3. Freezing of Bank Accounts Upon Expiration of Identification Documents
3.1 Freezing of Bank Accounts
As a rule between banks and customers, the relationship must start and continue under valid identification documents and IDs for all transactions, whether those covered by the definition of bank account in Chapter I or other contractual relations or account-related services.
3.1.1 Saudi Natural Persons
Banks must freeze all accounts held by Saudi natural persons upon the expiration of the documents provided below unless the account holder presents a renewed document or a valid ID card. A bank may verify ID renewal without requiring the customer attendance via trusted and independent source and it shall document that. The following are the documents to be presented by Saudi customers prior to opening or maintaining a bank account:
- National ID Card: The account opened by an ID card shall be frozen after the elapse of (90) days from expiry date and shall not be reactivated except after renewal.
- Family Register for Minors: An account opened for a minor under a family register shall be frozen upon the elapse of five years from the account opening date or five years from last account update. Presence of the minor is not required as the presence of his/her guardian or curator will suffice. The bank shall inform the guardian or curator, (90) calendar days prior to the minor reaching the age of (15) Hijri years, to update such account and present a valid national ID of the minor.
- Birth Certificate of Children of Special Circumstances: The account must be frozen when the minor reaches the age of (15) Hijri years and may be reactivated when he/she is issued a valid ID card or when a letter is received from the Ministry of Human Resources and Social Development requesting continuation of the account until the minor reaches (18) Hijri years.
3.1.2 Non-Saudi Natural Persons
Banks shall freeze all accounts and transactions of all non-Saudi natural persons after (90) days of the expiration of the documents mentioned below. After (180) days of the expiration of the ID, the account balance shall be transferred to an unified account created by the bank for such cases. After 5 years from the date of last transaction/dealing carried out by the customer in his/her account, the balance shall be transferred to the suspense account created for unclaimed accounts and all outstanding obligations of the customer during and after this period shall be met. Also, all accounts of expatriates must be closed upon their final exit. The documents are as follows:
- National ID Card for GCC citizens.
- Iqama for expatriates.
- Diplomatic card for diplomats.
3.1.3 Juristic Persons
All banks must:
- Freeze all accounts of juristic entities after (90) days from the expiration date of the respective authorization to practice their activity (license, commercial registration, etc.) unless the customer provides a renewed authorization or any document valid for (90) days from a the responsible authority proving that it is being renewed.
- Freeze all accounts of juristic persons and organizations whose documents of opening their accounts do not contain a validity date, such as the accounts of charity and welfare societies or organizations, government accounts and licensed schools and the like upon the lapse of five years from the date of opening the account or the date of last update to the account until the account data is updated.
- Freeze the relationship with correspondent banks upon the end of the period specified in Rule (4) and until all requirements of KYC and AML/CFT are fulfilled.
- Monitor the ID validity of the directors and authorized signatories of juristic person accounts and freeze and suspend their powers to operate the account only, depending if they are Saudis or non-Saudis, until the renewal of IDs. This shall also be applicable to sole proprietorship owners.
3.2 General Instructions for Freezing of Bank Accounts
- The bank must ensure that the account opening agreement, contractual relationships and services state that the bank has the right to freeze the account upon the expiration of the customer’s ID and/or when the customer does not update his/her personal and financial data and addresses.
- The bank must notify the customer of the account freezing date at least (30) days in advance, and must have adequate processes in place to ensure the same with respect to each customer or authorized person acting on his behalf and such processes should be documented.
- A joint account with a single or joint signature must be frozen upon the expiration of the ID card of either of the account holders.
- Freezing order issued due to the expiry of identification documents other than the national ID may be lifted upon presentation of a valid national ID. However, banks shall not lift freezing order on accounts opened by a national ID if other identification document is presented.
- Natural or juristic persons shall have the right to close their own accounts or any accounts they are authorized to operate (only single transaction) that are frozen due to the expiry of IDs or failure to update their data, provided that the customer completes a form prepared by the bank for this purpose and that the procedures stated in account closure instructions are applied.
- If the request to freeze the account of an expatriate is made after his final exit from Saudi Arabia, and if the account balance is less than SAR (50,000), banks may transfer the money to the owner with the approval of the bank's compliance department, according to procedures set by the bank depending on the customers, their countries and signature checks. However, if the account balance is over SAR (50,000), the money shall only be transferred to the owner upon a request approved by the correspondent bank of the local bank or the branch of the resident foreign bank. Banks are not allowed to transfer only part of the balance. The balance shall only be transferred abroad to the account holder or the legal agent of his/her heirs upon the approval of the compliance department.
- In case an expatriate customer requests the bank to transfer the balance of his/her account immediately after his/her previous final exit and presents a visa other than the work visa, the balance exceeding SAR (50,000) may only be paid upon the approval of the compliance department after evaluating the account. If such a customer directly applies to the bank and submits a new Iqama issued under the same passport or a new passport, the frozen account shall be closed if it is still within the freezing duration, before (180) days, and a new account shall be opened for him/her and the amount shall be transferred to the new account, and thereafter he/she shall be allowed to deal on such account.
3.3 Freezing Exceptions
Banks shall not allow a customer or its authorized person to carry out transactions from his/her accounts after the expiration of his/her ID, unless upon renewal thereof or updating his/her KYC data. The following shall be exempted from freezing:
- Personal deposits or deposits received through clearing and local and international transfers, SARIE payments/ collections and salaries of employees.
- The customer existing obligations already effected by the bank with or on behalf of the customer in favor of the bank or third parties (government or non-government) before the expiration of the ID of account holder or authorized representative. Such obligations include, but are not limited to, payment of credit cards, loans, direct debit payments, standing regular instructions for payments such as payment of utility bills, letters of credit and letters of guarantee etc. These also include high risk investment transactions due to price fluctuations that are likely to inflict damages to the customer, in which case the customer would be called upon by a bank officer and given a maximum period of (60) days from the date of executing the transaction to have his ID renewed.
- Standing instructions governing Saudi account not related to outstanding obligations are allowed to continue after the freezing of the account subject to the approval of the operation manager at the bank's Head Office, for a limited number of times and for a maximum period of (180) days as of the ID's expiry date. The bank should lay down the procedures and the policies which ensure control and activation of these cases in terms of limits and number of times.
- Accounts of Saudi (male and female) diplomats, students on scholarship abroad, patients with chronic diseases staying at hospitals or other places and their accompanying family members, prisoners and the like, soon after the bank becomes aware of them, in which case they may be given (180) days from the date of expiration of ID for unlimited number of times after obtaining the approval of the bank’s compliance department manager. In order to extend the period specified, an approval from the bank’s CEO/general manager and the compliance department must be obtained. Banks shall contact their customers using the preferred method of contact according to their files or the procedures banks deem appropriate to encourage customers to renew their IDs.
- For the accounts of the State employees whose salaries are delivered through banks and whose accounts are frozen and are not able to present national IDs because of certain formality problem in respect therewith, they shall be allowed a 180 days' delay period after the date of expiration of their identification documents or updating due date, after presenting the official employment card or an official reference letter.