3 Part III: Account Opening and Operating Rules and Regulations
Chapter 7: Definitions
General Account
52. A General Account is an accounting record maintained by a DTFC licensed to operate in the Kingdom, generated under a contract called "General Account Opening Agreement" signed by the DTFC and the account holder (the Customer). The agreement sets out the rights and obligations of each of the parties including accounting entries posted by the DTFC 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.
The purpose of a General Account is to facilitate operations of Deposit Accounts.
Deposit Account
53. A Deposit Account is an accounting record maintained by a DTFC license to operate in the Kingdom, generated to reflect the terms and status of the Deposit Deal. The purpose of the Deposit Account is hold the funds for an agreed period accruing profit at an agreed rate as per Deposit Deal.
Deposit Deal
54. A Deposit Deal is a transaction which is generated under a contract i.e. "Deposit Deal Agreement" signed / accepted by the DTFC and the account holder (the Customer), where an account holder agrees to leave funds with a DTFC for an agreed period accruing profit at an agreed rate. The agreement sets out the rights and obligations of each of the parties including accounting entries posted by the DTFC 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.
Natural Person
55. For the purpose of these regulations, Natural Person include:
i. Saudi National (Male / Female / Minor), ii. GCC National (Male / Female / Minor), iii. Expatriates holding 5 years residence card (Male / Female / Minor), iv. Expatriates on visits (Male / Female / Minor), and v. Other Individuals not in above capacity
Resident Juristic Persons Including Commercial and Other Organizations
56. These include:
i. all private juristic entities, such as commercial firms, corporations and other organizations licensed by the Ministry of Commerce, ii. if it is a joint venture, or service firms licensed by the Ministry of Municipal and Rural Affairs, the Ministry of Pilgrimage and the like, and iii. financial institutions licensed by the Saudi Arabian Monetary Agency or by the Capital Market Authority, and iv. corporations licensed by the Saudi Arabian General Investment Authority (SAGIA);
including, all juristic parties owned by Saudi citizens or licensed individual expatriates.
Resident Juristic Persons Investing Under the Foreign Investment Act
57. These include all private Juristic persons such as companies and firms and subsidiaries, or similar entities, and natural persons of Non-Saudi nationality and their Saudi investing partners who are licensed to invest in the Kingdom pursuant to the Foreign Investment Act with license issued by the Saudi Arabia General Investment Authority (SAGIA).
Juristic Persons Renting Depository Areas at Saudi Ports
58. These include companies and firms authorized to sell and re-export at depository areas at Saudi Ports, whether renting is as per lease contract entered directly with Port.
Government Entities
59. These include all governmental institutions, ministries, and local juristic entities, whose financing sources are provided by the Ministry of Finance, which open bank accounts for official purposes only.
Other Official Resident Juristic Entities
60. These include foreign embassies, consulates, diplomatic representation offices, and schools and other affiliated institutions, and resident diplomats and foreign employees on temporary visits.
They also include regional, international and multilateral organizations, foreign airlines, Hajj missions, organizations and clubs affiliated, and charity and public welfare societies and committees as well as the Islamic Relief Organization and the World Assembly of Muslims Youth (WAMY) and other entities.
Under Establishment Companies
61. As defined by the Companies Law applicable in Saudi Arabia.
Chambers of Commerce & Industry
62. These are non-profit organizations that provide special services for licensed commercial entities and other business organizations. They also coordinate the relationship between the private and public sectors. They have their own boards of directors.
Non-Resident
63. These include all commercial corporations and other entities and organizations which are not mentioned in the above clauses, and do not have an existence in the Kingdom via commercial or professional license for business, or other official existence such as diplomats and international multilateral organizations.
Persons Having Authority to Appoint Signatories
64. Responsible officers at certain organizations (public/private) whom Financial Companies can, on a case by case basis, identify their powers based on approvals from the Ministry of Finance or SAMA; or based on their job positions or appointment decisions; or on approval from the regulatory bodies, board resolutions; entities owners or by virtue of the Articles of Association, Commercial Registration, job description (finance/human resources), notarized power of attorney, or contracts entered between banks and such organizations; or whom bank can identify through confirmation procedures, as they deem necessary, in addition to the official stamps or signature specimens.
(Responsibility of identification rests upon individual DTFCs).
Incompetent
65. A person legally forbidden from control over his property due to mental incompetence or bankruptcy.
Freezing of Account
66. This term refers to the temporary suspension of withdrawal from a General Account due to the:
i. expiry of the validity of the of identification documents relating to account holder or authorized party acting on behalf of account holder OR ii. failure to update addresses, income sources, signatures and other relevant data relating to account holder or authorized party acting on behalf of account holder OR iii. violation of the provisions of the General Account Opening Agreement.
Blocking of Account
67. This term refers to the suspension of withdrawal from a General Account due to instructions from the supervisory, regulatory or security authorities.
Foundations and Private Philanthropic (Charity) Funds
68. These are non-profit private charity organizations licensed by the Ministry of Human Resources and Social Development. A person or a group of persons (natural or legal) establishes them. Their benefits are limited to providing social and charity services to individuals or specific entities. Their membership is restricted to persons appointed in accordance with their charter.
Philanthropic / Charitable Societies
69. Organizations (juristic entities) licensed by local government agencies to provide religious, charitable and social services. They are dependent upon donations by benefactors.
Philanthropic / Charitable Committees
70. Special committees licensed by local government agencies to serve the disabled and indigent. They are dependent upon donations by benefactors.
Professional / Vocational Organizations, Societies and Committees
71. Societies and commissions licensed by official government agencies to assume professional / vocational specialized roles that serve the interests of their members. They are dependent upon contributions by members, or official government support.
Pilgrimage (Hajj) Missions
Hajj missions are of two types:
72. Type 1: Official Hajj Missions representing their respective governments during the pilgrimage (Hajj) season.
73. Type 2: Individual pilgrims who come to perform Hajj with private foreign agencies (charitable societies, tourist offices or agencies etc...) that are officially authorized by their government to offer Hajj services with a minimum number of 50 pilgrims, and approved by the Saudi embassies and consulates in their home countries.
