Financial Crime World

Saudi Arabia’s Financial Crimes Risk Assessment: Strengths, Weaknesses, and Future Improvements

In November 2017, the Financial Action Task Force (FATF) conducted an on-site assessment of the Saudi Arabian Monetary Authority and the Ministry of Interior’s Anti-Corruption and Economic Crimes Department to evaluate the country’s efforts in mitigating money laundering (ML) and counter-terrorist financing (CTF) risks.

Assessment Findings

Key findings from the assessment are as follows:

Interagency Policy Coordination and Cooperation

  1. Saudi Arabia has demonstrated strengths in its financial crime risk assessment through interagency policy coordination and cooperation.
  2. The country has a well-established institutional framework for cooperation, featuring the Anti-Money Laundering Permanent Committee and the Permanent Committee for Counter Terrorism.
  3. Saudi authorities have introduced measures to address risks identified in previous assessments, such as reducing the use of cash and the risks associated with Hajj pilgrimages.

Financial Intelligence Unit’s Capabilities

  1. While Saudi Arabia has devoted significant resources to support financial investigation and analysis, the Financial Intelligence Unit (FIU)’s capabilities need improvement.
  2. The FIU currently lacks the ability to conduct sophisticated financial analysis to support investigations, relying mainly on organizing and compiling information from available databases and reporting entities.

Effectiveness in Investigating and Prosecuting ML Activities

  1. Despite an increase in ML investigations over the past few years, Saudi Arabia is not effectively investigating and prosecuting individuals involved in larger scale, professional ML activities.
  2. Investigations are mostly reactive, and prosecutions usually involve self-laundering offenses rather than third-party money laundering.
  3. Saudi Arabia struggles to trace and confiscate the proceeds of crime, whether located within or outside its borders.

Efforts to Combat Terrorist Financing

  1. Saudi Arabia has shown a strong commitment to combating terrorist financing by successfully conducting financial investigations in connection with terrorism cases.
  2. The country has an established legal framework for implementing Terrorist Financing Sanctions (TFS) without delay.
  3. Saudi Arabia has made significant use of targeted financial sanctions under the UNSCR 1373 system.

Areas for Improvement

  1. Addressing the weaknesses within the FIU.
  2. Effectively investigating and prosecuting larger-scale ML activities.
  3. Implementing proactive measures to prevent sanctions evasion in relation to proliferation financing.

Reactions and Commitment to Improve

The Saudi Arabian Monetary Authority and the Ministry of Interior have reacted swiftly to the evaluation’s findings, implementing changes to the administrative and legislative framework and demonstrating a commitment to strengthening their AML/CTF efforts.