In reference to the letter received from His Excellency the Minister of Municipal and Rural Affairs and Housing, Chairman of the Board of Directors of the General Authority for Real Estate, under number (244382) dated 19/09/1444H, which refers to the Law of Real Estate Registration issued by the Royal Decree No. (M/91) dated 19/09/1443H. and as stipulated in Article 7, Paragraph (1) of the law, which states: "The real estate area shall be determined by a decision issued by the competent authority, including a precise and clear delineation of the area and the specified period for receiving initial land registration requests, and it shall be announced by any appropriate means determined by the decision." It also refers to Article 9, Paragraph (3) of the implementing regulations of the same law, which states: "The decision designate the real estate area shall be communicated to all relevant entities concerning the initial land registration immediately upon issuance."

Since His Excellency's letter includes the announcement that the area of (Al-Falah District) in Riyadh is the first area to benefit from the "Real Estate Registry" according to its updated mechanism, financing entities with rights related to the aforementioned announced area must accept the property registration certificates issued by the General Authority for Real Estate as the official document of ownership for that area.

Please take note and act accordingly. Note that financing entities are responsible for following up on announcements issued by the General Authority for Real Estate in this regard.

Based on the powers granted to SAMA under the Finance Companies Control Law issued by Royal Decree No. M/51 dated 13/8/1433H.

We inform you that the Governor's Decision No. (126/M SH T) dated 8/6/1444H, which includes the amendment of Article (8) of the Implementing Regulations of the Finance Companies Control Law to read as follows:

"Subject to the provisions of the Companies Law, the minimum paid up capital of the Finance Company is as follows:

SAMA may stipulate higher or lower minimum capital based on the prevailing market conditions, or if, as deemed by SAMA, the proposed business model of the Finance Company, scope and nature of proposed activities, or their geographic reach so requires, taking into consideration the magnitude and the nature of risks associated with such activities. The capital must be paid up in full at the establishment of the Finance Company."

Based on the powers granted to SAMA under the Finance Lease Law issued by Royal Decree No. (M/48) dated 13/08/1433H and its Implementing Regulations issued by the Governor’s Decision No. (1/BSI) dated 14/04/1434H, and referring to the controls and procedures for requesting and issuing execution document extracts for registered finance lease contracts issued by SAMA’s circular No. (42039135) dated 12/06/1442H, and in order to ensure the integrity and reliability of executive document extracts issued by finance lease contract registration companies.

SAMA wishes to emphasize the lessors' obligation to provide data proving the occurrence of one of the cases outlined in the Regulations and Procedures for Requesting and Issuing Extracts of the Executive Document for Registered Finance Lease Contracts when submitting a request to a contract registration company for the issuance of extracts from the executive bond. The lessor is responsible for the accuracy of the data provided to finance lease contract registration companies and any implications for the lessee's rights. This responsibility is without prejudice to the obligations of contract registration companies to verify the legitimacy of the lessor’s request for the issuance of extracts from the executive bond. and to obtain the necessary declarations from the lessor affirming their compliance with the relevant controls, regulations, and instructions before issuing these extracts.

Based on the powers granted to SAMA under the relevant regulations and instructions, We would like to inform that micro-consumer financing companies must comply with the following:

Based on the powers granted to SAMA under the relevant regulations and instructions, we wish to inform that crowdfunding institutions are required to adhere to the following:

Based on the powers granted to SAMA under the Finance Companies Control Law and its implementing regulations, and in line with its role in maintaining the safety and stability of the financial sector.

SAMA emphasizes that finance companies must update their credit policies and procedures to align with the rapidly evolving conditions in the financing sector and the activities being financed. Companies should implement appropriate precautionary measures to mitigate the rise in non-performing loans. Additionally, finance companies must ensure that provisions and guarantees are adequate relative to the risk levels associated with their operations.

Based on the powers vested to SAMA under the relevant regulations, rules, and instructions, and in light of the provisions outlined in the Debt Collection Regulations and Procedures for Individual Customers issued by SAMA, and considering some negative practices observed in this regard.

SAMA would like to emphasize that finance entities are responsible for ensuring that external service providers comply with the Debt Collection Regulations and Procedures for Individual Customers issued by SAMA when assigning debt collection tasks. Finance entities must also ensure that external service providers implement the necessary measures to adhere to these guidelines and procedures. SAMA will take legal measures against those who violate these regulations and procedures.