Cooperative Societies & Funds
74. Co-operative Societies:
Every society formed by the members of a certain region, under the provisions of Societies Act to improve the conditions of its members in production or consumption through the joint efforts of the members using the standard cooperative principles.
75. Cooperative Funds:
These are funds instituted by the employees of a governmental organization or a company under the provisions of Cooperative Funds Act. Its funding source is originated by its members' contributions. Expenditure from such funds is mainly for the purposes of covering social, cultural and sport activities of the Fund's members.
Endowments
There are two types of endowments:
76. Public Charity Endowment:
means a charity endowment for public utility such as mosques, orphans, Quran Memorization Schools, Way Farers, Mosque Imams and Moathens (Caller for Prayers) etc. The Ministry of Islamic Affairs Endowments, Call & Guidance acts as a supervisor on such endowment.
77. Private Endowments:
These facilities are endowed to certain descendants or group of people and have a trustee by virtue of a legal deed. Responsible for implementing the endowment terms. The role of the Ministry of Islamic Affairs, Call & Guidance is limited to supervising the activities of the trustee. In this type of endowment, if the endowed persons cease to exist, the endowment becomes a public charity endowment.
Relief Committees and Campaigns
78. Organizations established under Royal directions and consisting of local governmental or private organizations whose objectives are to arrange for the provision of relief assistances in cash or in kind to certain country, people, or minority.
DTFC's Verification
79. The DTFC's official certified seal on documents or identification card for certification in addition to the bank staff signature and seal. Only DTFC's seal on the copy is not sufficient to be consider as DTFC's verification.
Chapter 8: General Requirements for Opening General Accounts
Introduction
80. DTFCs are expected to receive fund from customers in its normal bank accounts maintain with the Bank(s) operating in KSA. Similarly, DTFCs will use its normal bank accounts when funds are remitted back to customers based on Customers' instructions. DTFCs are not required to open a separate bank accounts for purposing of receiving funds from or remitting funds to its customers. However, DTFCs may open a separate bank account for convenience purposes.
81. The requirements of opening and maintaining General and Term Deposit accounts relates to DTFCs internal books and records.
Natural Person
82. DTFCs must NOT open General Accounts and Term Deposit Accounts in the name of Natural Persons.
Juristic Persons
83. DTFCs can only open General Accounts and Term Deposit Accounts for Juristic Persons in accordance with the rules stipulated in the Section 3 of the regulations.
Minimum Information and Documents Required Opening a General Account
84. DTFCs must obtain and record the following information / documents (at a minimum) before opening General Account:
i. Copy of the identity document of the Juristic customer and ensure that they are in the conformity with the original document. ii. Names, Nationalities, Identification Numbers, Identification Documentation Expiry Dates, National Addresses, Profession and means of communication of all Board members and senior managers of the Juristic Person. iii. Names, Nationalities, Identification Numbers, Identification Documentation Expiry Dates, National Addresses, Profession, means of communication and signature forms (signatures, thumbprints, stamps etc.) of all authorized persons of the account. iv. Copies of the Identity documents of all the Board members and Senior Managers of the account holder and authorized person of the account. v. Financial information: source of income (primary / additional), the volume of expected financial transaction on the account (deposit / withdrawal) vi. Verify and record the real beneficiary of the account if different from the account holder vii. Verify and record the control structure and ownership of the Juristic person i.e. the account holder.
Acknowledgement of Term and Conditions
85. DTFC must ensure that the account holder agrees to all the terms and conditions of the agreements of opening the General Account. In addition, terms and condition of opening the General Account should include following statements (at the minimum):
i. Acknowledges and verifies that all the data provided by account holder is true and reliable. ii. Understands all the terms, conditions and provisions of the account opening agreement. iii. Acknowledges Account holder is responsible before the competent authorities for all the information provided at the time of opening and operating the account and all the activities of the account i.e. funds deposited and withdrawal by the account holder or by its authorized persons. iv. Acknowledges that the deposited funds are the result of legitimate activities and that it is responsible for their safety, and that if the DTFC receives any illegal or counterfeit money, account holder is not entitled to recover or compensation. v. Commits to update its and its authorized persons data as and when requested by the DTFC but not more than five years, as well as to provide a renewal of identity documents before the end of its effectiveness. vi. Acknowledges that the DTFC will freeze the account if account holder does not update or renew its data. vii. Acknowledges the right of the DTFC to freeze the account or any of the amounts credited to it in case the DTFC suspects the use of the account or the amounts are for financial fraud. viii. Acknowledges and verify that Account holder is the real beneficiary of the account.
Opening General Account Remotely
86. DTFCs cannot open its General Account remotely for its new customers. However DTFCs can facilitates its new customers to allow them to provide maximum information through electronic and/or digital channel. Upon completing the requirement information and uploading copies of the documents required, Customer must visit DTFCs office to provide Signature forms and Original Documents for verification purposes.
87. DTFCs can open additional General Accounts remotely provided Customer initiates the request through electronic and digital channels. It is responsibility of DTFCs to ensure all requirements relating to General Account Opening are complied with.
Opening the Account Without Deposit
89. DTFCs can accept the request to open an account for any client without depositing any amount at the time of making the request. However, DTFCs must ensure that the client will eventually make deposits once account is open.
Account Identification Details
88. DTFCs shall provide the customer (by any appropriate means) with account identification details showing the customer's name, account number, confirming the account opening.
General and Term Deposits Accounts in Foreign Currency
90. DTFCs are NOT allowed General Accounts in a foreign currency i.e. other Saudi Arabian Riyals
Additional General Accounts
91. DTFCs can open Additional General Accounts in Saudi Riyal provided they are linked / managed under one identification code (CIF). DTFCs must not use the same account number for a new customer.
92. All requirements of opening Additional General Accounts are similar to the opening the General Account for the first time. However, copies of the identify documents relating to account holders, its board members, senior managers and authorized persons of the accounts does not requirement re-submission unless they are different from the documents submitted earlier.
93. All specific documents, relating to account opening such approvals, must be submitted for each new account opening application.
