400. Rules for Opening Bank Accounts for Resident and Non-Resident Foreign Investors Not Covered by the Foreign Investment Law
400.1 Rules for Opening Bank Accounts for the Purpose of Linking Investment Deposits Only or Linking Investment Deposits for Issuing Letters of Guarantee to Non-Resident Juristic Persons
Banks may open accounts for non-resident juristic persons (for instance, sovereign wealth funds, mutual funds, cash funds, investment companies, and the like) for the purpose of linking investment deposits only or linking investment deposits for issuing letters of guarantee in banks operating in Saudi Arabia. Banks shall take into consideration the provisions of Article (11) of the Anti-Money Laundering Law and Article (66) of the Law of Terrorism Crimes and Financing. Non-resident foreign investors’ documents shall be obtained by the correspondent banks outside Saudi Arabia. The correspondent bank’s verification of all documents is required in addition to identifying the customer’s account number held by the bank. This should be subject to the following conditions:
1. Obtaining copies of the following documents:
a. License\commercial register issued by the competent authority in the country of origin.
b. Memorandum of association and its annexes or the founding document in the case of sovereign wealth funds and the like, clearly showing the structure of capital and management.
c. The authorization issued by the board for the persons authorized to open and operate the bank account, unless this is specified in the memorandum of association.
2. Obtaining a list of names and copies of the identities of board members and authorized managers showing their nationalities.
3. Identifying and assessing ML/TF risks, applying preventive measures, and exercising due diligence when handling such accounts.
4. Opening an intermediary account with the bank for the purpose intended, named (investment deposit account).
5. The account shall not allow any kind of services (checks, ATM cards, etc.).
6. The customer’s request to break the deposit or issue a bank guarantee shall be made through any of the following:
a. A SWIFT message from the customer through the correspondent bank which the customer deals with in its home country.
b. Written instructions signed by two authorized persons in the non-resident foreign company, whose names are included in the deposit request.
c. The beneficiary shall be the same juristic person.
7. Cash deposits, checks and transfers from domestic accounts with the same bank are not permitted.
8. The bank shall confirm that all IDs and documents are true copies of the originals, and documents issued outside Saudi Arabia shall be verified by relevant authorities, the Saudi Embassy in the relevant country and the Ministry of Foreign Affairs in Saudi Arabia.
9. Obtaining approval of the CEO and the manager of compliance department to open the account.
10. SAMA must be informed when the account is opened.
11. The account must only be used for purposes of deposits, and it is not allowed to be used to carry out any other transactions.
400.2 Rules for Opening Intermediary Investment Accounts
- A bank offering among its investment products and services pooled accounts managed by professional intermediaries or lawyers (such as mutual funds, cash funds, deposit funds, etc.) shall obtain from the intermediary ID documents of beneficiaries of the account where there are sub-accounts for each real beneficiary. The bank shall also ensure that the intermediary is subject to the same regulatory requirements applicable to banks pertaining to AML/CFT and KYC principle.
- Banks must obtain copies of the intermediary’s licenses to practice business attested by the correspondent bank or the Saudi Embassy.
- Approval of the CEO/general director and the manager of compliance department to open the account.
- SAMA must be informed when the account is opened.
400.3 Rules for Opening Bank Accounts for Juristic Persons (Licensed Companies, Institutions and Shops) Owned by Foreign Residents Permitted to Practice Business But Not Included in the Foreign Investment Law
Banks may open bank accounts for this category after obtaining the following:
1. A copy of the commercial register issued by the Ministry of Commerce.
2. A copy of the license if it is the only requirement or if it is required along with the commercial register.
3. A copy of the memorandum of association and its annexes (if any).
4. A copy of the business owner’s Iqama or national ID card (for GCC citizens). The information (name, ID number and expiry date) contained in the commercial register and/or license provided by a non-Saudi merchant must be verified.
5. A list of owners as mentioned in the memorandum of association (if any) as well as copies of their IDs.
6. Non-Saudi owner of an entity is not allowed to authorize others (Saudis or non-Saudis) to manage the accounts of the entity.
400.4 Rules for Opening Bank Accounts for Foreign Financial Institutions Qualified to Invest in Securities Listed in the Saudi Stock Exchange
Banks may open bank accounts for this category after the following is met:
1. An application is submitted by a person authorized by CMA or a qualified foreign investor in accordance with the Rules for Qualified Foreign Financial Institutions Investment in Listed Securities issued by CMA, in which it is specified that the account is for investment in the securities listed in the Saudi Stock Exchange.
2. Obtaining a copy of the foreign investor’s license or commercial register issued by a competent authority in the state of origin, where applicable.
3. Obtaining a copy of the foreign investor’s business license to practice the activity in the country of origin issued by a supervising body (CMA or SAMA counterpart), where applicable.
4. Obtaining a copy of the articles of association and its annexes and/or memorandum of association and its annexes, where applicable.
5. Real beneficiaries holding ultimate control shall be identified and verified (as a minimum, a natural owner holding 25% as specified in the memorandum of association and its annexes or according to the available data).
6. Identifying the control and ownership structure.
7. Obtaining a list of names and copies of ID cards of the legal entity managers and the persons authorized to sign on behalf of the foreign investor regarding account transactions.
8. Obtaining an authorization from the foreign investor’s board specifying the persons authorized to sign on his/her behalf regarding account transactions, where applicable.
9. Completing the KYC principle and AML/CFT form (prepared by SAMA).
10. Obtaining a declaration from the foreign investor and/or authorized person to provide the Saudi supervisory authorities with any information at any time upon request, in accordance with relevant laws and regulations.
11. A copy of the notice issued by the person authorized to confirm acceptance of the investor as a qualified customer.
12. Approval of the bank’s senior management to open the account for the foreign investor.
13. The account shall not provide any kind of services (checks, ATM cards, etc.).
14. Cash withdrawals and deposits shall not be accepted.
15. Banks may open accounts only for licensed foreign investors or foreign founders (where applicable) whose countries apply strong measures to identify customers and cooperate in combating money laundering and terrorist financing. Amounts transferred to accounts in Saudi Arabia’s banks must come from a foreign investor’s account in a country applying such measures (to be specified in the account opening agreement if possible) and be transferred again to the same account. Applications submitted by foreign investors whose countries never (or insufficiently) apply the FATF Recommendations, or some decisions have been issued against them by the Security Council, shall not be accepted.