Based on the powers vested in SAMA under the relevant regulations, and in line with its supervisory and regulatory role over real estate financiers, and pursuant to the provisions of the Real Estate Finance Law issued by Royal Decree No. (M/50) dated 13/8/1433H and its Implementing Regulations.

SAMA confirms that refinancing through licensed real estate refinancing companies is limited to the trading of real estate finance contract rights in the secondary market, as outlined in the Real Estate Finance Law and its Implementing regulations. The real estate financier (the originator of the real estate finance contract) remains responsible for fulfilling its obligations as stipulated in the relevant regulations, contracts, and instructions when transferring its rights. The financier must continue to meet these obligations throughout the contract's term. These obligations include, but are not limited to:

1. Immediate updating of any changes in customer credit records, with a minimum update period as specified in the Implementing regulations of Credit Information Law.
2. Handling early repayment and debt restructuring for customers in accordance with the relevant instructions.

Accordingly, the real estate financier is obligated to comply with this requirement, while enabling the third party assigned the collection tasks to carry out its duties (in accordance with the relevant regulations and instructions). SAMA will take legal action if any violations of its instructions are identified.

Based on the powers vested to His Excellency the Minister of Finance under the Real Estate Finance Law issued by Royal Decree No. (M/50) dated 13/8/1433 H, and the powers vested to His Excellency the Governor of SAMA under the Finance Companies Control Law issued by Royal Decree No. (M/51) dated 13/8/1433 H.

We inform you of the issuance of His Excellency the Minister of Finance's Decision No. (1144) dated 2/6/1443H, which includes the deletion of Article (4) from the Implementing Regulations of the Real Estate Finance Law.

We also inform you of the issuance of His Excellency the Governor's Decision No. 113/M Sh T dated 10/8/1443 H, which amends Article (16) of the Implementing Regulations of the Finance Companies Control Law to read as follows: " SAMA will determine in the License the Finance Activity or Activities for which it is granted. SAMA may restrict the License to certain geographic area or specific types of Borrowers or impose other conditions."

Referring to the Royal Decree No. M/51 dated 13/8/1433 H which includes the issuance of the Finance Companies Control Law.

We inform you of the issuance of the Royal Decree No. M/24 dated 15/3/1443 H, which amends Paragraph (2) of Article (35) of the Finance Companies Control Law issued by the aforementioned Royal Decree, and adds Paragraphs (3) and (4) to that Article, as follows:

2- Without prejudice to the provisions of Article 34 of this Law, any person violating any of the provisions of this Law and its Regulation shall be subject, depending on the gravity of the violation, to a fine not exceeding two million riyals or 10% of the amount financing obtained by the violator, and imprisonment for a term not exceeding two years, or either penalty. Amounts resulting from said fines shall be deposited into the State treasury.

3-SAMA may provisionally attach the funds of persons who are proven to violate Article 4(1)(2) of this Law, without exceeding the prescribed amount and percentage in paragraph (2) of this Article. Such attachment shall be in force pending the competent authority decision on the violation in according to applicable statutory procedures.

4- The judgment may include a provision to issue its summary on the expense of the violator in a local newspaper or any other appropriate medium.

Referring to the importance of the compliance function in finance companies and the responsibilities associated with ensuring adherence to relevant regulations and instructions, and based on Article 2 of the Implementing Regulations of the Finance Companies Control Law, which states: "SAMA shall organize the Finance Sector and supervise the business of the Finance Companies in accordance with the Law and  the Regulations, including: 5. Taking all suitable means for the development of the Finance sector, Saudization, and enhancement of its employees’ efficiency through regulating the obligations of the Finance Companies in training of human resources, improving their skills and enriching the employees’ knowledge in Finance Industry."

Therefore, compliance managers in finance companies are required to obtain the "Compliance Certification for Finance Sector" within one year from the date of this circular or upon the finance company's submission of a no-objection request for appointment to this position. The finance company must provide SAMA with this certification upon receipt. Training materials related to this certification can be accessed through the Financial Academy's website.

