The following terms and phrases, wherever mentioned herein, shall have the meanings
assigned thereto unless the context otherwise requires:

1. SAMA:

The Saudi Central Bank

2. Rules:

Rules for Bank Accounts.

3. Bank Account:

An accounting record maintained by a bank licensed to operate in Saudi Arabia. Such a record is generated under a contract called "Account Opening Agreement" between the bank and the account holder (the Customer) or its representative. The Agreement sets out the rights and obligations of each party including accounting entries posted by the bank in accordance with the applicable regulations and the acceptable rules and practices agreed upon under the account opening agreement, other agreements signed by the two parties, and other instructions given by the account holder to the bank.

4. Freezing of Account:

A temporary suspension of withdrawal/transfer or the like from a bank account/relationship due to the expiration of the customer’s ID; non update by the customer or his representative of KYC data or violation of any provision of the Account Opening Agreement.

5. Bank Verification:

Placing the bank official stamp or the like in addition to the bank employee signature and stamp on a copy of a document or ID card to confirm that it is a copy of the original.

6. Special Purposes Entities

Entities established and licensed under Rules for Special Purposes Entities, issued by the Capital Market Authority.

7. Government Entities:

Government entities, public institutions, authorities, funds and the like, whether they have appropriations in the State general budget or not.

8. Foreign Schools:

Schools licensed by the Ministry of Education that apply non-Saudi curriculum and are subject to the Regulation for Foreign Schools in Saudi Arabia. They are different from educational institutions of foreign embassies.

9. International Multilateral Organizations:

International organizations in Saudi Arabia that exist under a headquarters agreement (license), signed by Saudi government, such as the Muslim World League, World Assembly of Muslim Youth and the like.

10. Chambers of Commerce and Industry:

Non-profit organizations that represent commercial and industrial interests before public entities and protect and develop such interests. They have their own Boards of Directors.

11. Freelancer:

A self-employed person (who gets paid per hour, day, or work) rather than working for an employer in exchange for a monthly salary.

12. Minor:

A male or female under the age of 18 Hijri years.

13. Curator:

A person appointed by a Guardianship Deed issued by the competent courts to be a guardian of a minor.

14. Guardian:

The father of a minor or a person appointed by the court under a Guardianship Deed.

15. Custodial Person:

A person appointed by the court under a Custody Deed authorizing him/her to receive the allowances provided by public or private entities to a child in his/her custody.

16. Legally Incompetent Person:

A person not allowed to manage his/her money under a court deed that proves the lack or loss of mental capacity.

17. Private Associations and Foundations:

Associations and foundations as defined in the Civil Associations and Foundations Law.

18. Philanthropic/Charitable Committees:

Committees licensed by local government entities to serve the public, such as Patients’ Friends Committee and Disabled Persons Committee and the like.

19. National Societies and Committees:

Societies and committees established pursuant to a royal approval or a resolution by the Council of Ministers to perform specialized roles to serve the public interests.

20. Cooperative Associations and Funds:

- Cooperative associations:

An associations formed by individuals in accordance with the provisions of the Law of Cooperative Associations to improve the social and economic conditions of its members in production, consumption, marketing or services through the joint efforts of the members using cooperative principles.

- Cooperative funds:

Funds established by the employees of a government agency or a company in accordance with the provisions of Cooperative Funds. The source of funding is member contributions. Such funding is mainly used to cover social, cultural and sport activities of the Fund's members.

21. Foreign Endowment⁽²⁾:

Endowment for specific Saudi individuals or Saudi charities inside Saudi Arabia owned by natural or juristic non-Saudi persons with one or more Saudi legal agents.

22. Escrow accounts for off-plan sale or rental real estate projects ⁽⁶⁾:

A bank account for depositing the amounts paid by financiers, buyers or tenants for the project.

23. Escrow Accounts for Real Estate Contributions Project ⁽⁷⁾:

A bank account for depositing real estate contribution funds.