Client Interview
94. Subject to the provisions of these Rules, as a basic rule, it is not allowed to open accounts for new customers unless they are interviewed by the DTFC.
Visiting Customers in Their Premises for Exceptional Circumstances
95. In special and exceptional cases where it is difficult for a client to attend the DTFC Office (for the compelling circumstances of the client), the DTFC may assign two or more of its employees (different positions) to meet clients at their premises and collect the data and documents themselves according to these rules.
Time Period for General Accounts
96. DTFC shall open General Account for legal persons whose opening requirements do not include any special approvals from the concerned departments of the DTFC within one working day of completing the account opening requirements, and within two working days for those accounts for which special approvals are required. The applicant should be notified in writing (or any other means if customer agree i.e. through email or SMS) of any additional deficiencies or requirements within one day of submitting the application.
Electronic Record Keeping
97. For the purpose of establishing a unified automated database of General Accounts and Term Deposit Accounts. DTFCs shall establish an electronic (automated) registry system in accordance with the classification described in Appendix C and its updates based on the information contained in the approved identities.
98. In addition, the DTFC shall establish an electronic register of Juristic Persons, which shall include, at a minimum, the following data:
i. The full official name of the legal person according to the official documents (both in Arabic and English), ii. Commercial registration number or license number if the activity does not require a commercial register. (In case the account is for the purpose of the main commercial register, then main commercial register, but if the purpose of a branch of the commercial register, the sub-commercial registration number is registered provided that links the electronic record of accounts Sub Commercial Register with the main commercial register), iii. Owners Names, Identity Numbers and percentage of ownership - The names mentioned in the Memorandum of Association in accordance with the latest amendments thereof - are authorized to manage accounts along with their Identify Numbers (the owners of the listed joint stock companies are excluded from writing down their identification numbers), iv. Names, Identity Numbers, Copies of IDs and Signature form for the authorized account managers), v. National address of the Juristic person, vi. Tax number (if applicable), vii. The Legal Entity Identifier ("LEI") number (if any) and viii. The reference number and date and the name of the issuing entity in case of the accounts opened pursuant to approvals or official requests.
99. DTFC must identify and record the Names and Identity Numbers of ultimate beneficiaries of the account, which may be different to the owners of the account i.e. in the case of group companies. Only following persons are considered as Ultimate Beneficiaries:
i. Natural Persons or ii. Listed Jointed Stock Entities or iii. Government Entities or iv. Ultimate owners / shareholders (i.e. any of the above three) of any other entity
Requirements for Inspection Purposes
100. For the purposes of inspection by SAMA or upon the request of concerned security departments for investigation purposes, DTFCs must maintain an electronic inspection system to perform routine searches on the electronic records maintained for each type of account holders; provided that this search inspection system Is part of the main system.
Chapter 9: Specific Rules for Opening General Accounts for Juristic Persons
Licensed Businesses, Establishments and Shops
101. DTFCs must obtain following documents before opening General Account in the name of Licensed Business, Establishments and Shops:
i. Copy of the commercial register of the establishment or the shop. ii. A copy of the license to practice the activity if it is required for the activity of the establishment alone without the need for a commercial register. iii. Identifying and verifying the identity of the owners of the establishment according to the name mentioned in the commercial register or license, and verifying the identity data and its validity. iv. Identities of persons authorized to manage and operate accounts.
Special Purpose Entities
102. DTFCs must obtain following documents before opening General Account in the name of Special Purpose Entities:
i. Copy of the license of the Special Purpose Entities issued by the Capital Market Authority. ii. Copy of license (if any) or commercial registration of the sponsor issued by the competent authority. iii. Status of the establishment. iv. Identify and verify the personal identities (natural persons) / licenses or business records (legal persons) of the registered directors. v. Confirmation to authorize the persons concerned to manage and operate accounts from the owner(s) of the Special Purpose Entities. vi. Identities of persons authorized to manage and operate accounts. vii. Identification and verification of personal identities (natural persons) / licenses or commercial records (legal persons) of the owners of the Special Purpose Entities named in the Articles of Association and its amendments.
Institutions that Practice E-Commerce and Have No Official Headquarters
103. In addition to the requirements stated for the Licensed Business, Establishments and Shops, DTFCs should perform following additional procedures when opening General Account in the name of an institution that practices e-commerce and have no official headquarters:
i. Classify the account type as e-commerce. ii. Verify the electronic platform of the Institution through the documentation of electronic stores licensed by the Ministry of Commerce. iii. Complete the national address of the institution or its owner. iv. Classify these accounts are classified as high-risk accounts and review every two years.
Holders of Self-Employment Licenses
104. DTFCs must comply with the following conditions before opening General Account in the name of Holder of self-employment license:
i. Obtain a copy of the self-employment license issued by the Ministry of Human Resource and Social Development. ii. Obtain a copy of the national identity of the holder of the self-employment license. iii. Obtain and record national address of the holder of the self-employment license. iv. Record the name of the account similar to the holder of the self-employment license. v. Do not open joint account or authorized by it. vi. Link the validity of the account to the date of validity of the self-employment license.
Licensed Exchange Practitioners
105. DTFCs must comply with the following conditions before opening General Account in the name of a License Exchange Practitioner:
i. Obtain a copy of the license issued by SAMA. ii. Link the validity of the account to the validity of the license issued by SAMA. iii. Obtain a copy of the commercial register. iv. Ensure the information contained in the commercial register or the license issued by SAMA matches with the information contained in the owner's identity document. v. Obtain a copy of the owner’s identity document. vi. A copy of the identities of persons authorized to manage and operate accounts.
Resident Companies Including Joint Stock Companies, Limited Liability Companies, General Partnership and Limited Partnership Companies
106. DTFCs must comply with the following conditions before opening General Account in the name of a Resident Company:
i. Obtain a copy of the commercial register. ii. Obtain a copy of the Articles of Association and its annexes. (if any) iii. Obtain a copy of the identity of the manager in charge. iv. Identify and verify the identities of the members of the Board of Directors. v. Obtain a power of attorney issued by an authorized notary or notary, or authorization prepared within the bank by the person (s) who, by virtue of the Memorandum of Association, the partners' decision or a decision of the members of the Board of Directors, has the power to authorize natural persons to sign and operate accounts. vi. Obtain a copy of the identity of persons authorized to sign and operate accounts. vii. Identify and verify the identities of the owners of the company named in the Memorandum of Association in accordance with the latest amendments, except for the listed joint stock companies.
