Financial Crime World

Saudi Central Bank’s New Counter-Fraud Framework: A Game Changer for Financial Institutions in Saudi Arabia

Amid a rise in financial fraud cases in Saudi Arabia, the Saudi Central Bank (SCB) has issued a new mandate to combat fraud in Financial Institutions (FIs). By June 29, 2023, FIs must adhere to the SCB’s Counter-Fraud Framework to effectively manage fraud risks.

Why the Need for Change?

  • Financial fraud has become a prevalent issue in the Saudi region, with methods such as impersonation, fictitious recruitment, phantom investments, and identity mismatch being the most common.
  • Weaknesses in process controls, insufficient anti-fraud system infrastructure, bypassing of identity checks, and lack of procedures for verifying IBAN and beneficiary matches have worsened the problem.
  • 55% of remotely opened online accounts show identity mismatches, highlighting the need for a more robust approach to fraud prevention.

Framework Objectives

The Counter-Fraud Framework aims to:

  1. Create a unified strategy for addressing fraud risks within member organizations.
  2. Achieve an appropriate maturity level of fraud controls.
  3. Ensure effective fraud risk management.

The framework consists of four main domains:

  1. Fraud Governance
  2. Prevention
  3. Detection
  4. Response

Assessing and Enhancing Fraud Controls

  • FIs will undergo a self-assessment using a predefined Counter-Fraud Maturity Model, which distinguishes six levels.
  • To operate efficiently, FIs are expected to achieve a maturity level of 3 or higher before the deadline.
  • Maturity Level 3 includes:
    • Implementing fraud detection systems
    • Documenting “why,” “what,” and “how” fraud controls should be imposed
    • Addressing fraud risks across all digital and non-digital channels

How Clari5 Supports Compliance

Clari5 can help member organizations:

  1. Implement fraud detection systems before the deadline.
  2. Facilitate proactive fraud detection across all products and channels.
  3. Address various types of financial crimes such as identity theft, money laundering, and account takeovers.
  4. Comply with the SCB’s guidelines through extensive due diligence, awareness and training programs, and risk assessments.

For more information on how Clari5 can assist your organization, please contact us.