Based on the powers granted to SAMA under its Law issued by Royal Decree No. (M/36) dated 11/4/1442H, and the Monitoring of Financing Companies Law issued by Royal Decree No. (M/51) dated 13/8/1433H.

SAMA would like to emphasize to all debt crowdfunding institutions on the importance of adhering to the Monitoring of Financing Companies Law, its Implementing regulations, and the Rules for Conducting Debt Crowdfunding Activities regarding consolidated accounts for managing debt financing value in crowdfunding institutions. In particular, the following must be observed:

Please review and act upon these guidelines from this date. SAMA must be provided with the procedures undertaken to review and amend all documents in accordance with the instructions above.
 

SAMA has received a letter from the Saudi Organization for Certified Public Accountants regarding its approval of several periodic amendments and improvements made by the International Accounting Standards Board. These amendments include the following aspects:

• The improvement made to International Financial Reporting Standard (IFRS) No. (1) "Adoption of International Financial Reporting Standards, for the First time" which includes a facilitation for a subsidiary applying IFRS for the first time by providing it with an additional option to measure cumulative translation differences.
   
• The improvement made to International Financial Reporting Standard (IFRS) No. 9 "Financial Instruments" involves addition of practical guidance to clarify the fees included in the present value of the obligation under the new terms and how to account for costs and fees incurred when accounting for the exchange or modification of debt instruments as a derecognition of the obligation.
   
• The improvement made to International Accounting Standard No. (41) "Agriculture" relates to amounts included in cash flows for the purpose of measuring fair value.
   
• Amendments to International Accounting Standard No. (37) "Provisions, Contingent Liabilities, and Contingent Assets," which clarify the meaning of the cost of fulfilling a contract in the context of defining onerous contracts.
   
• Amendments to International Accounting Standard No. (16) "Property, Plant, and Equipment," which address the treatment of proceeds from the sale of products during the testing phase of an asset.
   
• Several amendments to International Financial Reporting Standard No. (3) "Business Combinations."

You can review the periodic improvements and amendments above by visiting the International Standards page on the website of the Saudi Organization for Certified Public Accountants.

Based on the powers vested in SAMA pursuant to the relevant laws, regulations, and instructions, and based on Article (2) of the Real Estate Finance Law stipulates that "SAMA shall regulate the real estate finance sector, including the following: 5- Issue real estate finance standards and procedures, etc." Paragraph (1) of Article (Eight) from the implementing Regulation of the Real Estate Finance Law which states that "A real estate finance entity shall comply with the requirements stipulated in the Law, this Regulation, other related laws and regulations as well as rules and instructions issued by SAMA relating to real estate finance. Real estate finance contracts and products shall comply with the Law and relevant laws, regulations, rules and instructions."

SAMA wishes to emphasize that real estate financiers must adhere to all relevant laws, their implementing regulations, and the relevant instructions of SAMA applicable to all mortgage contracts for individuals, whether done directly, by agency, or on behalf of others. Real estate financiers should not enter into any new contracts unless these requirements are met and should amend their agreements with other entities to comply with this directive. This includes contracts where the real estate financier acts as an agent for the financing entity, as well as cases where the decision to grant credit does not originate from the real estate financier.

In reference to SAMA Circular No. 41038534 dated 06/01/1441H concerning the "Model Contract of the Financial Lease of Vehicles for Individuals" which states that lessors must adhere to this model agreement and complete the necessary procedures according to their policies by the deadline of 30/08/1441H, corresponding to 23/04/2020 G, and not to enter into any contracts that deviate from or amend this model, and to SAMA's decision on April 13, 2020 G, to postpone compliance with the model lease agreement until further notice in support of efforts to address the impacts of the COVID-19 pandemic.

As SAMA has directed all financial institutions to gradually resume normal operations in their general departments, following the royal approval dated 03/10/1441 AH corresponding to 26/05/2020 G which included several decisions, including lifting the suspension of attendance for ministries, government agencies, and the private sector, and resuming office activities according to the guidelines set by the Ministry of Human Resources and Social Development in coordination with the Ministry of Health and relevant authorities starting from Sunday, 08/10/1441H corresponding to 31/5/2020 G. lessors are now required to comply with the Model Contract of the Financial Lease of Vehicles for Individuals as per SAMA Circular No. 41038534 dated 06/01/1441H and complete the necessary procedures according to their policies by the deadline of 30/11/1441H corresponding to 21/7/2020 G*.