Companies Under Incorporation
107. DTFCs shall not open General Account if a company is under incorporation.
Gulf Non-Bank Commercial Companies Residing in the Kingdom
108. In the case of a Gulf company incorporated in the Kingdom of Saudi Arabia (without an investment license from the Saudi Arabian General Investment Authority), the Gulf company become a resident company thus DTFCs must apply similar conditions as of a resident company.
Residents Investment Companies Under Foreign Investment Law (Mixed Ownership by National Investor and Foreign Investor)
109. DTFCs must comply with the following requirements before opening General Account in the name of a Resident Investment Company under Foreign Investment Law (Mixed Ownership by National and Foreign Investors):
i. Obtain a copy of the license issued by the General Authority for Investment. ii. Obtain a copy of the commercial register and match the name of the activity, investors) name(s) and ID number(s) stated in the commercial register with the license. iii. Obtain copy of the professional license and / or commercial registration of the Saudi companies and institutions for the national investor. iv. Identify and verify the personal identities of all the Investors, except thein the case of listed joint stock companies. v. Obtain copy of the national identity document of the national investor if he/she is a natural person. vi. Obtain a copy of the professional license and/or commercial register of the foreign companies and institutions of the foreign investor in the country of origin or its equivalent approved by the Saudi Embassy. vii. Obtain copy of the residency document if the foreign Investor is a natural person and ensure his/her residency document indicate that he/she is a foreign investor by profession, and a copy of his/her passport. viii. Copy of the Memorandum of Association and its annexes for the invested foreign partner, approved by the Saudi Embassy. ix. Record the addresses of foreign invested enterprises in their countries (if any). x. In case of the presence of agents or commissioners in the management of the investing establishment and its bank accounts, a copy of the agency containing the name and identity of the agent or the commissioner and the name of the partner or other partners certified by a notary if issued in the Kingdom or the Saudi Embassy if issued outside the Kingdom. If the authorization to manage the account is prepared on the forms of the bank, it must be prepared by an authorized person and his presence in the bank or stipulated in the agency or the authorization above. xi. A copy of the identity of the agent or the commissioner (national identity document for Saudis or Gulf nationals and / or residence document for foreigners) and a clear address for him locally and in his country if he is a foreigner.
Residents Investment Companies Under Foreign Investment Law (Entities Wholly Owned by a Foreign Investor)
110. Requirements as stated for the Residents Investment Companies under Foreign Investment Law (Mixed Ownership by National Investor and Foreign Investor) above after excluding requirements related to the National Investor
111. In case of Branches of Foreign Institutions, all above will apply. In addition, obtain a copy of a letter of authorization from the head office of the company or institution in the country of origin, which nominates persons authorized to sign on behalf of the company in the Kingdom in respect of all financial transactions. This copy should be certified by the Saudi Embassy
Public Companies and Public Sector Institutions
112. DTFCs must comply with the following requirements before opening General Account in the name of a Public Companies or a Public Sector Institutions (for further guidance on those entities and their names, see Appendix B):
i. Obtain a copy of the decision resolution to form the Board of Directors issued by the Council of Ministers. ii. Obtain a copy of the decision resolution by the Board of Directors authorizing person or persons authorized to open and operate these accounts, along with identification documents and a form of their signatures.
Gulf Resident - Ksa Non-Resident Non-Banking Companies
113. DTFCs must comply with the following requirements before opening General Account in the name of a Gulf resident - KSA non-resident non-banking companies not resident in the Kingdom:
i. Obtain a copy of the license / commercial registration issued by the governmental authority in the country of origin (residence) in the GCC countries. ii. Verify and identify the national identity of the owner(s) of the company (excluding listed joint stock companies) and retain the copy of such identity documents. iii. Obtain a copy of the Memorandum of Association and its annexes, which clearly indicate the composition of both the capital and the management of the company. iv. Identify and verify the identities of the members of the Board of Directors and retain the copy of such identity documents. v. Obtain copies of the identities and nationalities of the authorized managers. vi. Obtain a copy of the authorization letter issued by the board of directors authorizing persons to manage the bank account unless specified in the Memorandum of Association. vii. Obtain an approval of the Saudi Embassy in the Gulf country by the Company for all the above requirements. viii. DTFC's employee must complete the documentation through physically interviewing the client personally (authorized). The final responsibility for the customer's data lies with the DTFCs operating in the Kingdom. ix. After the availability of the above documents and requirements, the DTFC will fulfill and apply the KYC rules. x. CEO / General Manager and the Head of Compliance Department of the DTFC must approve the opening of the account relating to the Company. xi. Allowing the opening of accounts includes all types of Gulf companies, as well as those engaged in commercial, industrial, service, agricultural, and real estate activities. xii. DTFCs must NOT open accounts for Gulf resident - KSA non-resident banks, money exchangers, financial investment companies, financial institutions, independent or subsidiary investment funds, insurance companies, individual institutions and licensed shops.
