300.2 Non Resident Juristic Persons
300.2.1 Non-Banking GCC Companies Not Residing in Saudi Arabia
300.2.1.1 Current Accounts and Deposits for Business and Credit Purposes
Bank accounts shall be opened for GCC companies for business and credit purposes according to the following conditions and requirements:
1. A copy of the license/commercial register issued by the government authority in the GCC country of residence.
2. Submitting a request to open a bank account stating the business purpose of the account which should conform to the purposes of the company according to the memorandum of association and license.
3. Verifying the national ID(s) of the owner(s) of the GCC establishment (excluding listed joint stock companies).
4. The memorandum of association and its annexes which clearly indicate the composition of both the capital and the establishment’s management and that the ownership of GCC citizens (natural or juristic) exceeds 50% of the company's capital.
5. Verifying the IDs of the members of the board of directors, provided that the majority of members shall be GCC citizens or from GCC establishments.
6. Copies of IDs of the authorized managers and their nationalities.
7. A copy of the authorization issued by the board of directors authorizing persons to manage the bank account unless specified in the memorandum of association.
8. The person authorized to manage the bank account shall be a GCC citizen. If the purpose of the account is to receive facilities from a bank licensed to operate in Saudi Arabia, the person authorized may be a non-GCC individual working in the company and residing in the company's country.
9. Approval of the Saudi embassy in the company’s GCC country for all the above requirements.
10. The above documents shall be completed by the bank's employees directly by interviewing the clients personally (authorized persons) or by a national GCC correspondent bank residing in the country of the company. The correspondent bank shall verify that copies provided for all the required documents, even documents certified by the Saudi embassy, are true copies of the original documents. Deposit, withdrawal and transfer shall be carried out by the correspondent bank. Documents may be completed by a correspondent bank residing in the GCC country of the company that is one of the Saudi bank partners in capital and technical management or by the branches of Saudi banks in the GCC country. The final responsibility for the customer data shall rest with the bank operating in Saudi Arabia.
11. Once the above documents are provided and the requirements satisfied, the bank shall apply the KYC principle.
12. Approval of the CEO/general director and the manager of compliance department to open the account.
13. The permission to open accounts includes all GCC companies and those carrying out commercial, industrial, service, agricultural and real estate businesses.
14. Banks, money changers (other than correspondent accounts), investment companies, financial institutions, independent or affiliated investment funds, insurance companies, sole proprietorships and licensed shops are prohibited from opening bank accounts.
300.2.1.2 Bank Accounts of GCC Juristic Persons for the Purpose of Trading in Securities Listed in the Saudi Stock Exchange
Bank accounts may be opened for these juristic persons after carrying out and providing the following:
- An application for opening a bank account shall be submitted, specifying that it is for the purpose of investment in joint-stock companies shares or securities. The bank shall ascertain that the investment purpose conforms with the company’s objectives as specified in its memorandum of association and license. It shall also ensure that the company’s memorandum of association and articles of association are free of any restrictions that might prevent or limit the company’s ownership of shares of joint-stock companies.
a. GCC companies:
1. A copy of the license / commercial register issued by a competent government authority in the GCC country of residence and attested as a true copy of the original.
2. The company’s articles of association or memorandum of association, or the decision issued by a shareholders’ association or the company partners, must provide that the company is allowed to invest in securities.
3. Real beneficiaries holding ultimate control shall be identified and verified (as a minimum, a natural owner holding 25% as specified in the company’s memorandum of association and its annexes or according to the available data).
4. A copy of the company’s memorandum of association and its annexes clearly showing the company’s capital structure and management and that the share of GCC citizens (natural and juristic) shall exceed 50% of the company capital.
5. Verifying the identity of board members.
6. Copies of IDs of the authorized managers and their nationalities.
7. A copy of the authorization issued by the company’s board of directors empowering the persons concerned to manage accounts and investment portfolios, unless such authorization is included in the company’s memorandum of association.
b. GCC investment institution:
Documents of establishment which prove that the institution is owned by the government, including its memorandum of association, decision to form its board of directors, names of those authorized to manage the accounts and copies of their ID cards.
c. Pension and social insurance organizations:
Documents pertaining to the establishment of these organizations, board formation decision, names of those authorized to manage the accounts and their authorization decision as well as copies of their IDs.
d. Affiliated investment funds:
1. A copy of the fund’s or the managing fund’s articles of association or memorandum of association and any amendments thereto.