*The deadline for compliance with the Model Contract for Vehicle Financial Leasing for Individuals has been extended pursuant to Circular No. (42011683) to no later than 15/12/1441H, corresponding to 5/8/2020G.

In line with SAMA’s commitment to enable all customers in the financing sector to obtain their financing needs easily and efficiently, and to enhance the SAMA’s strategic goals of accelerating digital transformation in the sector through strengthening and securing technological infrastructure, and to facilitate and improve services by enabling financing companies to utilize approved digital certification services in the Kingdom.

We inform you that financing companies can offer all financing products and credit cards via electronic channels to individual customers as well as small and medium enterprises through digital certification services, provided that adherence with the Electronic Transactions Law, issued by Royal Decree No. (M/18) dated 8/3/1428 H and its implementing regulations, is maintained. The company must assess the associated risks and identify the types of financing covered by this service and establish sufficient controls, policies, and precautionary procedures, and apply the following minimum requirements:

1. Ensure full compliance with the Cyber Security Framework Maturity Level 3 by evaluating compliance through an independent party as per the framework.
    
2. The company must have obtained SAMA’s no-objection to provide electronic services as per the Cyber Security Framework. Without this, the company cannot provide digital certification services until it receives SAMA’s no-objection for providing electronic services.
    
3. The digital certification service provider must be accredited by the National Digital Certification Center.
    
4. Providing digital certification services should not affect the company's core procedures for applying the "Know Your Customer" principle or the eligibility and identity of the customer, agent, or authorized signatory.
    
5. The financing request must be created through one of the electronic channels, with the necessary procedural controls in place and the customer must be notified via SMS about the request. Additionally:
    

• For individuals: The request must be activated via another channel, for example, implementing the rules for adding and activating beneficiaries as outlined in the Cyber Security Framework.
   
• For enterprises: Consider necessary procedural controls, for example but not limited to: delegating multiple authorities for approving financing requests, activating the request from another channel, etc.
   

6. The company must verify the approval of the customer/enterprise owner or authorized representative for the request through a phone call from the call center or customer service.
    
7. The company is responsible for verifying the information provided by the customer/enterprise before executing the transaction.
    
8. Approval of the request must occur at least 24 hours after submission for individuals and three business days for enterprises.
    
9. Implement sufficient security standards to protect data and communication with the digital certification service provider, including data encryption standards and data privacy.
    
10. Retain copies of documents and all legal matters related to digital certification.
     
11. Update agreements and contracts to specify that this service is conducted electronically using digital certification and it is not permissible to appeal its execution electronically.
     
12. Set a maximum limit for the financing amount provided through digital certification in line with the company's risk policy.
     
13. Periodically evaluate and monitor precautionary controls and ensure their effectiveness.
     

For your information, and to act accordingly from this date, noting that digital certification services do not apply to products subject to a test environment.

Referring to SAMA instructions informed via email on 03/12/1441H corresponding to 23/07/2020G, regarding the increase in value-added tax for cooperative insurance contracts related to leasing contracts.

The instructions, which must be adhered to from the date they were sent by email, are as follows:

Referring to the decision to raise the value-added tax from 5% to 15% starting from July 1, 2020G, and in response to inquiries from some lessors regarding how to handle this increase in cooperative insurance contracts related to Finance lease contract.

SAMA would like to confirm that the lessor shall bear the increase resulting from the raised value-added tax for cooperative insurance contracts related to leasing contracts, and it is not permissible to pass this increase on to the lessee. This is based on paragraph (3) of Article Nine of the Finance Lease Law, which states: "The lessor shall be responsible to obtain cooperative insurance on the leased asset and shall not require it from the lessee."

Referring to SAMA's supervisory and regulatory role over financing companies according to relevant regulations, and to SAMA's efforts to protect customers and provide all services and products with high quality and ease.

Therefore, SAMA would like to inform financing companies that they must:

SAMA emphasizes the adherence to the above within one month from the date of this notice and requires that SAMA's communication officer be provided with the measures taken regarding this within two weeks from the date of this notice

Referring to Article 72 and Article 73 of the Implementing Regulations of the Finance Companies Control Law, and to SAMA’s circular No. 371000052766 dated 7/5/1437 H regarding to provide SAMA with quarterly risk reports, audited annual financial statements and quarterly financial statements of finance companies.

