Chapter VII:Governance and Responsibilities of Financial Institution
The financial institution is responsible for the effective implementation of the AML/CTF requirements and adoption of a risk-based approach to mitigate the money laundering and terrorism financing risks it faces. The financial institution shall not consider combating money laundering and terrorism financing in isolation from other regulations and needs in the financial institution, but as part of its comprehensive risk management strategies. Therefore, the board of directors and senior management in the financial institution shall ensure that the policies, procedures and controls in place related to AML/CTF are based on the results of money laundering and terrorism financing risks. To ensure the effectiveness of the AML/CTF strategy at the level of the financial institution, the risk management process shall be reviewed continuously and updated periodically, and appropriate mechanisms, policies and procedures shall be developed to mitigate risks. The financial Institution must ensure that its employees are sufficiently aware of all the policy requirements, procedures and internal controls and are working to implement them.
Section 1: Board of Directors
The board of directors of the financial institution is generally responsible for ensuring compliance with AML/CTF requirements. In this regard, the oversight exercised by the board concerning combating ML/TF shall be in line with international best practices, including SAMA Governance Guidelines. The board shall also ensure that there is documentation relevant to its oversight function, such as minutes of meetings of the board (or board committees). The main responsibilities of the board include, but are not limited to, the following:
a) Ensuring that the ML/TF risk assessment in the financial institution is conducted accurately and covers all risks facing the financial institution in order to develop appropriate policies to manage such risks.
b) Adopting an internal policy to mitigate ML/TF risks and ensure its effective implementation.
c) Providing sufficient budget and resources, including adequate and qualified employees as well as appropriate systems and tools in order to ensure that the application of internal policies, procedures and controls is effective and consistent with the ML/TF risks identified.
d) Following up on the implementation of the ongoing and annual training programs in the field of AML/CTF for all employees as well as members of the board of directors and senior management.
e) Ensuring that appropriate independent audit mechanisms are in place so that the board can monitor the ongoing effectiveness of internal controls.
Ensuring that the appropriate actions are promptly taken and that violations are not committed when a branch or subsidiary in a country or region is unable to implement the AML/CTF requirements as stated in the Anti-Money Laundering Law, the Law on Combating Terrorism Crimes and Financing, and their Implementing Regulations due to the weakness of laws, regulations, or other domestic measures in that country or the inability to implement the appropriate measures.
f) Ensuring the receipt of regular comprehensive reports on ML/TF risks facing the financial group or financial institution, including but not limited to:
• Corrective action plans, if any, to process the results of independent audits (whether internal or external), observations of the AML/CTF compliance department and inspection reports from SAMA regarding the evaluation of the financial institution’s compliance with AML/CTF requirements.
• Developments and updates in the laws and regulations for combating money laundering and terrorism financing as well as their implications on the financial institution, if any.
• Details of high ML/TF risks and potential effects on the financial institution.
• Details on the implementation of financial sanction procedures related to the UN Security Council resolutions regarding those on terrorist lists, combating proliferation, or the decisions communicated by SAMA.
Section 2: Senior Management
The senior management is responsible for the continuous implementation and monitoring of compliance with the AML/CTF requirements in the financial institution. The main responsibilities of the senior management include, but are not limited to, the following:
a) Identifying, assessing, and understanding ML/TF risks arising from new products or services, distribution channels, or customers.
b) Establishing a program for AML/CTF that includes setting up and developing policies, procedures, and controls in line with the latest means, techniques and methods of ML/TF.
c) Adopting internal procedures and controls to mitigate ML/TF risks.
d) Reviewing policies and procedures periodically (at least once a year) by establishing an appropriate mechanism for periodic review of the main AML/CTF policies and procedures to ensure that they are continuously effective and consistent with the changes in products and services of the financial institution and to address new and emerging risks from ML/TF activities.
e) Taking actions with regard to all important recommendations issued by the AML/CTF compliance department, the independent auditor, and supervisory authorities concerning the level of compliance with AML/CTF requirements.
f) Providing the board of directors with sufficient relevant information in a timely manner about matters relating to AML/CTF.
g) Providing appropriate specialized training for employees in the AML/CTF compliance department and those working in the same field on an annual basis to ensure effective performance of their duties and functions.
h) Creating a continuous training program for employees of the financial institution to enable them to obtain sufficient knowledge and understanding and fulfill their responsibilities related to AML/CTF.
i) Supporting the functions of AML/CTF compliance and independent audit appropriately in terms of staff, technical systems, information, and budget in order to effectively implement, manage and monitor the AML/CTF program requirements.
j) Following up on the implementation of the instructions and circulars issued by SAMA regarding AML/CTF.
Section 3:Financial Institution Staff
Employees of the financial institution are responsible for the implementation of policies, procedures, and controls of AML/CTF, including:
a) Following and implementing policies and procedures of AML/CTF and being aware of the need to comply with the laws, regulations, and guidelines applicable in this field.
b) Ensuring that no actions are taken on behalf of a customer when such actions are required to be taken by that customer in accordance with the internal instructions.
c) Performing daily tasks in accordance with the internal work procedures of the financial institution and in a manner consistent with the relevant laws and instructions.
d) Reporting immediately to the AML/CTF compliance officer when there are reasonable grounds for suspicion of a ML/TF transaction.
e) Refraining from disclosing or implying any information about suspicious transactions linked to a certain customer or that certain transactions are under investigation internally or externally.
f) Taking the appropriate measures to ensure that no clues are given when requesting information from a customer.
g) Providing full assistance in investigations related to ML/TF.