2. Documents relating to the license to establish the fund, received either from a capital market authority or a central bank in a GCC Country.
3. Names of the board members responsible for managing the fund and its policy.
4. The resolution nominating those empowered to operate the fund and copies of their IDs.
5. A copy of the fund’s or the managing fund’s memorandum of association and its annexes which clearly show the structure of its capital and its management and that the share of GCC citizens (natural or juristic) exceeds 50%.
- The documents mentioned in a, b, c and d shall be received by directly meeting the customers (authorized persons) in person or through a GCC agent.
- The AML/CFT form shall be completed by a GCC agent. However, when meeting customers (authorized persons) in person, in the case of a GCC company and an investment fund only, such form shall be completed by these two parties themselves as applicable.
- The bank shall apply the KYC principle and exercise due diligence.
- The bank shall obtain a declaration from a GCC agent in which the agent undertakes to provide the bank or the supervisory authorities in Saudi Arabia with any information about customer investors at any time upon request. This is in the case that the bank is dealing with a GCC customer through a GCC agent.
300.2.2 Non-Resident, Non-Banking (Non-GCC) Companies and Businesses with No Contracts or Projects in Saudi Arabia
Banks are not permitted to open any account for such companies and businesses, except for the intermediary accounts allowed under Rules (400.1) and (400.2). An exception is companies and institutions which have SAMA’s approval to obtain facilities, finance or loans from banks operating in Saudi Arabia according to the following conditions and controls:
1. Providing copies of the following documents:
a. License/commercial register issued by the government authority in the country of residence.
b. Memorandum of association and its annexes, clearly showing the structure of capital and company management.
c. Authorization issued by the company’s board for persons to handle credit processes and manage bank accounts, unless this is specified in the memorandum of association.
2. Providing a list of names and copies of the identities of board members and authorized managers showing their nationalities.
3. Determining the (natural) real beneficiary of ownership.
4. Verifying the ownership of any politically exposed person, if any, and verifying its source of funds.
5. Opening an intermediary account with the bank for the purpose intended, named (.........Company Loan Account).
6. The intermediary account shall be managed by officers from the executive level in the bank.
7. The account shall not provide any kind of services (checks, ATM cards, etc.)
8. Requests of a customer who obtains a finance loan (borrower) to withdraw from the account shall be made through any of the following:
- A SWIFT message from the customer through the correspondent bank which the customer deals with in its home country.
- Written instructions signed by two authorized persons in the company obtaining the finance, whose names are included in the finance request.
9. Repayment is made through remittances from the borrower’s country or from banks in the Kingdom by a resident customer specified in the loan agreement. Cash deposits, checks and transfers from domestic accounts with the same bank are not permitted.
300.2.3 Non-Resident and Non-Banking Companies and Businesses with Contracts or Projects in Saudi Arabia
When a non-resident business or company has a contract or a project in Saudi Arabia, it may have accounts with a bank in Saudi Arabia for the duration of the project or the contract according to the following conditions:
1. Obtaining permission from the Ministry of Commerce and/or a provisional license from the Ministry of Investment and approval from the company’s head office. This approval must be certified by the Saudi embassy in the company's country of origin.
2. A copy of company's memorandum of association duly attested by the Saudi embassy in the company's home country.
3. A recommendation from a bank rated by an approved rating agency with which it deals in the country of origin.
4. A copy of the authorization from the company’s head office certified by the Saudi embassy, nominating the persons authorized in Saudi Arabia to sign on behalf of the company for all financial transactions (including opening and operating accounts and checks), along with copies of their Iqamas.
5. Approval of the CEO/general director and the manager of compliance department to open the account.
- Banks must close all such accounts upon expiry of the contract. In order to manage post-project receivables and payables, including zakat and income tax payments, special accounts can be maintained specifically for this purpose until completion. After that, such accounts must be closed according to the following:
1. Considering such account as a trust account under the control of the operations manager at the bank's head office only.
2. Obtaining a letter from the company’s head office, duly attested by the Saudi embassy in its home country, identifying the authorized signatories to sign for the trust account after completion of the company’s business and specifying the method for transferring the remaining amounts and paying zakat or income tax.
3. Limiting deposits in such account to the amounts payable to the company by other parties such as the Ministry of Finance (government checks) or a private entity if the contract is made with a private or semi-government business sector.
