A. These principles aim to:
1. Enhance sound practices within the company, and continuously affirm the effectiveness of compliance policies and their implementation.
2. Promote a culture of compliance, ensuring that compliance is an integral part of the company’s culture, noting that this is not limited to the unit’s employees only, but extends to all company staff.
3. Define the responsibilities of the Board of Directors, the Audit Committee, the Executive Management, the Compliance Unit, company employees, and the Internal Audit Department regarding compliance.
4. Establish the minimum requirements to enable the unit to perform its tasks efficiently, professionally, and effectively.
B. These principles do not prejudice the requirements imposed on finance companies and real estate refinancing companies under other relevant laws and regulations, including but not limited to the following:
· The Finance Companies Control Law and its Executive Regulations.
· The Real Estate Finance Law and its Executive Regulations.
· The Anti-Money Laundering Law and its Executive Regulations.
· The Anti-Terrorism Crimes and Financing Law and its Executive Regulations.
· Rules for Regulating Real Estate Refinancing Companies.
· Rules for Practicing Debt Crowdfunding Activity.
· Rules for Regulating Buy Now Pay Later (BNPL) Companies.
· Rules for Combating Fraud in Finance Companies.
· Key Governance Principles in Financial Institutions Subject to the Supervision and Control of the Saudi Central Bank.
· Principles of Conduct and Work Ethics in Financial Institutions.
· Principles and Rules for Protecting Clients of Financial Institutions.
· Requirements for Appointment to Leadership Positions in Financial Institutions Supervised by the Saudi Central Bank.
· Controls and Procedures for Collection from Individual Clients.
· Controls for Establishing Customer Care Management in Finance Companies.
· Anti-Money Laundering and Terrorism Financing Guide.
· Whistleblowing Policy in Financial Institutions.
A. The provisions of these principles shall apply mandatorily to financing companies and real estate refinancing companies.
B. These principles shall apply as guidance to companies supporting financing activities and companies registering finance lease contracts. The bank may, at any time, require compliance with all or some of the provisions of these principles.
1. Subject to the duties and responsibilities of the Board of Directors stipulated in the relevant laws, regulations, and instructions issued by the bank, the Board shall undertake the following:
A. Support and promote the values of honesty and integrity throughout the company.
B. Ensure the existence of an effective compliance unit, work on its development, ensure its independence from other departments, grant it appropriate authorities and resources, and train its employees and develop their capabilities and skills in this field.
C. Approve a written compliance policy that includes the authorities, obligations, responsibilities, compliance programs, and related procedures of the compliance unit.
D. Appoint the compliance officer based on the recommendation of the audit committee and after obtaining a letter from the bank indicating its non-objection to this appointment.
E. Accept the resignation of the compliance officer based on the approval of the audit committee and notify the bank accordingly.
F. Establish clear limits of responsibility and accountability, and obligate all company employees to adhere to them, ensuring complete segregation of responsibilities at the executive management level.
G. Review the periodic compliance report submitted by the compliance officer.
1. Subject to the tasks and responsibilities of the Review Committee stipulated in the relevant laws, regulations, and instructions issued by the bank, the committee shall have the following responsibilities:The committee shall be responsible for the following:
A. Reviewing and discussing the periodic compliance report submitted by the Compliance Officer, documenting the actions taken thereon, the resulting decisions, and submitting it to the Council.
B. Verifying the implementation of the compliance policy approved by the Council, assessing its effectiveness, updating it, and proposing necessary amendments on an annual basis.
C. Approving the plan that includes the main activities and operations of the unit and updating it annually from the Compliance Officer.
D. Providing recommendations to the Council for the appointment of the Compliance Officer, including stating the reasons and justifications for that.
E. Approving the resignation request of the Compliance Officer.
F. Evaluating the Compliance Officer according to the plan approved by the company.
G. Evaluating the effectiveness and efficiency of compliance policies and procedures, the reporting mechanism, and the extent of adherence thereto annually, and providing recommendations to the unit for improvement before approval by the Council.
H. Reviewing and approving the risk-based compliance program followed by the unit in conducting its business.
I. Reviewing the results of the bank's reports and verifying that the company has taken the necessary actions thereon.
J. Reporting to the Council on matters deemed necessary for action and providing recommendations on the measures to be taken.
