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  • Guide to Enforcing Security Council Resolutions Related to Combating Terrorism and its Financing

    • 1. Freezing the Designated Funds in Accordance With the Mechanisms Issued to Enforce Security Council Resolutions Related to Combating Terrorism and its Financing

      1.1 In adherence to Security Council resolutions on combating of terrorism and its financing, and in execution of the corresponding mechanisms, financial institutions shall promptly freeze, within hours and without prior notification, any funds, economic resources, or property, whether wholly or partially owned, controlled, or possessed, directly or indirectly, by any of the following:
       
        (a) Any individual, group, or entity listed by the Security Council Committee (1267/1989/2253) or the Security Council Committee (1988).
       
        (b) 

      Any individual acting on behalf of, at the direction of, or directly or indirectly owned or controlled by a person, group, or entity included in the Security Council lists referred to above in paragraph (a).
       

       

      1.2 The implementation mechanisms of Security Council resolutions aimed at combating terrorism and its financing strictly forbid any natural or legal person, including all categories of financial institutions, from providing funds, economic resources, or property to any listed person, group, or entity. This covers preparations to offer any form of financial or other services, directly or indirectly, to these individuals or for their benefit, unless their names have been delisted by the Security Council committees or explicit prior authorization has been granted by SAMA.
       
      1.3 

      The mechanisms additionally mandate continuous updating of the data of those on the United Nations lists on a daily basis, by referencing the websites of the (1267/1989/2253) Committee and the (1988) Committee. Both committees maintain websites containing updated lists of the names of listed individuals. These websites can be accessed at the following two addresses:
       

      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. In case of name similarity, SAMA will be promptly notified, and appropriate measures will be taken by financial institutions. These measures may include freezing or not freezing funds until directives are received from SAMA. The decision will be based on the degree of similarity assessed by the financial institutions, utilizing the information and data available to them.
       
      1.5 Freezing will be promptly put in place for names designated by the Kingdom of Saudi Arabia in accordance with Security Council Resolution No. (1373). Freeze requests are issued through the Presidency of State Security (the Permanent Counter-Terrorism Committee) and transmitted to financial institutions via SAMA.
       
      1.6 Payments made to listed individuals, groups, institutions, or entities may be permitted to 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 related to combating terrorism and its financing extend to any "funds," a term that is broadly defined to include: “various forms of 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 encompasses 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 complex or ambiguous ownership structures aimed at concealing 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. Disposition of such funds will only occur after consultation with SAMA, which subsequently notifies the Presidency of State Security (the Permanent Committee for Combating Terrorism) for investigation, with each case being handled individually.
       

    • 3. Financial Institutions’ Mechanism to Verify All Customers Against the Listed Names

      3.1 Financial institutions shall conduct daily and ongoing checks of customer databases and any relevant information concerning potential or existing customers. They must compare this data with the names listed by the two Security Council committees tasked with combating terrorism and its financing as outlined in this guide. This process aims to identify whether the financial institutions possess or manage any funds subject to the decisions of these committees. Hence, it is essential to maintain an updated list of the entities and individuals included in these lists within the database. This requirement extends to the names classified nationally in accordance with Security Council Resolution No. 1373, which are received from the State Security Presidency and disseminated by SAMA to the financial institutions it supervises.
      3.2 Certain financial institutions utilize electronic service programs to ascertain that their clients are not subject to any penalties associated with the (1267/1989/2253) and (1988) Committees. It's noteworthy that while electronic services are valuable tools, they should not be solely relied upon as guarantees of compliance with imposed procedures. Daily and continuous verification remains essential to compare the names listed by the United Nations sanctions committees. The primary method for staying informed about updates and ensuring compliance with sanctions imposed on the individuals listed by the Security Council Committees (1267/1989/2253) and (1988) is through regularly consulting the respective websites of these committees, as mentioned in Paragraph (1.3).
      3.3 If a financial institution identifies that any funds in its possession or under its management are subject to freezing, it must adhere to the following steps:
        (a) Immediately and without delay (within hours), freeze all such funds, along with any funds derived or resulting from them, without prior warning.
        (b) Refrain from providing any financial or other services or transferring 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) The freeze must be notified to SAMA within a maximum of five business days from the date it is imposed. The notification shall include details about the status of the funds, any actions taken, the nature and quantity of the frozen funds, and any other pertinent information that may aid in compliance with the decisions. Financial institutions should ensure that the information provided is accurate.
      3.4 If a financial institution determines that it does not possess or manage any targeted funds, it must promptly inform SAMA if any former or current client it engaged with is identified as a listed person, group, or entity.
      3.5 In cases where names are similar, financial institutions must conduct thorough searches using legally available means to confirm whether the names match or not. If the financial institutions do not obtain information confirming whether the name matches or not, they must notify SAMA immediately without taking any action.

