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  • Guide to Enforcing Security Council Resolutions concerning the prevention of WMD proliferation and their financing

    • 1. Freezing of Funds Designated in Accordance With the Mechanisms Issued to Enforce Security Council Resolutions Concerning Prevention of the WMD Proliferation and Their Financing

      1.1 In compliance with Security Council resolutions concerning the prevention of the WMD proliferation and their financing, and in implementation of the mechanism issued accordingly, financial institutions are required to promptly freeze (within hours) and without prior notice any funds, economic resources, assets, or property owned, controlled, or possessed, either wholly or partially, directly or indirectly, by any of the following:
       
        (a) Any person, group, or entity designated by the United Nations Security Council or any relevant committee of the Security Council under any of the pertinent Security Council resolutions.
       
        (b) Any person who acts on behalf of, at the direction of, or is owned or controlled, directly or indirectly, by a person, group, or entity listed by the Security Council. including through illegal means.
       
      1.2 The implementation mechanism of Security Council resolutions on preventing the WMD proliferation and their financing prohibits any natural or legal person, including all categories of financial institutions, from providing any funds, economic resources, assets, or property to any listed person, group, or entity. It also prohibits the provision of any form of financial or other services, directly or indirectly, to or for the benefit of such persons, unless the designation is removed from the Security Council committees or a reasoned written authorization is obtained from the Saudi Central Bank (SAMA).
       
      1.3 

      The mechanism mandates the continuous updating of data for individuals on the lists of the Security Council sanctions committees on a daily basis. This involves referencing the website of the resolutions adopted by the United Nations Security Council at the following address:
       

      un.org/ar/sc/documents/resolutions/

      1.4 SAMA must be notified within a maximum of five working days in the event of a freeze, and complete details of the account or transaction must be provided as outlined in Paragraph (3.3-c) of this guide.
       
      1.5 Payments made to listed individuals, groups, institutions, or entities may be credited to the frozen accounts, on the condition that these payments remain frozen and that SAMA is notified accordingly.
       

    • 2. Funds to be Frozen Under the Resolutions

      2.1 The obligations outlined in the mechanisms for implementing Security Council resolutions on the prevention of the proliferation of WMD and their financing extend to any "funds," a term that is broadly defined to include: “assets, economic resources, or property, regardless of their origin or value. This includes tangible or intangible assets, movable or immovable property, as well as documents, instruments, or tools in any form, including electronic or digital systems and bank credits indicating ownership or interest. Examples of such assets include but are not limited to all types of checks, transfers, stocks, securities, bonds, bills of exchange, letters of credit, and any associated interest, profits, or income derived from these funds or assets, whether located within or outside Saudi Arabia”.
       
      2.2 The freezing order extends to funds owned or controlled, directly or indirectly, in whole or in part, by the person concerned. The freezing order covers entities that the listed person controls directly or indirectly, even if not officially owned, such as joint bank accounts, trust funds, or entities owned indirectly through minors or spouses. It also includes shell or front companies utilized by the listed person, joint ventures they're part of, and entities with intricate or ambiguous ownership structures designed to conceal control or ownership by the listed person. These examples serve to illustrate that any funds subject to the control or ownership of a designated person, irrespective of the method—directly, indirectly, or through any mechanism—are covered by Security Council resolutions.
       
      2.3 It is imperative to highlight that funds jointly owned, controlled, or held by the listed person, group, or entity and a non-listed person, group, or entity are subject to the freezing order in full. This includes the portion owned or controlled by the unlisted person, group, or entity. Disposal of the frozen funds will not occur without first consulting SAMA, which subsequently notifies the Ministry of Foreign Affairs (the Permanent Committee responsible for implementing Security Council resolutions issued under Chapter Seven of the United Nations Charter, established by Royal Order No. 7753/MB dated 29/10/1427 AH) for deliberation. Each case will be handled on an individual basis.
       

    • 3. Financial Institutions’ Mechanism to Verify all Customers Against the Listed Names of the Security Council

      3.1 Financial institutions must conduct daily and continuous checks of customer databases and any information obtained regarding potential or existing customers. They must compare this information with the names included in the Security Council lists related to the prevention of the proliferation of WMD and their financing. Financial institutions are tasked with determining whether they are in possession or under their management of any funds subject to Security Council resolutions. An up-to-date list of individuals and entities on these lists must be maintained in the database.
       
