Arab News
With the development witnessed by the financial sector and its services, especially with the entry of technology in the implementation and processing of these services, many financial institutions have been exposed to money laundering or illegal financial operations.
The Saudi anti-money laundering law focuses on the duties of these financial institutions.
Financial institutions, as well as designated nonfinancial businesses and professions, must make sure to apply due diligence measures to clients in order to abide by anti-money laundering regulations and policies.
The scope of these measures is based on the level of risk associated with the customer, and business or commercial relations. Strict due diligence measures must be applied if the risk of money laundering is high.
Also, financial institutions and designated nonfinancial businesses and professions must use appropriate tools to determine whether the customer or the beneficial owner is assigned — or has become entrusted — with high public tasks in the Kingdom or a foreign country, or in high administrative positions or a job in an international organization.
If any of that becomes apparent, it must apply additional measures to make sure that all foreign and sensitive customers are following the regulations, especially when it comes to disclosure.
As for dealing with international financial institutions, such financial institutions must adhere to the appropriate measures to reduce the potential risks that may arise from this relationship before entering into a correspondent relationship with financial institutions outside the Kingdom.
They also must ensure that these institutions do not allow their accounts to be used by a fictitious bank, where these financial institutions must refrain from entering into, or continuing, correspondent relations with a fictitious bank, or with a financial institution outside the Kingdom that allows its accounts to be used by a fictitious bank.
Moreover, financial institutions engaged in wire transfers must obtain the full information and details related to the transfer order and the beneficiary and save this information with transfer orders or related messages through the payment chain.
If the financial institution is unable to obtain this information, the wire transfer should not be carried out.
These institutions must also record all information related to the transfer order and the beneficial owner, and keep all records, documents and data for a period of no less than 10 years from the date of the end of the transaction or the closing of the account.
Due to the nature of the financial sector developments, the financial institution shall abide by any additional measure related to wire transfers stipulated in the updated regulations, where they have to keep an open eye on such updates.
Risk management is an important pillar in combating money laundering activities, where the financial institutions must apply strict due diligence measures proportionate to the risks that may arise from business relationships and transactions with a person who comes from a country that the Permanent Committee for Combating Money Laundering has identified as a high-risk location.
