United Arab Emirates: A Practical Guide To Saudi Arabia's Anti Money Laundering Law

Last Updated: 22 February 2019
Article by Marc Saroufim and Dario Najm

1. What are the main laws governing money laundering in KSA jurisdiction?

The main law governing money laundering in Saudi Arabia is Saudi Arabia Cabinet Decision No. 80/1439, approving the Anti‐Money Laundering Law (the "AML"), and its Implementing Regulations (the"Implementing Regulations"), published in 2017. This law supersedes Saudi Arabia Royal Decree No. M31/1433, the old Anti‐Money Laundering Law.

2. How is money laundering defined?

Saudi Arabia Cabinet Decision No. 80/1439, Approving the Anti‐Money Laundering Law, and its Implementing Regulations, do not provide a clear definition of money laundering. Despite this, Article 2 of Saudi Arabia Cabinet Decision No. 80/1439, Approving the Anti‐Money Laundering Law, lists the offences considered to be money laundering. These offences are:

  • Converting, transferring or conducting any transaction of funds that the person knows are the proceeds of crime for the purpose of disguising or concealing the illegitimate origin of the funds, or to help a person involved in the commission of the offense that generated the funds to evade the legal consequences of his/her acts;
  • Acquiring, possessing or using funds that the person knows are the proceeds of crime, or from an illegal source;
  • Concealing or disguising the true nature, source, movement, ownership, place, disposition, or manner of disposition, or rights with respect to funds that the person knows are the proceeds of crime;
  • Attempting to conduct any of the stated acts in Sup (1), (2), (3) in Article 2 of Saudi Arabia Cabinet Decision No. 80/1439, Approving the Anti‐Money Laundering Law, or participating in, by means of agreement, or providing assistance, or abetting, or providing counseling, advice, or facilitation, or collusion, cover‐up, or the attempt to commit any of the acts provided for in this Article.

3. What are the main differences between money laundering legislation in the KSA jurisdiction and that in other major jurisdictions?

Saudi Arabia Cabinet Decision No. 80/1439, Approving the Anti‐Money Laundering Law, and its Implementing Regulations, are materially in line and compliant with most of the money laundering laws in other developed countries, international conventions, and UN Security Council Resolutions on combating terrorist financing.

4. Are there any specific secondary regulations issued by agencies covering this area?

Some of Saudi Arabia's agencies have issued rules and regulations covering money laundering, notably:

  • The Anti‐Money Laundering and Counter‐Terrorist Financing Rules (the "AML/CTF") issued by the Saudi Capital Market Authority (the "CMA"), amended by CMA Board Resolution No. 1‐85‐2017;
  • The Saudi Financial Action Task Force's (the "FATF") 40 Recommendations and 9 Special Recommendations dealing with anti‐money laundering and combating the financing of terrorism 2012;
  • The fourth update of the Rules Governing the Opening of Bank Accounts & General Operation Guidelines 2012, issued by the Saudi Arabian Monetary Agency (the "SAMA") Banking Inspection Department;
  • The Manual for Combating Embezzlement & Fraudulent Transactions, (second issue) 2008, issued by SAMA's Banking Inspection Department;
  • The Guidelines Manual for Banks in Saudi Arabia for Regulating Audit Committees 1996;
  • The Internal Control Manual for Banks Operating in the Kingdom 1989;
  • The Manual of Compliance with Regulations for Banks operating in the Kingdom of Saudi Arabia 2008;
  • The Rules of Electronic Banking Services 2010, issued by SAMA;
  • The Risk Based On‐ Site Inspection “Policy Framework & Procedures” 2011, issued by SAMA; and
  • The Risk Based Approach for AML/CFT Supervision 2012, issued by SAMA.

5. Do particular professions and industries have any specific duties to guard against money laundering? Under what laws or regulations are they governed?

Other than finance service institutions (banks, etc.), where compliance with anti‐money laundering regulations are most stressed, the FATF regulates a variety of industries that must guard against money laundering. Most of the FATF's Designated Non‐Financial Businesses and Professions ("DNFBP") operating in Saudi Arabia includes real estate agents, dealers in precious metals, dealers in precious stones, lawyers, legal advisers, and accountants. This includes trust (waqfs) and company services which

are partly provided by lawyers (when forming companies). The remaining two categories of DNFBPs as defined by the FATF do not operate in the Kingdom, as casinos are prohibited, and notaries are civil servants who do not practice or prepare any financial transactions or deals for clients.

6. What are the penalties for money laundering? Are there any specific penalties for particular professions or industries?

A. The penalties for money laundering as provided for under Saudi Arabia Cabinet Decision No. 80/1439, approving the Anti‐Money Laundering Law, are:

  • whoever commits the crime of money laundering, as stipulated in Article 2 of Saudi Arabia Cabinet Decision No. 80/1439, Approving the Anti‐Money Laundering Law, will be subject to imprisonment for a period of up to ten years and no less than two years, and a fine not exceeding five million riyals, or both (Article 26 of Saudi Arabia Cabinet Decision No. 80/1439, Approving the Anti‐Money Laundering Law).
  • Article 27 of Saudi Arabia Cabinet Decision No. 80/1439, Approving the Anti‐Money Laundering Law, provides that whoever commits the crime of money laundering, as stipulated in Article 2 of Saudi Arabia Cabinet Decision No. 80/1439, Approving the Anti‐Money Laundering Law, will be subject to imprisonment for a period of up to fifteen years and no less than three years, and a fine not exceeding seven million Riyals, or both if the crime was accompanied by any of the following:
  1. through an organised crime syndicate;
  2. with the use of violence or weapons;
  3. in relation to a public office job and the crime was connected thereto, or if such person abused his/her powers or influence in committing the crime;
  4. trafficking human beings.
  5. exploiting persons or minors and the like;
  6. committed through a correctional, charitable or educational institution or social service facility; or
  7. has a prior conviction within the Kingdom or abroad.
  • Article 30 of Saudi Arabia Cabinet Decision No. 80/1439, Approving the Anti‐Money Laundering Law, also provides that the penalties stipulated in Article 26 of Saudi Arabia Cabinet Decision No. 80/1439, Approving the Anti‐Money Laundering Law, can be reduced to imprisonment for a period of up to seven years and no less than one year, and a fine not exceeding three million riyals, or both, if the perpetrator of the offense provides the competent authorities with information they would not have otherwise obtained, to assist them in:
    1. preventing another money laundering offense or limiting the effects of the offence;
    2. Identifying or prosecuting other perpetrators of the offense;
    3. obtaining evidence;
    4. depriving a criminal organisation of funds over which they have no right or control.

B. Article 31 of Saudi Arabia Cabinet Decision No. 80/1439, Approving the Anti‐Money Laundering Law, provides that any legal person who commits a money laundering offense will be punished by a fine of no more than 50 million riyals and no less than the equivalent of double the full value of the funds that were the object of the offense. A legal person can also be prohibited, permanently or temporarily, from engaging in certain licensed activities, directly or indirectly, or be ordered to close its offices, permanently or temporarily, that were used in conjunction with the commission of the offense, or an order can be made to liquidate the business.

C. In addition, Articles 33 to 37 of Saudi Arabia Cabinet Decision No. 80/1439, Approving the Anti‐Money Laundering Law, also states that the competent court can issue an order to confiscate the laundered funds and proceeds of crime, including proceeds intermingled with funds acquired from legitimate sources, up to the value of the intermingled proceeds.

D. The penalties for money laundering as provided for under Saudi Arabia Cabinet Decision No. 80/1439, approving the Anti‐Money Laundering Law, and The Anti‐Money Laundering and Counter‐Terrorist Financing Rules (the "AML/CTF") issued by the Saudi Capital Market Authority (the "CMA") in 2017, are the following:

  • An authorised person or director, manager or employee of an authorised person that fails to comply with any article of Saudi Arabia Cabinet Decision No. 80/1439, approving the Anti‐Money Laundering Law, and The Anti‐Money Laundering and Counter‐Terrorist Financing Rules (the "AML/CTF") issued by the Saudi Capital Market Authority (the "CMA") in 2017, will be subject to the sanctions set out in Saudi Arabia Royal Decree No. M30/1424, The Capital Market Law. These sanctions include:
    1. warning the concerned person;
    2. obliging the concerned person to cease or refrain from carrying out the act which is the subject of the lawsuit;
    3. obliging the concerned person to take necessary steps to avert the violation, or take the necessary corrective steps to address the results of the violation;
    4. indemnifying the person/s who have suffered damages as a consequence of the violation, or obliging the violator to pay the gains realised as a consequence of the violation, to the capital market authority's account;
    5. suspending the trading in security;
    6. barring the violating person from acting as a broker, portfolio manager or investment adviser for a period of time necessary for the safety of the market and the protection of investors;
    7. seizing and executing on property;
    8. travel ban; and
    9. barring the person/s from working with companies whose securities are traded on the Saudi Stock Exchange

7. Are there specific offences for concealing, converting or transferring criminal property? How is criminal property defined?

Criminal property is specifically defined. As well as the sanctions stipulated in Saudi Arabia Cabinet Decision No. 80/1439, Approving the Anti‐Money Laundering Law, and The Anti‐Money Laundering and Counter‐Terrorist Financing Rules (the "AML/CTF") issued by the Saudi Capital Market Authority (the"CMA") in 2017, the sanctions set out in Saudi Arabia Royal Decree No. M30/1424, The Capital Market Law, include seizing and executing on property.

8. What are the most common defences for money laundering?

The most common defences for money laundering are:

a. Insufficient evidence to accuse;

b. Absence of intent to commit a crime;

c. Threat ‐ when a person truly believes there is a danger or threat to his/her life if they do not contribute in the crime.

9. What sort of practical checks would a business be expected to carry out to prove they are not an accomplice to a money laundering offence?

Keeping on top of due diligence is one of the most effective checks. Also, using triggering events to guarantee that a business remains on top of due diligence with current clients. It is also important that entities maintain objectivity and professional doubt.

10. Does the amount involved impact the offence?

International conventions have tended to strengthen the role of financial institutions (banking and non-banking): in detecting money‐laundering offenses; informing of financial transactions in excess of a certain amount; or raising suspicions about any connection to money‐laundering activities. The amounts involved in money laundering transactions will impact the offence.

11. Are specific checks required with businesses based or operating in specific jurisdictions?

Each entity has specific customer due diligence requirements. An entity's policy statement will include the business's anti‐money laundering policy, controls and procedures the business should take to prevent money laundering. Customer identification documents will also help to identify the sources of client funds, in addition to monitoring daily transactions and receipts.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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