      3.2 Certain financial institutions utilize electronic service programs to ensure that their clients are not subject to any sanctions linked to the Security Council lists related to the prevention of the proliferation of WMD and their financing. While electronic services are valuable tools, they should not be relied upon as foolproof guarantees of compliance with imposed procedures. Daily and continuous verification must be conducted to compare the names listed by the Security Council sanctions committees. The basis for tracking updates and ensuring the enforcement of sanctions imposed on individuals listed in Security Council lists remains the website mentioned in paragraph (1.3) above.
       
      3.3 When a financial institution identifies funds in its possession or under its management that must be frozen, it is required to take the following actions:
       
        a– Without delay (within hours), the financial institution must immediately freeze all such funds and any funds derived or resulting from them, without prior warning.
       
        b– Abstain from offering any financial or other services or providing funds to or for the benefit of any listed person, group, or entity. This prohibition covers all types of services provided to the listed person, group, or entity, including but not limited to opening accounts or offering any form of advice, financial services, brokerage and investment services, or any type of assets or property, directly or indirectly, whether physical or non-physical, tangible or intangible, movable or immovable.
       
        c– In the event of a freeze, SAMA must be notified within a maximum of five working days from the date of the freeze being imposed. This notification should include information about the status of the funds, any measures taken regarding them, the nature and quantity of the frozen funds, and any other relevant information that may facilitate compliance with the decisions. Financial institutions shall ensure the accuracy of the information provided to SAMA.
       
      3.4 If a financial institution is not found to be in possession or control of any targeted funds, it must promptly notify SAMA of any transactions carried out with a former or transient client who is later identified as a person, group, or entity listed on the Security Council's lists. Furthermore, the institution must immediately inform SAMA of any attempted transactions involving individuals listed on the Security Council's lists.*
       
      3.5 Financial institutions, in the event of name similarity, are required to immediately search using available system resources for information to confirm whether the name matches or not. If the financial institutions fail to obtain information confirming the match, SAMA must be notified immediately without taking any further action.
       

      Paragraph (3.4) has been amended in accordance with Circular No. (486/130885) dated 04/09/1440H, corresponding to 09/05/2019G.

    • 4. Procedures to be Put in Place by Financial Institutions if the Freezing Order is Lifted

      4.1 In case a name is delisted by the Security Council sanctions committees, financial institutions are mandated to promptly and directly lift the freeze, without any prior notice, within hours. Subsequently, they must notify SAMA, as detailed in paragraph 4.2 below. No prior written notification of the non-lift from SAMA is required.
       
      4.2 SAMA must be informed of the lifting of the freeze within five working days from the date of the freeze being lifted, providing it with information on the status of the funds, any measures taken, the nature and amount of the unfrozen funds and any other information relevant to the decisions. Financial institutions must ensure the accuracy of the information provided.
       
      4.3 In case the Security Council authorize the partial release of funds and other frozen assets as identified in accordance with Security Council resolutions, SAMA will promptly notify the financial institutions under its supervision regarding this matter.
       

    • 6. SAMA's Mechanism for Verifying Financial Institutions' Commitment to Implementing and Financing Security Council Resolutions Aimed at Preventing the Spread of WMD

      Financial institutions shall take all necessary measures to ensure their complete compliance with sanctions imposed on individuals or entities listed by the Security Council sanctions committees. Compliance will be verified through on-site inspections, and penalties outlined in relevant regulations will be enforced in cases of negligence or failure by financial institutions to adhere to instructions.

    • 7. Penalties Enforced in Cases of Non-Compliance With the Requirements and Procedures Outlined in the Mechanism for Implementing Security Council Resolutions Aimed at Preventing the Proliferation of WMD and Their Financing

      Individuals who fail to impose a freeze or enforce a freezing order against individuals listed under the mechanism for implementing Security Council resolutions aimed at preventing the proliferation of WMD and their financing, as well as those who facilitate the availability of funds or offer financial or related services to them, will be held accountable according to applicable regulations. Any designated person who breaches the mechanism for implementing Security Council resolutions related to preventing the proliferation of WMD and their financing, intentionally or negligently withholds or provides inaccurate information, delays in furnishing information, or commits other infractions will also face accountability measures.