SAMA would like to confirm that finance companies are required to publish the reports and financial statements referred to in Article 72 and Article 73 of the Implementing Regulations of the Finance Companies Control Law on their websites within ten (10) business days from the end of the deadline for submission.

In reference to receiving the letter from His Excellency the Minister of Commerce, Number (00196) dated 05/01/1442H, which refers to His Excellency’s Decision Number (632) dated 16/11/1441H regarding the development of the mechanism for verifying the identities of partners or shareholders when establishing companies or amending their bylaws.

Attached is a copy of the ministerial decision.

Further to SAMA’s circular No. 41038534 dated 6/1/1441H concerning the "Model Contract of the Financial Lease of Vehicles for Individuals" and SAMA's decision on April 13, 2020G, which included postponing adherence to the standard lease agreement template for vehicle leasing to individuals until further notice in support of efforts to address the impacts of the COVID-19 pandemic. It also included notifying that lessors must adhere to this standard template and complete the necessary procedures according to their policies by the deadline of 30/11/1441H corresponding to 21/07/2020G.

As SAMA has received requests from some financing entities to postpone the adherence deadline due to its proximity to the Eid al-Adha holiday and the entities' desire to utilize the holiday period to ensure readiness for implementing this template, we inform you that SAMA has decided to extend the deadline for adherence to the Model Contract of the Financial Lease of Vehicles for Individuals until 15/12/1441H corresponding to 05/08/2020G.

Referring to SAMA Circular No. 361000107381 dated 7/8/1436 H, regarding the provision of prudential data forms to SAMA at specified times according to the models, controls, and instructions set by SAMA.

we would like to inform you of the update on annual and quarterly prudential data models. Finance companies must comply with the following:

First: The finance company must complete all required data and follow the instructions provided in the prudential data models, ensuring that the validation rules are correctly applied before submission.

Second: Completed prudential data models should be submitted in Excel format via the Supervisory Data System (Returns Management System "RMS"). In case of any technical issues, they should be submitted via email to the designated prudential data.

SAMA emphasizes the importance of adhering to the aforementioned update and submitting the prudential data models at the specified times and in the prescribed manner.

Referring to the Ministry of Municipal and Rural Affairs' establishment of the "Balady" portal, one of the ministry's initiatives to enhance municipal services, which was fully launched on Sunday, 08/06/1441H, corresponding to 02/02/2020G, this portal consolidates all secretariats and municipalities services into a single electronic platform with streamlined procedures.

Based on SAMA's supervisory and regulatory role, and to facilitate the procedures for obtaining municipal sector services, SAMA encourages utilizing the services provided through the 'Balady' portal in all related procedures.

Referring to the "NAFITH" platform for enforcement documents, which is approved by the Ministry of Justice and other government entities, this platform offers a fully electronic service for issuing and managing enforcement documents with ease and efficiency.

In line with SAMA's strategy to promote the use of electronic channels to enhance service levels and contribute to  to the achievement of the Kingdom's Vision 2030, we would like to inform you that finance companies can now connect to the "NAFITH" electronic platform approved by the Ministry of Justice, and benefit from the services provided through it, while ensuring compliance with the regulations and instructions issued by SAMA.

Referring to the powers granted to SAMA under the Finance Companies Control Law issued by Royal Decree No. (M/51) dated 13/8/1433H.

We inform you of the issuance of His Excellency the Governor's Decision No. 85/M SH T dated 26/5/1441H, amending certain articles of the Implementing Regulation of the Finance Companies Control Law as follows:

First: Amend Article Three of the Implementing Regulation of the Finance Companies Control Law to be as follows: "1- Any legal person engaging in one or more of the Finance Activities specified in Article 10 of the Law, or any other Finance Activity approved by SAMA in accordance with Article 10 of the Law, shall be subject to the provisions of this Regulation. 2- Notwithstanding the provision of paragraph 1 of this Article, consumer microfinance companies are subject to the rules issued by SAMA in this regard."

