceeds, or means used in a crime.
  10. Monitoring body: Saudi Arabia’s government agency responsible for granting financial institution licenses and ensuring compliance.
  11. Competent authority: Any Saudi government agency assigned the responsibility to fight money laundering crimes.

Article Two: Prohibited Activities

Anyone engaging in the following activities may be charged with money laundering:

  • Conducting transactions involving illegally obtained funds or proceeds.
  • Transporting, acquiring, keeping, or transferring prohibited funds or proceeds.
  • Concealing or falsifying the source, movement, ownership, or disposal of illicit funds or proceeds.
  • Financing terrorism, terrorist acts, or terrorist organizations.
  • Participating in the commission of any of the previously mentioned acts.

Article Three: Institutional Responsibility for Money Laundering

Financial and non-financial institutions’ leadership and staff can also face charges for money laundering:

  • Chairmen of the board.
  • Board members.
  • Owners.
  • Employees.
  • Hired hands acting on behalf of a principal.

Article Four: Client Identity Verification

Financial and non-financial institutions must verify clients’ identities before starting any deals or transactions.

Article Five: Record Keeping

Institutions must keep records of transactions and client information for a minimum of ten years.

Article Six: Preventive Measures

Institutions are required to implement precautionary measures and internal monitoring systems to prevent money laundering.

Article Seven: Reporting Suspicious Transactions

Suspicious transactions should be reported to the Financial Investigation Unit immediately.

Article Eleven: Financial Investigation Unit

A Financial Investigation Unit is established to analyze, investigate, and report on suspected money laundering cases.

Article Twelve: Preventive Seizure

Competent authorities can request preventive seizure of funds, proceeds, or means linked to money laundering for up to twenty days.

Article Thirteen: Confidentiality

Information exchanged between financial institutions and competent authorities is confidential and not to be disclosed without proper authorization.

Punishments for Money Laundering

Article Sixteen through Twenty: Money laundering criminals face punishments, including imprisonment, fines, and confiscation of proceeds.

The following articles (Twenty-One to Twenty-Nine) outline exceptions, international cooperation, and the law’s effective date.

Note: The articles marked from Article Fourteen to Twenty-Five could not be included in this markdown representation due to the given context, but they pertain to the implementation of the law, disclosure of cash and precious metals, recognition and enforcement of foreign judgments, liability exemptions, and jurisdiction.