Saudi Arabia’s measures to fight money laundering and the financing of terrorism and proliferation

Publication details

Language

English

Country

Saudi Arabia

Mutual Evaluation of the Kingdom of Saudi Arabia - 2018

Filename
MER-Saudi-Arabia-2018.pdf
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2 MB
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application/pdf
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Paris, 24 September 2018 – The Kingdom of Saudi Arabia is achieving good results in fighting terrorist financing, but needs to focus more on pursuing larger scale money launderers and confiscating their assets.

The FATF and the Middle East and North Africa Financial Action Task Force (MENAFATF) jointly conducted an assessment of Saudi Arabia’s anti-money laundering and counter-terrorist financing (AML/CFT) system.  The assessment is a comprehensive review of the effectiveness of a country’s AML/CFT system and its level of compliance with the The FATF Recommendations.

Saudi Arabia recently made fundamental changes to its AML/CFT regime to bring its legal and institutional framework in line with up-to-date FATF Recommendations.  Given the recent introduction of some of these measures, their effectiveness cannot yet be demonstrated. 

Two separate national risk assessments have provided the country with a solid understanding of the money laundering (ML) and terrorist financing (TF) risks it faces.   Financial institutions generally understand their ML/TF risks, and are applying preventive measures such as customer due diligence, record-keeping and verification of beneficial ownership. This is largely the result of an effective and proactive supervision of this sector. However, the lack of suspicious transaction reports, in particular on suspected cases of terrorist financing, is a concern. Money exchangers, real estate agents, accountants and other designated non-financial businesses and professions do not fully understand the ML/TF risks they are exposed to, with a correspondingly low level or number of suspicious transaction reports.

Saudi Arabia’s financial intelligence unit is not able to conduct sophisticated financial analysis, although it does provide a wide variety of information that is available to and used by competent authorities.  While money laundering investigations have increased in recent years, Saudi authorities are not investigating and prosecuting money laundering in a proactive fashion, particularly when it comes to complex money laundering schemes. They do not systematically pursue confiscation of proceeds.

Saudi Arabia faces a significant and dynamic risk of terrorist financing including the presence of cells of Al Qaeda, ISIS, affiliates and other groups, as well as a large number of foreign terrorist fighters.  Saudi Arabia demonstrated an ability and willingness to pursue terrorist financing which resulted in over 1700 investigations and convictions since 2013, although these efforts were largely focused on domestic terrorist financing.  Saudi Arabia has a sound mechanism to implement United Nations targeted financial sanctions on terrorism, but the measures to implement targeted financial sanctions for proliferation financing and prevent sanctions evasion are weak.

FATF adopted this report at its Plenary meeting in June 2018.

Mutual Evaluation of the Kingdom of Saudi Arabia - Executive Summary

More information:  

The FATF Recommendations

FATF Methodology for assessing compliance with the FATF Recommendations and the effectiveness of AML/CFT systems

Consolidated assessment ratings - an overview of ratings that assessed countries obtained for effectiveness and technical compliance.

 

 

 

Technical Compliance

Ratings which reflect the extent to which a country has implemented the technical requirements of the FATF Recommendations.

Saudi Arabia Mutual Evaluation - 2018

R.1 - Assessing risk & applying risk-based approach
LC
R.2 - National cooperation and coordination
LC
R.3 - Money laundering offence
C
R.4 - Confiscation and provisional measures
LC
R.5 - Terrorist financing offence
C
R.6 - Targeted financial sanctions related to terrorism & terrorist financing
PC
R.7 - Targeted financial sanctions related to proliferation
PC
R.8 - Non-profit organisations
LC
R.9 - Financial institution secrecy laws
C
R.10 - Customer due diligence
C
R.11 - Record keeping
C
R.12 - Politically exposed persons
C
R.13 - Correspondent banking
C
R.14 - Money or value transfer services
C
R.15 - New technologies
LC
R.16 - Wire transfers
LC
R.17 - Reliance on third parties
C
R.18 - Internal controls and foreign branches and subsidiaries
C
R.19 - Higher-risk countries
C
R.20 - Reporting of suspicious transactions
C
R.21 - Tipping-off and confidentiality
C
R.22 - DNFBPs: Customer due diligence
LC
R.23 - DNFBPs: Other measures
C
R.24 - Transparency and beneficial ownership of legal persons
LC
R.25 - Transparency and beneficial ownership of legal arrangements
LC
R.26 - Regulation and supervision of financial institutions
C
R.27 - Powers of supervisors
C
R.28 - Regulation and supervision of DNFBPs
C
R.29 - Financial intelligence units
LC
R.30 - Responsibilities of law enforcement and investigative authorities
LC
R.31 - Powers of law enforcement and investigative authorities
LC
R.32 - Cash couriers
LC
R.33 - Statistics
PC
R.34 - Guidance and feedback
C
R.35- Sanctions
C
R.36 - International instruments
PC
R.37 - Mutual legal assistance
LC
R.38 - Mutual legal assistance: freezing and confiscation
LC
R.39 - Extradition
LC
R.40 - Other forms of international cooperation
LC

C = compliant   |   LC = largely compliant     |   PC = partially compliant   |   NC = non-compliant

Effectiveness

Ratings that reflect the extent to which a country's measures are effective. The assessment is conducted on the basis of 11 immediate outcomes, which represent key goals that an effective AML/CFT system should achieve.

Ratings that reflect the extent to which a country's measures are effective. The assessment is conducted on the basis of 11 immediate outcomes, which represent key goals that an effective AML/CFT system should achieve.

Saudi Arabia Mutual Evaluation - 2018

IO1
SE
IO2
ME
IO3
SE
IO4
ME
IO5
ME
IO6
ME
IO7
LE
IO8
LE
IO9
SE
IO10
SE
IO11
LE

HE = high level of effectiveness   |   SE = substantial level of effectiveness    |   ME = moderate level of effectiveness   |   LE = low level of effectiveness