Financial Crime World

Saudis Crack Down on Money Laundering: Impact on Economy and Society

Saudi Arabian authorities are taking a firm stance against money laundering to safeguard the economy and society. Here’s what you need to know about this strict move.

The Risk of Money Laundering

The Anti-Money Laundering Permanent Committee (AMLPC), under the Saudi Arabian Monetary Authority (SAMA), emphasizes that money laundering poses significant threats to the economy and society of any nation, particularly those with weak anti-money laundering measures in place.

Definition of Money Laundering

The AMLPC defines money laundering as the process by which criminals clean illicit funds by disguising their illegal origin. Predicate offenses can include all crimes committed within or outside the Kingdom and are considered illegal under the Sharia or statutory laws of Saudi Arabia.

Establishment of AMLPC

The AMLPC was founded in 1999 to implement the Financial Action Task Force’s (FATF) 40 recommendations to combat money laundering operations within Saudi Arabia’s regulations.

  • Represents various ministries and authorities: Ministry of Interior, Ministry of Foreign Affairs, Ministry of Justice, Ministry of Commerce and Investment, Ministry of Finance, Ministry of Labor and Social Development, Ministry of Islamic Affairs, Dawah and Guidance, Presidency of State Security, Public Prosecution, Presidency of General Intelligence, and Capital Market Authority
  • Combats money laundering operations: Strives to prevent, control, and investigate money laundering activities

The Impact of Money Laundering

Prevalence of money laundering can have adverse effects on societies:

  • Increased crime rates
  • Decline in the value of education and culture
  • Emergence of shadow economy leading to:
    • Decrease in economic growth
    • Escalating inflation
    • Price hikes, disrupting fair competition among businesses

The Law Against Money Laundering

The Anti-Money Laundering Law, issued by Royal Decree No. (M/20) in 1439 AH, criminalizes money laundering as a severe offense. Consequences for this crime include:

  • imprisonment for up to fifteen years
  • fines of up to seven million riyals
  • travel ban for Saudi citizens
  • deportation for non-nationals

Extent of the Law’s Reach

The reach of the Anti-Money Laundering Law covers:

  • all types of funds, assets, and properties of any value
  • economic resources, regardless of ownership
  • conviction does not require prior predicate offense conviction

The Consequences of Reporting a Crime

Those who report a money laundering crime before detection or provide reports leading to the arrest or seizure of crime assets may receive leniency in sentencing.