Non-GCC Non-Resident Commercial Companies and Institutions with No Contracts Or Projects in the Kingdom
114. DTFCs must NOT open General Account for these companies
Non Resident Companies and Non-Bank Commercial Establishments with Contracts or Projects in the Kingdom
115. In case of a commercial establishment or a non-resident company has a contract or project in the Kingdom, DTFCs may open a General Account for the duration of the project or contract in accordance with the following conditions:
i. Obtain an approval from the Ministry of Commerce and / or a temporary license from the General Authority for Investment, the approval of the company's head office and the approval of the Saudi Embassy in the country of origin. ii. Obtain a copy of the company's memorandum of association certified by the Saudi Embassy in the country of the company. iii. Obtain a recommendation from a bank classified by an accredited rating agency dealing with it in the country of origin. iv. Obtain a copy of the contracts demonstrating that the Company is engaged in the contract in a contract in the Kingdom v. Obtain a copy of the authorization issued by the head office of the company endorsed by the Saudi Embassy, which specifies the persons authorized to sign in the Kingdom on behalf of the company in respect of all financial transactions, including opening and operating accounts and copies of the identification documents of the authorized persons. vi. CEO / General Manager and the Head of Compliance Department of the DTFC must approve the opening of the account relating to the Company. vii. DTFCs should close all these accounts at the expiry of the contract period unless the contract period is extended. In case of extension, DTFCs must obtain a copy of the Contract extension. viii. DTFCs must classify these accounts high-risk.
Non-resident and Non-Banking Commercial Companies and Institutions Leased in the Depository Areas in the Kingdom
116. DTFCs can open General Accounts for companies and institutions authorized to sell and re-export in the depository areas in the local ports in the Kingdom, whether leasing directly from the General Authority for Ports or through the owners of lease concession contracts, for the duration of the lease contract after obtain/meeting the following documents/requirements:
i. A copy of a lease contract in the deposit area certified by the Chamber of Commerce and Industry and the Port Administration. ii. A copy of the commercial register of the leased establishment issued in the country of origin and certified by the Saudi Embassy with a clear address of the establishment. iii. Recommendation from a bank in the country of origin of the leased company or institution. iv. The list of persons authorized to manage the accounts of the leased establishment with copies of residency permits. v. DTFCs shall close the account immediately unless lease period is extended. In case of extension, DTFCs must obtain a copy of the lease period extension.
Legal Persons (Companies, Institutions and Licensed Shops) Owned by Resident Foreigners Who are Authorized to do Business and are not Covered by the System of Foreign Investment
117. DTFCs can open General Accounts for legal persons (companies, institutions and licensed shops) owned by resident foreigners who are authorized to do business and are not covered by the system of foreign investment companies after obtain/meeting the following documents/requirements:
i. Copy of the commercial register issued by the Ministry of Commerce. ii. Copy of the Memorandum of Association and its annexes, if any. iii. A list of the owners of the establishment mentioned in the Memorandum of Association and its amendments, if any, and a copy of each of them.
Ministries and Government Agencies Listed in Annex A and Their Equivalent
118. DTFCs can open General Accounts for ministries and government agencies listed in Annex A and their equivalent after obtain/meeting the following documents / requirements :
i. Ministries and Government agency should send the request of opening the General Account in a DTFC to the Ministry of Finance. After examining the application, the Ministry of Finance shall inform SAMA of opening the account with the DTFC. ii. DTFC must obtain an approval letter from SAMA authorizing DTFC to open an account in the name of Ministry or Government Agency. iii. The General Account shall be in the name of the government entity or administration and not in the name of a natural person, its position or its function. iv. DTFCs must obtain names and forms of the signatures of the authorized persons and their IDs from the Ministry / Government Agencies as an official letter. v. In case the Ministry or Government Agency wishes to amend the name of the account, Ministry / Government Agency shall submit a request to the Ministry of Finance for approval. Ministry of Finance will inform SAMA of its decision and SAMA will inform the DTFC.
Chapter 10: General Requirements for Opening Term Deposit Accounts
119. DTFCs can open a Term Deposit Account for its customer provided following requirements are met:
i. A General Deposit Account of the same customer is already open and active. ii. The customer has agreed with a Term Deposit Deal by signing or accepting the term of Term Deal Agreement.
120. DTFC must linked Term Deposit Account to a General Account upon its initiation. (Term Deposit Account will only receive credits from the same General Account to which it is linked upon its initiation.)
121. The name/title of the Term Deposit Account should be same to the General Account it is linked to with addition of identification that it is a Term Deposit Account.
122. DTFCs must not de-link the Term Deposit Account with the General Account to which it was linked to upon its initiation and re-linked with another General Account.
123. DTFC can open a new Term Deposit Account where related account is frozen or is dormant provided Customer has agreed to an automatic rollover of Term Deposit Deal is agreed at the time of accepting or signing the Term Deposit Agreement.
124. DTFCs can link a General Account to more than one Term Deposit Accounts based on the number of the Term Deposit Deals however, DTFCs can link a Term Deposit Account to only one General Account
125. A Term Deposit Account represents one Term Deposit Deal only and cannot be recycled for another Term Deposit Deal.
Chapter 11: Freezing and Updating of the Accounts
Freezing of General Account at the Expiration of Validity of Identification Document(s)
126. As a rule, dealings between DTFCs and their customers and their relationship must start and continue in all aspects under valid ID documents, including dealings covered under the account definition or other contractual dealings or account related services.
127. All DTFCs must freeze all General Accounts of juristic entities after 90 days from the expiration date of the respective authorization to practice their activity (license, commercial registration, etc.) unless the customer provides a renewed authorization or any document.
128. All DTFCs must freeze all General Accounts of juristic persons whose documents of opening their accounts do not contain a validity date as of the date of opening the account or as of the date of last updating made on such accounts.
129. The validity of the ID cards of the directors and authorized signatories of the accounts of such persons and entities must be monitored, and their powers to operate the account only shall suspend, depending on their position as Saudis/non-Saudis, until renewal of their IDs. This requirement shall also be applicable to owners of private establishments and companies except Listed Joint Stock Companies and Government entities.
Specific General Account Freezing Rules
130. In the account opening form and contractual relationships and services, DTFCs must document that the DTFCs has the right to freeze the account upon the expiration of the customer's ID or when the account holder's data and information, addresses, incomes sources and signatures etc. are not updated.
131. All DTFCs must notify their customers of the date of freezing their respective accounts at least one month prior to the date of freezing, and must have adequate programs and processes in place to ensure the same with respect separately to each customer or authorized person acting on his behalf and that such policy and processes are documented.
132. Juristic persons and organizations (official and private) are allowed to close their own accounts, or any frozen accounts they are authorized to operate, by reason of the expiration of the validity of their IDs or failure to update them, provided that a written request for this purpose is submitted by the customer and the implementation related to closeting accounts.