24. Scientific Societies ⁽³⁾:

Societies established in Saudi universities under their direct management and supervision in accordance with the Rules for Scientific Societies in Saudi universities.

25. Professional Associations ⁽³⁾:

Juristic and financially independent associations established to improve specific professions and work under the supervision of a government entity authorized to do so.

26. Payment Service Providers ⁽¹⁾:

Any entity qualified and licensed by SAMA to provide one or more payment services in the Kingdom in accordance with SAMA'S relevant instructions.

27. Debt-Based Crowdfunding Company ^{(4) (5)}:

a joint-stock company licensed to engage in Debt-Based Crowdfunding activity.

28. Finance Amount ^{(4) (5)}:

funds raised from Participants via a Debt-Based Crowdfunding Platform to be provided for an Institutional Beneficiary.

⁽¹⁾ This paragraph has been added pursuant to the circular No. (42073085), Dated 21/10/1442H, corresponding to 01/06/2021G.

⁽²⁾ This paragraph has been amended according to the circular No. (41042946), Dated 19/06/1441H, corresponding to 13/02/2020G.

⁽³⁾ This paragraph has been added pursuant to the circular No. (41039895), Dated 08/06/1441H, corresponding to 02/02/2020G.

⁽⁴⁾ This paragraph has been added pursuant to the circular No. (42075950), Dated 29/10/1442H, corresponding to 09/06/2021G.

⁽⁵⁾ This paragraph has been amended according to the circular No. (000046024651), Dated 19/04/1446H, corresponding to 22/10/2024G.

⁽⁶⁾ This paragraph has been amended according to the circular No. (46028059), Dated 08/05/1446H, corresponding to 09/11/2024G.

⁽⁷⁾ This paragraph has been added pursuant to the circular No. (46028059), Dated 08/05/1446H, corresponding to 09/11/2024G..

Definitions:

The following terms and phrases, wherever mentioned herein, shall have the meanings assigned thereto unless the context otherwise requires:

* The Saudi Arabian Monetary Agency was replaced By the name of Saudi Central Bank accordance with The Saudi Central Bank Law No. (M/36), dated 11/04/1442H, corresponding in 26/11/2020AD.

These Rules shall apply to all Bancassurance Activities. The Cooperative Insurance Companies Control Law, its Implementing Regulation, the Banking Control Law and SAMA’s relevant regulations, rules, and instructions, and relevant laws and regulations issued by other authorities shall govern whatever is not provided for therein and to the extent possible.

The objective of these Rules is to regulate Bancassurance Activities and practices in Saudi Arabia and the relationship between the Company and the Bank in this regard.

1. Bancassurance Activities shall be practiced directly through the Bank. By merely establishing a tool among other tools for marketing and distribution for the Company, the contractual relationship between the Company and the Bank- in the context of conducting Bancassurance Activities - shall not include insurance agency, insurance brokerage, insurance advisory, or any insurance related profession.
2. The Company and the Bank shall sign the Agreement before the Bank starts practicing Bancassurance Activities.
3. The Company and the Bank shall obtain SAMA’s prior approval before signing the Agreement.

4. The Agreement must include, at a minimum, the following:

   a. Term of Agreement;

   b. Agreement termination procedures; 

   c. List of the electronic and non electronic marketing and distribution channels; through which the Bancassurance Activities will be practiced.

   d. Training plan for Authorised Employees; 

   e. Know Your Client (KYC) procedures;

   f. Compliance procedures;

   g. Insurance classes and products to be covered under the Bancassurance activities;

   h. Marketing and distribution procedures;

   i. Collection of premiums procedures;

   j. Bank commission and its calculation mechanism, due date, and collection procedures;

   k. Client care and complaints resolution procedures; and

   l. Procedures of receiving and transferring the claims to the Company.

1. The Company shall perform and not assign any of the following authorities to the Bank:

   a. Make any amendments to the insurance policies or its annexes.

   b. Settlement of claims.

   c. Payment of compensation.