Second: Amend Paragraph (1) of Article Nine of the Implementing Regulation of the Finance Companies Control Law to be as follows: "Microfinance activity is limited to Financing the production activates of small business owners, crafts people and the like, provided that the finance amount shall not exceed the limit set by SAMA."

Third: Amend Article Ninety of the Implementing Regulation of the Finance Companies Control Law to be as follows: "The finance company shall not contract or otherwise deal with providers of Finance support activities without receiving SAMA’s non-objection letter."

Based on the powers granted to SAMA under relevant laws, regulations, and instructions, including the Finance Companies Control Law issued by Royal Decree No. (M/51) dated 13/8/1433H and its Implementing Regulation issued by the decision of His Excellency the Governor No. 2/MFC dated 14/4/1434H, which stipulates in Article 83 that "all fees, commissions, and administrative services charges to be recovered from the Borrower by the Finance Company shall not exceed the equivalent of(1%) of the Amount of Finance or (5,000) five thousand Saudi riyals whichever is less," and further to SAMA's Circular No. 361000091211 dated 30/6/1436H, which included that the fees and administrative service charges mentioned in the above article cover all amounts the beneficiary is obligated to pay other than the financing amount and cost of term, including all fees, costs, and commissions that the beneficiary cannot avoid in obtaining the financing, including registration fees.

Accordingly, SAMA would like to confirm that registration fees in the contract registration company are included within the fees, commissions, and administrative service charges with the maximum limit stipulated in Article 83 of the Implementing Regulation of the Finance Companies Control Law and cannot be charged to the customer outside these fees.

Based on the powers granted to SAMA under relevant laws, regulations, and instructions, and the powers granted to SAMA under the Banking Control Law issued by Royal Decree No. (M/5) dated 22/2/1386H, the Finance Companies Control Law issued by Royal Decree No. (M/51) dated 13/8/1433H, and the Finance Lease Law issued by Royal Decree No. (M/48) dated 13/8/1433H, which states in the first paragraph of Article Eighteen: "Without prejudice to the provisions of the Companies Law, a joint stock company or more shall be incorporated pursuant to a license from SAMA to register contracts," and based on the second paragraph of Article Fifteen of the Implementing Regulation of the Finance Lease Law issued by the Governor's Decision No. 1/M.SH.T dated 14/4/1434H, which states: "The Lessor shall register the Contract and any amendments thereto at the Contracts Register within (10) business days from the date of concluding the contract or the amendment thereof. All transactions affecting the contractual rights of the Lessor and the Lessee shall also be registered."

SAMA confirms that all banks and licensed finance companies must start registering finance lease contracts with the Saudi Company for Leasing Contract Registration (SAJIL), starting from Monday 28/10/1440H, corresponding to 1/7/2019G.

Based on the powers vested to SAMA under the Finance Companies Control Law issued by Royal Decree No. (M/51) dated 13/8/1433H, including Article Twenty-One which states: "SAMA shall supervise the activities of finance companies and exercise its powers pursuant to the provisions of this Law and its Regulation," and Article Two of the implementing regulations of the Finance Companies Control Law, which states: "SAMA shall organize the finance sector and supervise the business of finance companies in accordance with the law and regulation," and referring to the "QAWAEM" program established by the Ministry of Commerce and Investment in collaboration with the Saudi Organization for Certified Public Accountants, aimed at improving work efficiency and utilizing deposited financial statements, enhancing the credibility and reliability of accounting information, and increasing the level of transparency for commercial entities.

Given the program's contribution to improving the quality and reliability of accounting information, SAMA confirms that all licensed finance companies in the Kingdom must use the "QAWAEM" program as a source for obtaining the financial statements of commercial entities required to be deposited in the program before providing any credit facilities.

For your information and action accordingly as of 16/8/2019G. 

Based on the powers vested to SAMA under the Real Estate Finance Law issued by Royal Decree No. (M/50) dated 13/8/1433 H, and its implementing regulations issued by Minister of Finance Decision No. (1229) dated 10/4/1434H, and the Finance Companies Control Law issued by Royal Decree No. (M/51) dated 13/8/1433H, and its Implementing regulations issued by SAMA Governor Decision No. (1/MSht) dated 10/4/1434 H. According to Article Sixty-Seven of the Implementing regulations of the Finance Companies Control Law, which states: "2- A finance company may not dispose finance assets or right arising therefrom in any form except in accordance with the rules issued by SAMA in this regard," and Paragraph Five of the updated rules governing disposal of finance assets or their contractual rights, issued in Circular No. (60558/99) dated 9/10/1440 H, which states: " SAMA may exempt certain transactions of disposal of finance assets or their contractual rights from certain provisions of these rules when it deems that their nature or volume warrant such exemption."