4. Classifying this account as of high risk.
300.2.4 Non-Resident and Non-Banking Companies and Businesses Leasing Spaces in Deposit Areas in Saudi Arabia
Banks may open accounts for companies and institutions licensed to sell and reexport commodities in deposit areas at local ports in Saudi Arabia, whether leasing was directly through contracts with the Saudi Ports Authority or through concession. This shall be for a period equal to the duration of the lease contract and according to the following requirements:
1. A copy of the lease contract attested by the Chamber of Commerce and Industry and the port management.
2. A copy of the lessee’s commercial register issued by the country of origin and attested by the Saudi embassy in addition to the full address of the entity.
3. A letter from a bank in the lessee’s country of origin.
4. The persons authorized to manage the entity’s account must be Saudis or non-Saudis with valid Iqamas.
5. The purpose of the account must be specified through a letter from the lessee to the bank.
6. The account must be closed by the bank upon expiry of the lease period if a renewal notification is not received.
300.2.5 Non-Resident Commercial Banks (Including GCC Banks)
Correspondent accounts may be opened for non-resident commercial banks (including GCC banks), including correspondent accounts for central banks, in accordance with the following conditions:
1. Approval of the CEO/general director and the manager of compliance department to open the account.
2. SAMA must be informed when the account is opened.
3. Obtaining license documents (except for situations where the correspondent is the central bank itself) issued by the competent foreign licensing authority of the foreign correspondent bank, such as the central bank or the banking control commission in the country of origin.
4. Banks should refuse to enter into or continue a banking relationship with a correspondent bank in a country where it has no physical presence and which is not affiliated with a regulated financial group (e.g. shell banks).
5. Banks should select or approve correspondent banks whose countries apply strong measures to identify customers and cooperate in combating money laundering. These correspondent banks should be under the control of competent authorities. Moreover, it is possible to have an easy access to information related to such banks’ management, main line of business, locations, reputation and the level of control applied by their regulators.
6. Banks shall obtain a completed AML/CFT form from each correspondent bank, stating that such bank is committed to the AML/CFT policies and procedures regarding relations with new banks as well as existing relations. Banks shall also access the correspondent bank’s internal controls to combat these crimes and ensure their adequacy and effectiveness and that the correspondent bank does not allow shell banks to use its accounts.
7. Banks should ensure, through publicly available information and research (such as media), that the correspondent banks, which a bank plans to deal with or continue to deal with, are not subject to any investigation on money laundering or terrorist financing, involved in cases brought against them in this regard, or subject to any legal action.
8. Banks are not allowed to start new relations with any correspondent bank or open a correspondent account without the approval of their senior management.
9. Banks should ensure that operating these accounts is restricted to dealings among correspondent banks only. Such accounts shall not be used or treated as current accounts and no check books should be issued for them. Additionally, they may not be used for cash depositing or by a third party to conduct activities for its own account.
300.2.6 International Investment Companies and Mutual Funds and Other Nonresident Financial Institutions (Including GCC Institutions)
Banks may not open any bank account for foreign investment companies, mutual funds or financial institutions, including GCC investment companies and brokers who illegally sell their products in Saudi Arabia and raise funds in Saudi riyals and other foreign currencies. Saudi banks may not facilitate the business of such entities in any way. An exception to this is the cases and categories permitted by the CMA, in which investment in the shares of Saudi joint-stock companies is allowed.
300.2.7 Non-Resident Insurance Companies and Money Changers
Saudi banks may not open bank accounts for such juristic entities except in the following cases after obtaining approval of the CEO/general director and the manager of compliance department to open the account and informing SAMA when opening the account:
• A non-resident insurance company with an agreement with a Saudi bank to offer insurance products:
Such company may only open an escrow account in Saudi riyal and other foreign currencies with the partner bank to facilitate its business under the agreement.
• A non-resident money changer:
It may only open a correspondent account after providing the documents related to practicing (banking activities) currency exchange activities as specified in Rule (300.2.5).
300.2.8 Payment Card Companies Not Residing in Saudi Arabia and Not GCC Affiliated
Banks are not permitted to open accounts for such companies. However, after obtaining approval of the CEO/general director and the manager of compliance department to open a bank account and informing SAMA when opening such account, the bank may hold intermediary accounts in Saudi riyals for these companies to enable them to pay the value of customer purchases to the merchants in Saudi Arabia. Banks should also obtain authenticated licenses or registration documents from these companies in order to be able to identify them.