Chapter IV. General Rules for Operation of Bank Accounts
1. The bank account shall be operated originally by the account holder or other persons authorized by the account holder and approved by the bank. Where applied, the authorization remains valid until the account holder notifies the bank of its cancellation, it expires (after five years), or the authorized person’s ID expires and no renewed ID is presented to the bank. The authorization for operating and cancelling the bank account shall be granted through a power of attorney or an authorization letter prepared at the bank. E-services may be used to verify the authorization.
2. Saudi individuals (whether account holders or authorized to operate the account) are not allowed to operate bank accounts, encash personal checks, make transfers, or carry out any other credit transactions to their order or to the order of a third party unless their valid national IDs are registered in the bank’s automated system. The exceptions to this rule are customers of bank branches at airports, who are traveling abroad; in such case, the customer is required to present his/her passport and boarding pass, and the bank branch shall in turn check customer’s name against documents submitted.
3. The authorization to operate bank accounts on behalf of juristic entities shall be granted by competent individuals who are permitted to give such authorization. The official approval for such authorization shall be granted by the concerned public or private entity. The approval may come from the board of directors, the partners, the employer, any person designated by the owner (or the person in charge) of the entity, a party determined in the agreement concluded between the bank and the concerned entity, or other parties as per the jurisdiction.
4. Authorization by a Saudi (natural or juristic) person to a non-Saudi or non-GCC individual to manage his/her accounts shall be subject to the following conditions:
• Natural persons and their sole proprietorships:
Any authorization granted by a Saudi individual to a non-Saudi or a non-GCC individual to operate his/her personal accounts shall not be accepted by the bank. The only exception is when a Saudi individual authorizes his/her non-Saudi wife/husband, father, mother, son or daughter, provided that the authorized person has a valid Iqama.
• Companies, factories, joint ventures, international trademark agencies, and other similar institutions:
*Companies may authorize an expatriate employee who is under their sponsorship and residing in Saudi Arabia to manage their bank accounts. However, such expatriate employee may not be authorized to manage the accounts of another company, whether a subsidiary or sister company.
*Factories and trademark agencies wishing to authorize an expatriate employee working under their sponsorship shall be treated in accordance with their legal status indicated in their licenses/commercial registers issued by the concerned authority. Legal entities licensed as sole proprietorships shall be subject to the provisions of Paragraph (1) of Rule (4) on Natural Persons and their Sole Proprietorships while legal entities licensed as companies shall be subject to the provisions of Paragraph (2) of Rule (4) on Companies.
5. Management of investors' accounts under the Foreign Investment Law shall be subject to the following conditions:
- The Saudi investing partner may authorize his/her foreign investing partner holding a valid Iqama or any of the non-Saudi expatriate employees working for his/her entity to manage and operate the entity's bank accounts.
- The foreign investor may authorize a Saudi and/or a non-Saudi expatriate to manage the entity's bank accounts, provided that the non-Saudi expatriate is an employee of that entity and has a valid Iqama.
- The Saudi investor and his/her foreign partner may authorize any other resident party to manage the entity's bank accounts.
6. The bank shall not accept any authorization given by an expatriate coming for work or investment in Saudi Arabia to others to manage and operate his/her personal accounts, except in the following cases:
- The expatriate husband and his expatriate wife and vice versa, and their first-degree expatriate relatives.
- The female expatriate working in Saudi Arabia and her legal escort, provided that the Iqama of the legal escort or any other official document states that he is the legal escort of the female expatriate.
- The female expatriate and her Saudi husband.
- The female expatriate and her Saudi father, mother, son or daughter.
- The male expatriate and his Saudi wife.
- The male expatriate and his Saudi father, mother, son or daughter.
- The male or female expatriate and his/her abovementioned relatives should hold valid Iqamas. The bank should record the number of Iqama for each male or female expatriate as an electronic reference number for the expatriate.
7. As for companies, the account will be operational when the company becomes legal.
8. The following banking rules regarding checks shall be observed:
- The name of the beneficiary must match the name shown on his/her ID.
- Provisions of the Commercial Papers Law, including those related to payment term, shall be complied with.