K. Verifying the company's compliance with the relevant laws, regulations, policies, and instructions, and taking necessary measures to improve the level of regulatory compliance in the company.
L. Verifying that the number of unit employees is sufficient in proportion to the size of the company's business and its business model.
1. Subject to the tasks and responsibilities of the executive management stipulated in the relevant laws, regulations, and instructions issued by the bank, the executive management shall be responsible for the following:
A. Complying with the applicable laws and instructions, and taking the necessary procedures and regulations to prevent violations of their provisions.
B. Establishing an independent unit responsible for compliance tasks and clarifying its role to all company employees.
C. Creating an atmosphere of trust and harmony in the relationship between the unit and other departments, and taking the necessary measures to that effect.
D. Preparing a written compliance policy approved by the Board of Directors that includes the unit’s authorities, obligations, responsibilities, and related compliance programs.
E. Including in the company’s internal regulations guarantees for compliance with the relevant laws and instructions.
F. Developing a written organizational policy that includes work manuals and procedures, continuously updating it in accordance with changes, and communicating it to the concerned employees in an appropriate manner and in a timely manner that enables them to comply with it, provided that these policies include the rules governing compliance with the relevant laws and instructions.
G. Providing appropriate training to the company’s employees annually and following up periodically; aiming to keep pace with developments in their fields of work, and to ensure the effective performance of their duties and responsibilities contributing to achieving compliance.
H. Supporting the unit to perform its tasks, including those related to combating money laundering and terrorism financing, by qualifying personnel, technical systems, information, and budget to implement, manage, and monitor the requirements of the anti-money laundering and terrorism financing program effectively, in case the anti-money laundering and terrorism financing unit is affiliated with the unit.
Independence
1. The concept of independence involves the following elements:
A- The unit shall have an official status within the company.
B- The unit shall be functionally linked to the Audit Committee and administratively to the Executive Management.
C- The Compliance Officer and unit employees must enjoy independence in performing their assigned tasks and are not permitted to undertake any other administrative duties.
D- The Compliance Officer and unit employees shall have the authority to access and review all information and documents, and communicate with company personnel as necessary to fulfill their responsibilities.
E- Other departments must not interfere with the unit’s work, provided that this does not undermine the unit’s cooperation with other departments in a manner that serves compliance.
Compliance Officer
2. The selection and nomination of the Compliance Officer shall be subject to the appointment requirements for leadership positions issued by the Bank, and any related directives the Bank may issue.
3. The Compliance Officer must possess the knowledge and skills necessary to perform the unit’s tasks and maintain its effectiveness. To achieve this, the following must be available:
A- Obtaining the Compliance Certificate in the finance companies sector, except for those assigned to the position.
B- Extensive experience in the finance sector and understanding of all regulations and instructions related to various financing operations and other relevant systems.
4. The Compliance Officer must submit a periodic compliance report to the Audit Committee. The report must include the main risks facing the company related to non-compliance, key observations resulting from reviewing the work of departments during the reporting period, an analysis of existing compliance-related operations and procedures, an evaluation of their effectiveness, and proposals for any amendments or changes related to these tasks.
5. The Compliance Officer has the authority to hold periodic meetings with the Executive Management and directors of other departments and units to discuss the application of compliance in accordance with relevant regulations and instructions.
6. The Compliance Officer shall meet with the Audit Committee during the submission period of periodic compliance reports to assess the company management’s capability and effectiveness in managing compliance risks.
7. The Compliance Officer shall verify any potential non-compliance issues and may request support from specialists within the company (such as the internal auditor) or involve an external specialist to perform the task if necessary. The Compliance Officer has the authority to directly contact any relevant party, whether the Board, Executive Management, or the Audit Committee, upon the existence of any observation or violation.
Unit Employees
8. The number of unit employees must be sufficient and proportional to the company’s business model and size. Unit employees shall report solely to the Compliance Officer in performing their duties.
9. Unit employees must have the appropriate qualifications and experience to perform their job duties and keep up with developments in their field of work.
10. Unit employees must have a full understanding of the instructions and their impact on the company’s operations.