The purpose of these rules is to ensure compliance by licensed individuals and registered persons with the procedures and regulations issued by the Authority, ensuring the following:
(a) The implementation of the Anti-Money Laundering System issued under Royal Decree No. M/31 dated 11/5/1433 H and its executive regulations, the forty recommendations related to combating money laundering, the nine recommendations related to combating the financing of terrorism issued by the Financial Action Task Force, the International Convention for the Suppression of the Financing of Terrorism (New York 1999), the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (Vienna 1988), the United Nations Convention Against Transnational Organized Crime (Palermo 2000), and Security Council Resolutions No. 1267 and No. 1373 and subsequent resolutions related to combating the financing of terrorism.
(b) Enhancing the integrity and credibility of the financial market.
(c) Protecting licensed individuals and their clients from illegal activities that may involve money laundering, financing of terrorism, or any other criminal activity.
1- The licensed person must take into account the nature of their activity, organizational structure, type of clients, and operations when establishing policies and procedures for combating money laundering and terrorist financing. They must ensure the adequacy and appropriateness of the measures taken to meet the requirements and general objectives stipulated in these rules.
2- The Government of the Kingdom of Saudi Arabia has ratified and implemented the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988, Vienna) and the United Nations Convention Against Transnational Organized Crime (2000, Palermo) and the International Convention for the Suppression of the Financing of Terrorism (1999, New York). The aforementioned conventions require the establishment and implementation of procedures to combat drug trafficking, money laundering, terrorist financing, and other serious crimes and organized crime activities. Based on these conventions, the licensed person is required to establish systems, policies, and procedures aimed at combating money laundering and terrorist financing, including procedures for reporting money laundering and terrorist financing activities. The Board of Directors, executive management, general manager, or owner, or their delegate in the licensed person is responsible for establishing appropriate and effective policies and procedures to prevent money laundering and terrorist financing and ensuring their implementation, as well as compliance with all relevant regulatory and legal requirements. To ensure this, senior management must appoint a manager who is directly responsible for overseeing the implementation of the policies and procedures related to combating money laundering and terrorist financing and other relevant legal requirements.
3- The licensed person is obligated to:
(a) Establish effective and written policies and procedures aimed at combating money laundering and terrorist financing and ensure full compliance with all regulatory and legal requirements, including record-keeping and cooperation with the Financial Intelligence Unit and the authorities responsible for enforcing the Anti-Money Laundering and Terrorist Financing Law and its executive regulations and related rules through the Anti-Money Laundering and Terrorist Financing Unit in the Authority, including timely disclosure of information.
(b) Ensure that all their officials and employees fully understand the content of these rules, are informed about them, and take all necessary precautions to combat money laundering and terrorist financing.
(c) Regularly review the policies and procedures for combating money laundering and terrorist financing to ensure their effectiveness. This includes reviewing the policies and procedures related to combating money laundering and terrorist financing issued by the Internal Audit Department or the Compliance Officer to ensure compliance, and the review should include: (1) assessing the system for detecting any money laundering and terrorist financing activities, (2) evaluating and reviewing reports of large or unusual transactions and ensuring their accuracy, (3) reviewing the quality of reporting suspicious transactions, and (4) assessing the level of knowledge of customer service employees regarding their responsibilities.
(d) Implement policies and procedures regarding client acceptance and dealings, and take necessary due diligence measures concerning the client, as stipulated in Chapter Three of these rules, including considering the risks of money laundering and terrorist financing based on the type of client, their operations, and the business relationship with them.
1- The licensed person must ensure that its branches outside the Kingdom and its affiliated companies comply with the Kingdom's laws, regulations, and rules related to combating money laundering and the financing of terrorism, as well as the recommendations of the Financial Action Task Force, to the extent permitted by the laws and regulations of the host country.
2- The licensed person must pay special attention to the application of paragraph (1) of this article to its branches and affiliated companies in countries that do not implement the recommendations of the Financial Action Task Force or do not implement them adequately, including countries identified by the Financial Action Task Force as countries that do not implement those recommendations.
3- In the event of any discrepancy between the requirements for combating money laundering and the financing of terrorism applicable in the Kingdom and those of the host countries of the licensed person's branches or affiliated companies, the licensed person must apply the best requirements to its branches or affiliated companies to the extent permitted by the laws and regulations of the host country.
4- If the external branch or affiliated company of the licensed person is unable to meet any of the requirements for combating money laundering and the financing of terrorism applicable in the Kingdom because the laws and regulations of the host country do not permit it or for any other reason, it must notify the authority immediately and comply with any directives issued in this regard.
The licensed person must not accept any cash amounts from the client for investment purposes or in exchange for services provided by the licensed person to the client, at any time, whether at the beginning of the employment relationship or during it.
For the purposes of applying the provisions of these rules, the licensed person must prepare a "Know Your Customer" form before accepting any client, including the information contained in Appurtenance No. (5-3) of the Regulation of Licensed Persons, as well as any other information required under these rules.
1- The licensed person must develop client acceptance policies and procedures aimed at identifying the type of client who may pose high risks related to anti-money laundering and counter-terrorism financing. Therefore, they must establish comprehensive and detailed policies and procedures regarding due diligence for high-risk clients, including clear internal policies for approving the business relationship with such clients.
2- To determine whether a client is high-risk, the licensed person must consider a range of factors, including the following:
(a) The client's data and background.
(b) The nature of the client's business and the degree of money laundering and terrorism financing risk.
(c) The location of the client's business establishment and the counterpart's headquarters with which the client deals, especially if the place of establishment or headquarters is in a specific country identified by the Financial Action Task Force or countries known to the licensed person for having inadequate and insufficient standards applied for combating money laundering and terrorism financing.
(d) The complexity—without reasonable justification—in the client's ownership structure.
(e) The method and type of payment, where increased scrutiny is required if the amount provided by the client to the licensed person for deposit into their account is drawn on a third party with no clear connection to the client.
(f) Any other information that may indicate that the client represents a high-risk level, such as another financial institution's refusal to establish a business relationship with them.
3- The licensed person must reconsider the assessment of the client's risk level if the pattern of account activity after accepting the transaction does not match the information the licensed person has about them, and must take into account reporting any suspicious transaction.
4- Except in cases to which Article 14 of these rules applies, the licensed person must not accept any client or open an account for them without meeting them face-to-face.