133. Transferring the account to unclaimed balances means transferring it to a special database without closing it. Each DTFCs can follow its own policies and procedures that fit to its own operational needs and fulfill this requirement.
Term Deposit Account Freezing Rules
134. In case of a Term Deposit Account linked to a frozen General Account, DTFCs should continue the deal until maturity. Upon maturity, DTFCs must credit the full principle and profit amount (separately) to the frozen General Deposit Account.
135. DTFCs can book a new Term Deposit Deal or an automatic rollover Term Deposit from a frozen General Account based upon the instruction of the account holder keeping in mind that DTFCs will always credit the funds to the frozen General Account upon maturity of the Term Account.
Freezing Exceptions
DTFCs must not allow an account holder or it authorized managers to withdraw from the relevant frozen accounts in any form whatsoever except for the following conditions:
136. The customer existing obligations already effected by the DTFC in term of charges before the expiration of the ID (of account holder/ authorized representative).
137. Standing instructions from SAMA or Department of Justice relating to settlement of a case.
Updating Account Data
138. DTFCs must establish customer identification at the outset of relationship.
139. As a measure of control, DTFCs must require all their customers to update the database of their General Accounts with the DTFCs periodically based on the risk rating policies established with a maximum limit of five years.
140. Updating of the General Account must include personal information, address, signatures specimen and (major and additional) income sources of those who act on behalf of a customer or as his agent. DTFCs must establish procedures and policies in order to achieve the objectives relating to updating of the General Account.
141. For accounts opened under official approvals or letters, such as government accounts updating period must not exceed max. 5 years.
142. In case, there is any suspicion of money laundering or terrorist financing in any time relating to account holder or authorized persons, DTFCs must update the General Account with such information
Chapter 12: Inactive and Dormant Accounts
143. If a General Account completes an one year period with no movement whatsoever by the account holder, DTFCs must consider such General Account as "Inactive" and should be subjected to dual control for activation thereof. This measure has no relation with the rules of account freezing due to expiration of the account holder's identification document.
144. If a General Account is linked with, a live Term Account then such period will not be counted a period of moment.
145. If a General Account completes another one-year period (i.e. two full years in total) with no movement therein by the customer, the account will be considered as "Dormant" and should be subjected to a higher authority dual control for activation thereof.
146. DTFCs shall not allow any transaction of withdrawal from a Dormant General Account except in the presence of the person duly authorized to deal in the account.
147. DTFCs shall set the policies and procedures that ensure appropriate supervision on the customer dormant accounts with a higher level than that applied on other. Dormant accounts files also must be isolated and the security tools must be available to prevent the archiving risk.
148. This rule must be applied on all customers without exceptions including the customers who have other active accounts.
149. The DTFCs must set policies and procedures approved by the Board of Directors to contact the dormant accounts' holders on the level of branches and head office including the communication procedures, responsibilities, documentations, account categories, periodical reports, efforts exerted and the results.
150. Inactive and Dormant accounts must be subject to the internal audit program at least once in the year and the report must be submitted to the audit committee.
151. At the end of March on yearly bases, DTFCs must report a softcopy statement of inactive and dormant accounts to SAMA on a Microsoft Excel program according to the schedule reported by SAMA that includes accounts according to their nature, category and balances without mentioning personal information as at the end of December of the previous year.
Chapter 13: Know Your Customer (KYC)
General Standards
152. To ensure effective implementation of a KYC program, DTFCs should apply high ethical and professional standards and policies that all employees must follow. They must determine the types of accounts that are acceptable, in such a way that will prevent DTFCs from being used, intentionally or unintentionally, by criminal elements.
153. DTFCs should include certain key elements in the design of their KYC programs, including customer acceptance policy, customer identification as set in these Rules (at minimum), on-going monitoring of high-risk accounts, and risk management.
154. DTFCs should deal with the clients by virtue of the names mentioned in their official identification documents accepted according to these guidelines.
155. DTFCs must NOT deal, open, operate or maintain any anonymous account, or with vague, counterfeited or incorrect name.
156. DTFCs must NOT deal, open, operate or maintain any numeric account without full details.
157. If the client requested opening an account or ask for a relationship but it is not possible to open that account because of some suspicions related to KYC in regard to the accuracy, correctness, non-sufficient data or the client not complying the requirements, the DTFCs shall not allow to open the account, start the relationship or execute any transactions. DTFCs must information Financial Investigation Unit at SAMA about the suspicions.
158. DTFCs should not only establish the identity of their customers, but should also acknowledge the purpose of opening any account or the relationship and its nature. DTFCs also shall monitor account activity to determine unusual transaction and should continue to exert due diligence toward the business relationship and operation pattern.
159. KYC must be a core feature of bank's risk management and internal audit procedures. Intensity of KYC programs beyond these essential elements should be tailored to the degree of risk involved.
160. DTFCs operating in KSA are fully responsible for the final recognition of customers' identity, their agents, authorized persons and the beneficiary owners. DTFCs also shall ensure that the identification documents are safe and sound.
161. DTFCs should verify the ownership structure for the juristic persons to recognize the ultimate beneficiaries (beneficiary owners) who hold the final power, recognize their identities (at minimum the natural owner who has 5% according to the organization by laws and its attachments or according to available data) and recognize the identities of the managers.
162. DTFCs should give special attention to the accounts opened and operated in virtue of delegation.
163. Instructions given in SAMA's Money Laundering Control, Financing of Terrorism and Fraud Prevention Manual must be implemented.
164. For fulfilling due diligence measures for customers residing outside the kingdom by depending on a third party, DTFCs must obtain from that party an undertaking that it would provide the supervisory authorities in the Kingdom with any requested information about customers immediately.
Role of Regulatory Supervisor/Compliance Officer
165. To establish review and updating of ethical and professional standards and determination of acceptable accounts under KYC program should be started by the Supervisory Authority (Compliance Officer) in coordination with the Internal Audit.
166. Ensure that the policies and procedures at least conform with local statutory and regulatory requirements with respect to money laundering and terrorism finance prevention.
