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  • 2.9. Compliance and Internal Audit Functions

    • 2.9.1. Compliance & Anti Money Laundering and Combating Terrorism Financing (AML/CTF)

      27.All FBBs are required to have a separate compliance function which is permanent, effective, and operates independently. The compliance and AML/CTF/Legal function/s should have the responsibility to monitor and, on a regular basis, to assess the adequacy and effectiveness of the policy measures and procedures put in place in accordance with;
       
       (a)SAMA’s Rules Governing Anti-Money Laundering & Combating Terrorist Financing
       
       (b)SAMA’s Compliance Manual for Banks Working in Saudi Arabia and;
       
       (c)Other Kingdom of Saudi Arabia regulatory and legal requirements.
       
      28.In order to enable the FBB’s compliance/AML/CTF functions to discharge their responsibilities properly and independently SAMA requires that the FBB should ensure these functions have the necessary authority, resources, expertise and access to all relevant information.
       
      29.In addition, where appropriate and proportionate in view of the nature, scale and complexity of its business and the nature and range of its activities, SAMA requires a FBB to ensure at least the following conditions are met:
       
       i.The relevant persons involved in the FBB’s compliance team should not be involved in the performance of services or activities they monitor. In other words, compliance department’s officers and staff, especially the compliance officer, should not also be entrusted with functions that may expose them to a conflict of interest in their compliance responsibilities and the compliance work; and
       
       ii.The method of determining the remuneration of the relevant persons involved in the FBB’s compliance function do not compromise their objectivity.
       

    • 2.9.2. Internal Audit Function (IAF)

      30.SAMA requires that a FBB should, where appropriate and proportionate in view of the nature, scale and complexity of its business and the nature and range of its activities, establish an independent IAF. The IAF should, at a minimum, have the following responsibilities:
       
       i.To ensure the FBB meets all SAMA Audit requirements;
       
       ii.To establish, implement and maintain an audit plan
       
       iii.To examine and evaluate the adequacy and effectiveness of the FBB’s governance, systems, internal control mechanisms and arrangements (or alternatively, to assess the extent to which the parent’s audit plan meets local regulatory requirements and make any modifications that may be necessary);
       
       iv.To issue recommendations based on the result of work carried out in accordance with the audit plan;
       
       v.To verify compliance with those recommendations; and
       
       vi.To report in relation to Internal Audit matters.
       
      31.Where a FBB has an individual performing the role of Head of Internal Audit, he or she will need to be pre-approved as the Head of IAF in line with SAMA Fit and Proper requirements.