Preventive measures of the financial and non-financial sectors for combating ML & TF are strong and well established.
The Financial Action Task Force's (FATF) report recently confirmed that Saudi Arabia has made fundamental changes to its AML/CFT regime to bring its legal and institutional framework into line with up-to-date FATF's recommendations. The preventive measures taken by Saudi Arabia for the fight against ML, TF and Proliferation as stated in the report are strong and well established including coordination and cooperation in the area of policy development and response to risks faced by the Kingdom. The report pointed out that the Kingdom proved that it has a good understanding of the risks emanated from money laundering and terrorist financing through its national risk assessment (NRA) which constitute a robust assessment process using a wide range of information. In this context, the Kingdom has taken many measures to address the risks specified and identified by the NRA.
In particular, the report indicates that the Kingdom has established legal framework and coordination process to implement the targeted financial sanctions imposed by the United Nations on terrorists. It was also noted that the preventive measures taken by the financial and non-financial sectors to combat money laundering and terrorist financing are strong and well established. The report also states that major financial institutions, including banks, finance and securities companies, have a good understanding of the risks countered in money laundering and the financing of terrorism, and implements a risk-based approach in their precautionary measures.
The report has pointed out the intensive monitoring conducted over sectors classified as high-risk based on the risk-approach implemented in the supervision of such sectors. In addition to the effective communication process conducted by supervisory authorities with the aim of conveying any obligations that has imposed recently. This enhanced compliance with the requirements related to combating money laundering and the financing of terrorism. In recent years, communications increased between the supervisory authorities and institutions subject to their supervision, directing them with the obligations and regulatory arrangements. In this context, the Kingdom of Saudi Arabia has been successful and all efforts resulted in a great rise in the level of compliance with the requirements of combating money laundering and the financing of terrorism.
The Kingdom's framework has witnessed essential changes for combating ML & TF since 1431H (2010). At the beginning of 1439 AH (2017), the Kingdom enacted a comprehensive set of measures by AMLL and CTFL. The two new laws were issued on 5th Safar 1439 AH (2017)(AMLL) and on (14th Safar 1439 H) (CTFL). The two laws entered into force immediately. The Implementing Regulations of the AML Law were issued on 19th Safar 1439H (2017) in addition to the adoption of the Kingdom's NRA .The revised Laws (AMLL & CTFL) addressed the shortcomings identified by the Mutual Evaluation Report of 2010. The laws also addressed the findings of the NRA, implement the new standards added to the revised FATF Recommendations in 2012, and address the findings of the national risk assessment.
As for the Technical Compliance, the Mutual Evaluation Report (MER) shows the level of the Kingdom's compliance with the forty Recommendations issued by FATF. This result is an important aspect of the assessment process and is largely positive.
In terms of effectiveness, the report noted the Kingdom's significant results in a number of aspects, including the quality of the assessment, understanding of the risks of money laundering and the financing of terrorism by the competent authorities, national risk assessments and the adoption by a number of authorities risk mitigation measures. Regulatory entities exerted efforts to enhance the compliance of financial institutions, and designated non-financial businesses and professions with the requirements of combating money-laundering and the financing of terrorism; efforts to combat terrorism financing; compliance with relevant UN Security Council resolutions; and measures taken to prevent the exploitation of non-profit organizations in financing terrorism.
Finally, the report stated that the Kingdom is applying controls on foreign ownership of companies, in addition to imposing other measures, which mitigate, to a certain extent, the risks of misuse of legal persons and legal arrangements by foreigners. Any legal person wishing to invest in the Kingdom should obtain a license from the General Investment Authority, which verifies ownership and the structure of control and the financial positions of foreign investors.