167. The Regulatory Supervisor/Compliance Officer shall have the authority and right to access, at any time, customers' identification information and other information needed toward customers, transaction records and other related information.
Trustees, Nominees Sponsors and Authorized Representatives (Natural or Juristic)
168. DTFCs should understand the true relationship of individual customers who open accounts as sponsors, nominees, trustees or authorized representatives, and ensure that such sponsors, nominees, trustees or authorized representatives do not act only as a" front" for other individuals or as intermediaries or on their behalf.
On-Going Monitoring of Accounts and Transactions
169. DTFCs should always monitor the accounts and their transactions and activity, identify any suspicious transactions, report these to the Financial Investigation Unit, and inform SAMA accordingly. They should implement formal procedures to identify unusual or suspicious activities, such as accounts exceeding certain limits, transactions of no economic or commercial purpose.
170. DTFCs must classify accounts and transactions according to the risk level.
171. DTFCs must only all high-risk accounts open after obtain senior management approval. In addition, DTFCs can process all high-risk transactions after obtaining approval from the high management.
172. DTFCs should have intensified monitoring over high-risk accounts. DTFCs should set key indicators for such accounts based on the country of origin, source of funds and the type of transactions involved, etc. The senior management should pay great attention to management information systems and high-risk transactions. Such transactions should be reviewed regularly (at least annually), especially with regard to high-risk clients.
173. DTFCs should include in its internal procedures those related to the e-services provided to the clients to enable monitoring the electronic transactions, risks in general and clients of high-risks according to indicators that enable acknowledging and measuring the risks extent and criminal suspicions through these services.
174. Monitoring accounts of all existing customers (whether before or after the issue of the Anti-Money Laundry Law) and their operations must be carried out based on materiality and risks.
Training as a Key Principle for these Rules
175. DTFCs should not assign staff in the process of account opening, maintaining, updating, monitoring and processing of the transactions before attending courses on KYC, anti-money laundering measures, and ethical and professional behavior of Financial Institution.
176. DTFCs should put in place continued training programs to provide on-job training to employees in these areas.
177. DTFCs should include in their training programs, extensive training on the contents of these Rules and their applications.
Chapter 14: Disclosing of Account Data and Blocking Balances
Disclosing and Blocking at the Request of Official Authorities
178. As a basic rule, for the purposes of disclosing of accounts and balances and blocking thereof pursuant to an order by the concerned official authorities, communications between these official authorities and the DTFCs should be made through SAMA only.
Disclosing of Account Data and Balances Pursuant to SAMA Request
179. For the purpose of disclosing of account and balances upon SAMA instructions, in accordance with the applicable regulations, DTFCs should include in their search disclosing of all relations between the DTFC and the customer, including the existing accounts and all active, closed, suspense, inactive, dormant General Accounts and Term Deposit accounts etc. DTFCs should ensure that their reply to SAMA indicates that search made in this respect covered all categories of accounts and transactions.
Blocking Balances Pursuant to SAMA Request
180. For purposes of blocking accounts and balances pursuant to SAMA request according to the applicable rules, DTFCs should observe that:
i. Blocking shall include the outstanding balance and all suspended withdrawals at and after the time of blocking. DTFCs cannot open opened new accounts unless SAMA's request demands blockage of specific balances and/or specific accounts. In this case, blockage shall be restricted to the specifically demand. ii. Blocking shall Include all accounts and transactions stated in the above paragraph 182.i with the exception of the customer’s participation in companies (in which he is shareholder) accounts unless otherwise stated in SAMA request. iii. DTFCs must continue to block the account effective and valid until the DTFCs receives a notice from SAMA for lifting the blockage and allowing dealing on such accounts. Blocking in the Event of Death, Bankruptcy or Loss of Legal Competence
Official notice on blocking due to bankruptcy:
181. If a DTFC becomes aware of, or receives an official notification of declaration of bankruptcy or of a restriction on its legal competence requested by an authorized party; the DTFC should stop all dealings related to the account and block the balance unless, the Companies Law or the Company's Articles of Associations (in regard to corporate bodies) allows the continuation of such accounts.
Disclosure of Accounts of Bankrupt and Insolvent:
182. In case any person contacts a DTFC to inquire about or disclose transactions, accounts balances or banking relationships related to his debtors or his clients because of bankruptcy or insolvency, the DTFC should direct him to submit a request of that to the competent judicial authority.
Chapter 15: Accounts Operating Rules
General Rules for the Operation of Accounts
183. The operation of the accounts shall be primarily the responsibility of the Account Holder and persons authorized by the Account Holder.
184. Account holders and its authorized person can operate the accounts either passing through written instructions duly signed and stamps or through digital mean.
185. DTFCs must facilitate its customer by availing standard forms and agreements to pass written instructions to operate accounts such as Forms use to initiate, cancel and/or roll over a Term Deposit Deal or deposit or withdraw funds from General Account etc.
186. DTFCs must verify the authenticity and validity of signatures provided on the form by comparing the specimen signatures in the signature form.
187. DTFCs must verify the identity of account holder and/or authorized person at the time receiving written instructions to operate General Account by obtaining a copy of his / her identity documents.
188. DTFCs should facilitate its customers to operate their accounts remotely i.e. through digital channels. In case DTFCs provides such facility, DTFCs must ensure the account holder or its authorized person goes through dual sign-in verification process before access to view and operate the accounts are provided.
189. In addition, DTFCs must provide maker / checker functionality to the account holder relating to juristic person on its digital channels before DTFCs receives the request to process. Maker / Checker means that two different individuals are required (one to initiate the request and other to approve). Both these individuals must go through dual sign-in verification process.
190. DTFCs must NOT accept physical cash to deposit funds to or disburse cash to withdraw fund from the General Account.
191. Persons authorized to operate bank accounts of juristic persons shall be authorized by authorized individuals, which are authorized by public or private approval, such as by the Board of Directors, Partners, Employer or any person designated by the Owner or by Officials of the establishment or entity.
