Financial Crime World

Saudi Arabia’s Insurance Sector Fortifies Fraud Prevention Measures

The Saudi Arabian Monetary Agency (SAMA) has updated the Anti-Fraud Regulation to strengthen fraud prevention measures for insurance and insurance-related companies, as well as insurance service providers. The new code aims to establish high standards of fraud detection and prevention within the sector. Below are the key guidelines outlined in the updated regulation.

1. Purpose and Scope

Saudi Arabia’s Anti-Fraud Regulation aims to present general principles and minimum standards for insurance companies and service providers to prevent or minimize fraud occurrences. The regulation applies to:

  • Insurance and reinsurance companies
  • Insurance service providers

2. Strategies and Policies

Required elements

Insurance companies must have a well-defined fraud management strategy aligned with their business objectives. Policies should include:

  • Clear definitions of fraud tolerance levels
  • Internal policies, procedures, and controls
  • Procedures to detect, measure, mitigate, and monitor fraud risks

3. Organizational Structure and Reporting

Organizational structure

Companies should design their organizational structure to facilitate communication between departments for effective fraud management strategy implementation.

Board involvement and reporting

  • Board involvement is essential
  • Companies must have suitable reporting procedures to ensure effective fraud prevention

4. Training and Awareness

Anti-fraud training

Companies should provide anti-fraud training to employees at all levels, covering:

  • Overview of fraud management strategy
  • Fraud prevention policies and procedures
  • Potential fraud risks

5. Contingency Planning and Recovery

Fraud incident response

Companies should establish a recovery plan to address small and large-scale fraud incidents:

  • Escalation steps
  • Evidence preservation
  • Involvement of external experts

6. Information Exchange and Communication

Collaboration with authorities

  • Companies must report suspected fraud to relevant authorities
  • SAMA encourages cooperation between companies

Information sharing with peers

  • Sharing fraud-related information with industry peers
  • Enhances collective efforts in fraud prevention

7. Regulations and Compliance

SAMA requirements

  • Companies must adhere to the Anti-Fraud Regulation and related laws
  • Failure to comply may lead to enforcement action

8. Prevention Measures Against Internal Fraud

Combatting internal fraud

  • Implement physical security measures
  • Establish cash handling procedures
  • Conduct background checks on new hires
  • Have strict internal policies/procedures

9. Addressing Service Provider Fraud

Fraud prevention partnerships

  • Close collaboration with insurance service providers
  • Ensure they have proper fraud prevention measures in place
  • Conduct regular audits and assessments of risk levels

10. Detection and Mitigation of Policyholder Fraud

Identifying policyholder fraud

  • Suspicious behavior or false representations
  • Establish clear procedures to recognize and react to fraud cases
  • Provide adequate training to staff to handle potential fraud situations