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

      4.1 If the Security Council Committees (1267/1989/2253) and (1988) delists the name, the freeze must be promptly lifted without prior notice,(within hours), and SAMA must be informed accordingly, (as outlined in Paragraph 4.2 below), unless prior notice of non-lifting is received as a result of the designation in accordance with Security Council Resolution No. (1373). As for names whose transactions were previously frozen based on directives from SAMA, they remain frozen until instructions are received from the SAMA to lift the freeze.
      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 should ensure that the information provided is accurate.
      4.3 If the Security Council approves the partial lifting of frozen funds and other assets identified based on Security Council Resolution No. (1452), SAMA will promptly inform the financial institutions under its supervision regarding this development.

    • 6. SAMA Mechanism to Verify the Financial Institutions’ Compliance With the Implementation of Security Council Resolutions Concerning the Combatting of Terrorism and its Financing

      Financial institutions must take all necessary measures to ensure their full compliance with the sanctions imposed on individuals listed by the Security Council Committees (1267/1989/2253) and (1988), as well as those provided by SAMA in accordance with Security Council Resolutions (1373). Full compliance will be verified through field visits, with penalties applied as per regulations in cases of negligence, non-compliance, or failure to adhere to instructions by financial institutions.

    • 7. Penalties That are Applied in the Event of Non-Compliance With the Requirements and Procedures Stipulated in the Mechanisms for Implementing Security Council Resolutions Related to Combating Terrorism and its Financing

      Anyone who fails to impose a freeze or enforce a freezing order against names subject to the mechanisms for the implementation of relevant Security Council resolutions on combating terrorism and its financing, as well as anyone who makes funds or financial services or other related services available to the designated person or for their benefit in violation of the relevant Security Council resolutions on combating terrorism and its financing, or fails to disclose information, provides false information intentionally or due to negligence, or delays in providing information, shall be held accountable in accordance with the relevant regulations.

    • 8. Obtaining Information

      The financial institution must obtain accurate information, whether basic or pertaining to potential or existing customers, to ensure comparison with the names listed by the two Security Council committees dedicated to combating terrorism and its financing, as referred to in this guide. This includes information related to the beneficial owner of legal entities (such as front companies) when investigating crimes or violations related to Security Council resolutions concerning the financing of terrorism.

    • 9. Notification and Grievance Mechanism

      Individuals designated in accordance with Security Council resolutions have the right to be notified when procedures outlined in these resolutions are applied to them due to their appearance on one of the lists associated with these resolutions.

      The designated individual also retains the right, in accordance with Security Council resolutions, to initiate grievance cases, whether within or outside KSA, against any decisions issued against them. This right is governed by the provisions outlined in the Law of the Board of Grievances, as well as the Law on Combating the Financing of Terrorism. It is crucial to consider the rights of bona fide third parties who act in good faith while fulfilling their obligations.

    • 10. Other Guidelines and Instructions

      Reporting financial institutions are required to identify, assess, understand, document, update and provide their risk assessment to the Central Bank upon request, taking into account a wide range of risk factors including those associated with their customers, countries or geographic regions, products or services, transactions or delivery channels, including a risk assessment study for new products, business practices and technologies prior to use.

      The national consolidated list, associated with Security Council Resolution No. (1373), should be continuously updated through referencing the website of the Presidency of State Security (Permanent Committee for Combating Terrorism and its Financing), on a daily and an ongoing basis. Any amendments to the national consolidated list, including new additions, deletions, or modifications to data, should be promptly noted. It is essential that these updates are directly monitored through the website of the Permanent Committee for Combating Terrorism and Its Financing at the Presidency of State Security.

      An assessment must be made of the quality of the procedures applied for the purposes of (1) designation/listing, (2) freezing or unfreezing, and (3) delisting, and the extent to which these procedures comply with the requirements of Security Council resolutions.