192. The sole purpose of the General Account is to facilitate operations of Term Deposit Accounts therefore DTFCs should not allow usage of the account for any other purpose such as making payments to third parties i.e. a payment where beneficiary is not the DTFC where General Account is held or Account Holder itself.
193. DTFCs shall not allow General Account to be used receive funds from third parties.
194. Under no circumstances, DTFCs will overdraw any General Account or any Term Deposit Account.
General Account
195. As stated in Section 1.1, the sole purpose of the General Account is to facilitate operations of Term Deposit Accounts.
Credit Entries Rules
General rules
196. General Account can ONLY be funded i.e. credited through the following operations:
i. Funds received directly from accountholder's Bank Account(s). ii. Funds received from the account holders' Term Deposit Account
Funds received directly from accountholder's Bank accounts)
197. DTFC must match the name of remitter with the name on General Account before crediting the funds to the General Account. In case of difference, DTFC must return the funds back to the remitter.
198. DTFCs must record the name of the remitter, IBAN number of the remitter and value date as part of posting the credit entry to the General Account.
199. DTFC may receive funds from multiple accountholder's bank accounts to fund a General Account. In this case, DTFC should proceed with credit the General Account provided conditions laid down in 9.2.3.1 and 9.2.3.2 are satisfied.
Funds received from the account holders' Term Deposit Account(s)
200. Upon maturity of Term Deposit Account, DTFC must credit the principle and profit amount separately to the General Account from which Term Deposit Account was funded in the first place.
201. DTFCs must record the details of the credit i.e. whether it is Principle or Profit, account number of Term Deposit Account / Term Deposit deal number, profit rate, currency, deal date, start date, maturity date and amount part of posting the credit entry to the General Deposit Account. In case of Islamic Term Deposit Account, details of underlying commodity, quantity and price sold & bought of the commodity must be recorded.
202. Upon cancellation of the Term Deposit Account, DTFC must credit principle amount only to the General Account from which Term Deposit Account was funded in the first place.
203. DTFC can credit the General Account from multiple Term Deposit Accounts (upon cancellation or maturity), provided conditions laid down in 9.2.4.1, 9.2.4.2 and 9.2.4.3 are met.
Debit Entries Rules
General Rules
204. Funds from General Account can only be withdrawn i.e. debited through the following operations:
i. Funds withdrawn by accountholder of the General Account. ii. Funds remitted to the Term Deposit Account iii. Deductible charges
205. Funds can only be withdrawn from General Account based on the instructions or agreement of the accountholder.
Funds withdrawn by accountholder of the General Account
206. From time to time accountholder may wish to withdraw the funds from General Account. Finance must remit the funds back to the same Bank account of the account holder from which General Account was initially funded i.e. the source.
207. In case, General Account was initially funded from multiple accounts belong to the accountholder, DTFCs can remit the funds back to any of the accounts from which General Account was initially funded as per the instructions or agreement of the account holder.
Transfers between General Accounts
208. If account holder have more than one General Accounts in a DTFC, then transfers between these accounts within the DTFC is permissible provided all General Accounts are held under the same name.
Term Deposit Account
209. The minimum tenor for the deposits is six months.
210. As stated in section 1.2., the purpose of the Term Deposit Account is hold the funds for an agreed period accruing profit at an agreed rate as per Term Deposit Deal, therefore a Term Deposit Account only reflects term and status of one only Term Deal.
211. Term Deposit Account must hold and record all the information relating to the terms of the related Term Deposit Deal, which should include, at the minimum, identification of Currency, Deal Capture date, Deal Trade Date, Deal Start Date, Deal Maturity Date, Days convention (30/360, Actual/360, etc.), Principle amount, Profit rate, Total profit amount at maturity and total profit amount accrued up to date of the inquiry, status of the deal (active, cancelled, matured etc.).
212. In case of Sharia Compliant Term Deposit Deal, DTFCs must hold and record the related commodity information such as, at the minimum, the identification of commodity, quantity of the commodity, selling and buying prices, names and statuses (principal / agent) of parties/broker involved etc.
213. Upon start date of Term Deposit Deal, Finance must debit Principle amount from General Amount and credit the Principle amount to Term Deposit account.
214. Upon maturity or cancellation of the Term Deposit Account, DTFCs must return the funds held in Term Deposit Accounts back to the same linked General Deposit Account.
215. DTFCs must NOT facilitate Currency Conversion or Currency Translation to its Account Holders.
Term Deposit Deal
216. DTFCs must ensure it has evidence that its Account Holders agreed to the terms of the Term Deposit Deal through a sign Term Deposit Deal Agreement.
217. DTFCs must send confirmation to its Account Holders stating all terms of the Term Deposit Deal and ensure its Account holder agrees to terms through signing and having account holders seal on the confirmation.
Chapter 16: Closing of the Account
218. If the account holder wishes to terminate his dealings with the DTFCs, the account holder must submit a request to close his account.
219. The DTFCs must reject the client's request to close the account in case the account is frozen or blocked by SAMA or a Judicial Order.
220. In the event that the account is exposed to an unresolvable problem(s) of verification, the DTFC must lock the account and return the money / balance to the source.
221. In connection with a suspicion of customer transactions (money laundering, terrorist financing, etc.), the Financial must apply anti-money laundering and terrorist financing rules, including reporting.
222. In case of opening, the account and the customer deposited into it and then withdraw from it and the balance became zero and continued without balance or deal for 4 years; DTFCs must send the notification of closing to account holder.
223. DTFCs must save all documentation and notices relating to the closure of the account in the client’s file.
224. DTFCs shall add the items related to the closure of the account within the terms of the account opening agreement or in a paper attached to the agreement.
Chapter 17: Statement and Audit Confirmation
225. DTFCs shall provide at least once in year the statements of accounts of all the accounts (General and Term Deposit Accounts) to its accountholders.
226. DTFCs shall also provide Audit Confirmation to accountholders Auditors based on the held add the items related to the closure of the account within the terms of the account opening agreement or in a paper attached to the agreement.
Chapter 18: Final Provisions
227. These Rules thereto shall be effective as of the date of its issuance.