- Crossing out, erasure, or using chemical materials on the check is not permitted.
- When amendment to a check is needed, the part that needs to be amended shall be crossed out, correction shall be written, and the signature of the drawer shall be placed next to the corrected mistake.
9. Rules for Deposits in Bank Accounts
9.1 Deposits Through Bank Tellers
The bank should give importance to cash and check deposits equal to that given to cash and check withdrawals. Aa a minimum requirement, the bank shall obtain full personal information of the depositor and his/her signature. A due consideration should be given to the volume and nature of other information that the bank should collect from depositors. Such information varies according to the type and nature of the deposited funds, deposit volume and recurrence, and the relationship between the depositor and the person/business receiving such deposit. Below are examples of different situations and how the bank should respond:
- When a natural person wants to deposit funds (personally in his/her name or in the name of another natural person) in his/her bank account, another natural person’s account or juristic person’s account, the bank in this case shall obtain the personal information of the depositor. Such information includes the depositor’s full name, address, telephone number, signature, and ID number in accordance with the provisions of Rule (3.1.1) and Rule (3.1.2) of Chapter II herein.
- When a natural person wants to deposit funds in a bank account on behalf of a juristic person (e.g. establishment, company, shop or any other entity) he/she does not own or is not authorized to manage its accounts, the bank shall then obtain the abovementioned information from the depositor in addition to the following:
■ The purpose of the deposit clearly identified in the deposit slip.
■ The name of the principal depositor (the juristic person) and the name and information of the representative (depositing on behalf of the juristic person) as stated above. Such information shall be contained in the deposit slip. The bank shall not limit the deposit slip information to only the names of the company and depositor.
■ A copy of the authorization granted to the depositor (natural person) by the principal depositor (juristic person), not by the beneficiary. The authorization may be attested by the chamber of commerce or made on the bank’s special form and the signature contained is certified by the bank. The authorization can also be in a form of a power of attorney issued by a notary public or a notary, permitting such natural person to deposit funds on behalf of the principal depositor (juristic person) in the bank account(s) of other natural or juristic persons. The authorization copy shall be certified by the bank as a true copy of the original and shall be kept in a separate file or attached to the deposit slip in the bank’s daily work record.
- Banks shall not continue to use the word “himself/herself next to the “customer’s name” if the depositor is the account holder. In such case, the bank shall write the full name of the depositor and all data contained in the deposit slip. However, the exception to this provision is when the depositor’s signature on the deposit slip is the same as that of the account holder, provided that the bank employee shall verify the authenticity of the depositor's signature and certify that he/she is the holder of the account.
9.2 Deposits Via Cash Acceptance Machines (CAM) and Automated Teller Machines (ATM)
9.2.1 Deposits Through ATMs, Using ATM Card and Personal Identification Number (PIN) Only
All banks shall comply with the following controls on the acceptance of cash deposits through ATMs:
1. Cash deposits through ATMs shall be accepted only when using an ATM card and the associated PIN or using a credit card. The exceptions to this rule are the payment of utility bills, payment made to government entities (whether by bank customers or others), and other payments approved officially by SAMA.
2. The bank shall comply with the instructions related to amount limits and number of banknotes and coins that can be deposited in one transaction or per day. In addition, the bank shall ensure that the procedures implemented are in line with data and results of customer risk assessment. Moreover, the bank shall adhere to controls and guidelines of the ATM operation manual.
3. ATMs used for deposits must support obtaining information on the source of cash deposited and the purpose of deposit. If envelope-free deposits are to be made, the ATM must be able to detect counterfeit banknotes through checking security features.
9.2.2 Deposits Through ATMs, Using Cash Deposit Card
Banks may issue smart cards to be used for cash deposit through the ATMs of the issuing bank. Such cards shall use PIN. The following controls shall be applied:
1. The purpose of deposit shall be identified.
2. The cash deposit cards shall be issued to a selected category of customers (companies and establishments) determined by the bank according to its risk assessment.
3. The business of such customers shall include sales or collections representatives. The bank shall be responsible for obtaining from such customers and checking the necessary documents proving their lines of business. The number of representatives shall be consistent with the entity’s business and size.
