His Excellency Dr. Abdulrahman A. Al-Hamidy,
the Vice Governor of SAMA
“Third Annual Seminar on Compliance and Anti-Money Laundering”
Institute of Banking, Riyadh
March 22-23, 2011
It is my pleasure to welcome you all, and I would like to thank those who participated in preparing and arranging for this Seminar, especially my colleagues in the IoB and Thomson Reuters' officers. I also extend my thanks to the participants in the discussion of the topics of this Seminar and its attendants. The continued holding of this Seminar from one year to another is a proof of the importance of its subject and the need to continue discussing its issues and concerns and study its updates.
The follower of the development of the economic history, especially over the last century and decade, would recognize that the saying: "History repeats itself." might be true. There have been reoccurrences of economic and financial crises which might have varied in their severity and reoccurrence due to their different time and place. However, they all share a common factor, namely, the lack of effective regulations and guidelines governing economic and financial activities, and their shortcomings or failure to impose and ensure compliance therewith. Hence, the significance of this Seminar emerges here by focusing on two important aspects, namely, Anti-Money Laundering and Compliance Function and its role in ensuring application of AML rules and instructions.
Dear distinguished audience,
The Forty Recommendations on AML as well as the nine Recommendations on countering Terrorism Financing issued by the Financial Action Task Force (FATF) are considered among the most important international criteria which should be complied with by financial and non-financial institutions. The extent of compliance with the recommendations by countries world-wide is assessed either by FATF itself or by regional work forces following the example of FATF and applying its recommendations. The Middle East and North Africa Financial Action Task Force (MENAFATF) is in charge of assessing the Region's member countries to ensure their compliance with the recommendations. Given that the GCC countries have been participating in the meetings of FATF through the GCC General Secretariat's membership in the FATF in addition to their membership as founding countries of the MENAFATF, their joint assessment is conducted with the participation of experts from member countries in the FATF and MENAFATF.
The most significant development in this regard is the outcome of the joint assessment of the Kingdom of Saudi Arabia in the area of anti-money laundering and combating terrorism financing, which was conducted by experts from member countries of the FATF and the MENAFATF. The results of the assessment were published on the websites of these two groups in the middle of last year. By the grace of Allah, then with the efforts made by faithful people of this generous country, the results of the assessment have placed the Kingdom at the forefront of the region's countries and advanced its ranking in the Group of Twenty countries (G20). In this connection, it would be appropriate to emphasize that such achievement would not have been achieved without the joint efforts and persistence of all appropriate entities and, here, I would like to make special mention of those concerned with compliance units at financial institutions in particular.
Dear distinguished audience,
In view of the extreme importance attached by SAMA to compliance, it has issued various rules and instructions related directly and indirectly to this subject, including the Rules for Combating Money Laundering, the Rules for Opening and Operating Bank Accounts, Anti-Financial Fraud Guide, Instructions for Appointment in Leading Positions at Banks, Outsourcing Regulations, the Guidelines Manual for the Audit Committees, and these were followed by the issuance of a comprehensive and integrated Compliance Manual. Compliance responsibility extends to include verification of the implementation of regulations and instructions issued by all supervisory authorities, especially those concerned with anti-money laundering and terrorist financing. One of the basic and important responsibilities of the compliance units is the preparation of periodic reports to their respective senior management in which they assess compliance and non-compliance with those instructions and regulations. SAMA requests banks to prepare a periodic report by their compliance units and to submit it to the senior management at the bank and at SAMA. In the light of this report, the compliance works in the bank are being assessed.
Given the equal importance attached by SAMA to ensuring the application of issued rules and regulations, it conducts periodical supervisory visits and on-site inspections to examine all banking aspects, including compliance with issued instructions on AML and terrorism financing. Verification of compliance with instructions regarding AML/TF is an essential part of the Comprehensive Examination Program conducted by SAMA.
It is appropriate here in this important Seminar to highlight the importance of joint work and complementarities between compliance and combating money laundering, especially with regard to the development of mechanisms and frameworks which would ensure combating financial crimes in general and money laundering and terrorism financing in particular. At the same time, I would like to point out that there should be no confusion with the two concepts. Each of them has its own specific functions. Compliance is more comprehensive and inclusive and its responsibilities include ensuring compliance with regulations and instructions issued by local and international regulatory authorities and verifying their full and precise application , in addition to preparing periodical reports about non-compliance risks.
Dear distinguished audience,
Finally, I would like to stress the necessity of enhancing exerted efforts in the area of compliance and combating money laundering, particularly providing capabilities, qualified and competent human resources, supporting necessary technology and electronic systems, and generous spending on training, raising awareness and working on diversifying its sources. Furthermore, joint work with the Banking Institute should be in place on preparing training programs and courses, and your staff must participate in those programs and courses, considering that as an investment spending that would be beneficial to, and maintain the good reputation for which we have worked together. This will protect us all against risks and serve the public interest.
Thank you for listening and I wish your forum, which includes various and valuable issues, good luck and success.