2. Obtain SAMA’s approval before any material amendments to the Agreement between the Company and the Bank.

3. The Company shall provide SAMA with an annual training plan for the Authorised Employees, provided that it includes -at a minimum- the following:

   a. Training on marketing and distribution techniques;

   b. Workshops to introduce insurance products; and

   c. Training on anti-money laundering and counterterrorist financing.

4. Maintain the confidentiality of the data and information of the Bank and its Clients.
5. The Company shall regularly review the Bank’s practice of Bancassurance Activities, whether through Bank’s electronic or non- electronic channels.
6. The Company shall pay the Bank the marketing and distribution of insurance products’ commission as a result of carrying out Bancassurance Activities during the period specified in the Agreement, provided that the commission is in line with SAMA;s instruction.

The Bank is prohibited from requiring the Client to obtain banking products in order to get the insurance products or vice versa, unless the insurance coverage is binding by a competent authority.

The Company may sign an Agreement with one Bank or more, and the Bank may sign an Agreement with one Company or more.

The Bank shall comply with the rules of professional conduct by fulfilling the following requirements:

1. Act in an honest, transparent and fair manner, and fulfill all of their obligations towards the Clients and the Company, as stipulated by Saudi Arabian laws and regulations.

   Where these obligations have not been fully codified, internationally accepted best practices should be honored.

2. Act within reasonable competence when dealing with Clients and the Company, which is acquired through training, experience, and consulting with experts when needed.
3. Continuously enhance the skills and knowledge of the Authorised Employees in charge, along with the continuous follow up of the products and services available in the market.
4. Take reasonable care in maintaining adequate managerial, financial, operational, and human resources to carry out their business and serve the Clients.
5. Communicate all relevant information including coverage details, conditions, exceptions and restrictions of the insurance policy to the Clients in a timely manner, and ensure that the Clients are aware of the commitment they are about to make to enable them to make a suitable decision.
6. Take reasonable measures to ensure the accuracy and clarity of the information provided to and from the Clients and make such information available in writing.

7. Treat all data and information acquired about the Company and the Clients with utmost confidentiality, and take appropriate measures to maintain the secrecy of confidential documents in their possession, along with taking the following actions:

   - Obtain and use of data only for activities specified under these Rules and not to be used in a manner that is incompatible with those purposes.

   - Keep the data secure and up-to date.

   - Provide data about insurance coverage to the Clients upon their written request.

   - Not to disclose the data to any third party without prior authorization from SAMA, with the exception of the Bank or the Company’s external auditors, or the authorised companies to collect insurance and credit data.

8. Banks must not motivate the Clients to revoke a valid insurance policy, and must not motivate the Clients to refuse a quotation given by a competitor using false or unfair evaluation in order to merely increase commissions.
9. Ensure that the Clients fully understand the Bancassurance services provided by the Banks and the nature of the relationship between the Bank and the Company.
10. Notify the Company of all the insurance information or documents related to Clients which may affect the decision of the Company to provide the coverage and the rates and conditions which the insurance policy will be built upon.
11. Immediately notify the Clients about the acceptance or rejection of the coverage by the Company.
12. Explain to the Clients the mechanism of paying the insurance premiums and any other additional due to the Company.
13. Clarifying to the Clients that the contractual relationship will be with the Company.

1. Pre-marketing and distribution Communication with Clients:

1.1 Advertising:

1.2 providing Advice:

1.3 Client Service:

1.4 Regulatory Requirements:

1.5 Documentation:

2. Marketing and distribution of Insurance Products and Services

2.1 Marketing and distribution Practices:

2.2 Providing of Information:

2.3 Interpretation of Contracts:

2.4 Charges:

3 Post marketing and distribution Client Service

3.1 Confidentiality of Information:

3.2 Clients Notification:

3.3 Renewal of Insurance Policy:

3.4 Claims handling :

The Bank shall not approve or settle claims. However, the Bank shall:

3.5 Client Complaints:

1. The Company or the Bank shall submit to SAMA a request to terminate the Agreement along with the reasons of termination.