4. Such accounts shall be subject to constant monitoring by the compliance officer at the bank according to risk assessment. The monitoring process aims to ensure that the deposit transactions agree with the customer’s business. Through reports of internal audit and monitoring process, the bank can prevent any suspicious financial transactions.
5. The cash deposit card(s) shall be restricted to a single account. In case of multiple accounts for a company, the bank may, at the request of the customer, issue one cash deposit card or more for each account. The cash deposit card shall be used for its associated account only.
6. The cash deposit card service shall be provided upon an official request from the person authorized to manage the account or from the authorized person in the entity.
7. The cash deposit card shall be issued only to the representatives of the entity upon presenting valid IDs. The entity’s representative shall present his/her ID to the bank in person. If he/she is an expatriate, he/she shall be subject to expatriate authorization provisions. If he/she is Saudi, he/she shall present his/her employment card or an employment letter from the entity for which he/she works.
8. The cash deposit card shall be issued in the names of the entity and the representative who will use the card (...Company/representative’s name). Personal photo of the representative shall, as possible, be placed on the cash deposit card.
9. The cash deposit card shall be valid for a period identical to the validity period of the ID or the entity’s documents, whichever expires first. However, the validity period of the cash deposit card shall not exceed two years.
10. The bank shall obtain from both the entity and the cardholder a written undertaking that the card will be used only by the person to whom it is issued and only for cash deposits, but not for any other banking transactions.
11. Each cash deposit card held by each representative shall have a unique PIN.
12. The cash deposit card shall be used for deposits in the associated current account through the ATMs of the issuing bank only.
13. The cash deposit card shall be subject to the same procedures applied to other cards in terms of technical (in relation to deposit transactions only) and security specifications.
14. The cash deposit card shall not be used for deposits through the bank tellers.
15. The cash deposit card shall be used for direct cash deposit with no need to use sealed envelopes.
16. The cash deposit card and its associated PIN shall be delivered to the representative directly by the bank, and not through the entity.
17. The bank shall set procedures to change the card’s PIN periodically pursuant to the nature of the entity, potential risks, and discretion of the departments of compliance and risk management at the bank.
18. The bank shall, based on risk assessment in terms of customer’s activity and category, set a maximum limit for daily deposits for each account, taking into consideration the risks associated with carrying large amounts of cash.
19. The bank shall obtain SAMA preliminary approval for providing such product (service).
10. Account Closure
1. If the customer wishes to terminate his/her relationship with the bank, he/she should submit a request to the bank to close his/her account and should return checkbooks, the ATM card and the account information card. If the customer is unable to return them to the bank, the bank shall obtain a liability acknowledgement from the customer. The bank shall cut up the checkbooks and cards in the presence of the customer and return to him/her the account’s funds. The bank may decline the customer's request if there are outstanding financial liabilities associated with the account, such as letters of guarantee, letters of credit and discounted bills with financial significance and effects that necessitate the continuation of the account. In this case, the bank shall explain to the customer when he/she will be able to submit an account closing request.
2. If problems related to the verification of the banking relationship occur after opening the account and the problems are not solved or if the relationship with the bank is used for other purposes other than its intended one, the bank shall terminate the banking relationship with the customer and return the account’s funds to the source. If the verification problem or the misuse of the banking relationship is related to suspicious transactions carried out by the customer (such as money laundering, terrorism financing and the like), the bank shall implement the Rules Governing Anti-Money Laundering and Combating Terrorist Financing, including reporting suspicious transactions.
3. If the account is opened, the customer deposits funds into it and then reduces his/her balance to zero, and the account has remained inactive or with zero balance for 4 years, the bank shall then close the account after verifying that it has no related commitments or obligations. Prior to account closure, the bank shall send one month’s notice to the customer. Another notice shall be sent to the customer upon account closure. The bank must document and keep all notices sent in the customer’s file. Further, the bank shall include terms on bank account closure in the main body of the account opening agreement or add such terms as an attachment appended thereto if it is difficult to modify the account opening agreement.