2. After obtaining SAMA’s approval, the Company and the Bank shall:

   a) Sign a financial clearance between them;

   b) Announce the termination of the Agreement on their official websites; and

   c) Take all actions that indicate the termination of the Agreement, including removal of all advertisements and returning the usernames and passwords of the Company’s electronic systems

1. SAMA shall supervise and conduct a periodic or surprise inspection of the Bank and the Company to ensure compliance to the Agreement and SAMA’s Bancassurance Rules, and investigate any violations detected by the inspection or from the complaints received by SAMA.
2. SAMA may request all relevant information and documents to ensure the Bank and the Company’s compliance with the provisions of the Agreement and SAMA’s applicable instructions on conducting Bancassurance Activities.

Non-compliance with the requirements of these Rules shall be deemed a violation of the Cooperative Insurance Companies Control Law, its Implementing Regulation and the Banking Control Law, and may subject the Bank or the Company to legal penalties.

In exercise of the powers vested upon the Central Bank under the charter issued by the Royal Decree M/36 on 11-04-1442 H corresponding to 26 November 2020 G and the Banking Control Law issued by Royal Decree no. M/5 dated 22/2/1386AH corresponding to 11 June 1966 G and the rules for Enforcing its Provisions issued by Ministerial Decision no.3/2149 on 14-10-1406A H, SAMA is hereby issuing the enclosed Rules on Profit Sharing Investment Accounts (PSIA) aimed to develop the practices followed by banks operating PSIAs. These rules should be read in conjunction with the wider SAMA regulatory framework.

The objectives of these rules are to provide the minimum requirements to be met by banks in Saudi Arabia that offer PSIA products. The rules aims to enhance consumer protection, transparency and financial stability in the banking sector whilst also ensuring compliance with Shari’ah principles in the operation of PSIAs.

These rules are applicable for all local Saudi banks that conduct Shari'ah compliant banking and are licensed by SAMA under the Banking Control Law.

Banks may raise funding through Profit Sharing Investment Accounts (PSIA) using, for example, Mudarabah and Wakalah contracts. In a Mudarabah arrangement, the bank acts as the Mudarib and the fund providers as the Rabb-ul-Mal, otherwise called Investment Account Holders (IAH). In a Wakalah arrangement, the bank acts as a Wakeel for the IAH.

Mudarabah contracts entail the sharing of profits between the contracting parties using a pre-agreed profit sharing ratio. IAHs are liable to bear losses arising from the investments managed by the bank except in case of proven fraud, negligence, misconduct or breach of contract.

Being an equity-based contract, IAH are expected to bear the credit risk of any counterparty to whom the funds are invested with as well as the market risk of the assets in which the funds were invested.

Banks may also in practice use profit smoothing techniques to mitigate against withdrawal risks associated with PSIAs. Profit smoothing can include the creation of reserve accounts such as the Profit Equalization Reserve (PER) and the Investment Risk Reserve (IRR) as per the discretion of the bank.

Banks must follow SAMA's prudential requirements pertaining to regulatory capital for the calculation of risk weights for assets funded by PSIAs and also ensure appropriate calculation of PSIA funds in their Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) as per SAMA’s liquidity requirements.

PSIA funds and any associated reserve accounts (PER and IRR) are prohibited from being included in the calculation of a bank’s regulatory capital.

Banks must ensure that they manage concentration risks arising from PSIAs in line with SAMA's Large Exposure Rules.

If the management of IAH funds is outsourced to a 3^rd party, Banks must ensure that such an arrangement is in compliance with all applicable outsourcing rules and regulations issued by SAMA.

SAMA may, by way of prudential assessment, direct a bank to treat, or not to treat, an arrangement between the bank and a client (for example by way of mudarabah, musharakah or wakalah) to be a PSIA.

SAMA emphasises that banks ensure compliance with relevant regulations and instructions pertaining to new products and services when considering PSIAs.