SAMA has decided to allow the Saudi Real Estate Refinance Company to purchase residential mortgage portfolios from real estate financiers after a minimum of three months from the date of granting the financing related to those assets, or three months from the date of receiving the first installment from the beneficiary, whichever is later, with the right to recourse against the financier for six months from the date of financing.

Referring to the Royal Order No. 52757 dated 17/10/1439H, which approved, in paragraph (First), the recommendations of the committee formed by the Royal Order No. 58005 dated 1/12/1437H to study the issue of employment opportunities for dental colleges graduates from all aspects, and the recommendations to instruct SAMA and the Social Development Bank to coordinate and authorize banks to offer a financing product for establishing private dental healthcare facilities.

In line with the objectives of the aforementioned Royal Order to create employment opportunities for Saudi dental college graduates, SAMA urges banks, and finance companies to introduce a financing product to support Saudi dentists in establishing their own  facilities, addressing their needs and aligning with their academic specialties.

Based on Article Fourteen of the Finance Companies Control Law, which states: "Without prejudice to provisions of Article 3 of this Law, the finance company, as specified in the Regulations and in proportion with its assets and financial position, may issue securities and sukuk in accordance with the provisions of the Capital Market Law and its regulations." And Article Sixty-Seven of the implementing regulations of the Finance Companies Control Law, which states: "the Finance Company may issue securities only after obtaining a non-objecting letter from SAMA." In reference to the ongoing coordination between SAMA and the Capital Market Authority regarding the issuance of debt instruments by finance companies through special purpose entities.

SAMA would like to inform you that finance companies may submit a request to the Capital Market Authority to establish a "special purpose entity" in accordance with the rules governing special purpose entities issued by the Capital Market Authority, with notification to SAMA. SAMA also emphasizes the necessity of obtaining SAMA non-objection before issuing any debt instruments through the special purpose entity.

Referring to Article 69 of the Implementing Regulations of the Finance Companies Control Law, which stipulates that "The Finance Company must obtain a non-objecting letter from SAMA before appointing persons in the following functions and tasks:1-Membership of the Board and its committees.2-Managing director, chief executive officer, general manager, their designees, financial manager and directors of the key departments, or their designees .3-Managers of control functions, such as internal audit, risk management and compliance, or their designees." Without prejudice to the requirements for appointing to leadership positions in financial institutions and suitability model under SAMA’s supervision, as issued by SAMA’s Circular No. 341000115396 dated 25/09/1434H, the Cyber Security Framework in the Financial Sector issued under Circular No. 381000091275 dated 28/08/1438H, and Circular No. 391000083333 dated 26/07/1439H regarding Customer Care Department Establishment in Finance Companies . Based on the observed differences in practices related to determining the key department directors in finance companies or their representatives, which require prior approval from SAMA before their appointment.

SAMA would like to clarify that "key department directors or their representatives," as mentioned in the Implementing Regulations of the Finance Companies Control Law, refers to the managers of the following functions and their equivalents or representatives: Credit Manager, Operations Manager, and Anti-Money Laundering Manager (if separate from the Compliance Manager). For other function managers linked to the CEO, other than the above-mentioned roles, it is sufficient to notify SAMA upon appointment or resignation.

Referring to the program of His Royal Highness Prince Mohammed bin Salman "I'tizaz" for all military forces in the Kingdom of Saudi Arabia, which aims to activate communication between companies and service and commercial institutions in the private sector and the members of all military forces in the Kingdom, with the goal of providing a distinguished level of care, attention, and services that meet all the necessary needs of military personnel.

SAMA urges all financial institutions under its supervision to participate in His Royal Highness Prince Mohammed bin Salman's "I'tizaz" program in appreciation and respect for the role of military personnel in maintaining security and safety.

Further to SAMA's circular No. 371000061185 dated 28/5/1437H, which outlines the Obligations of Real Estate Appraisal Customers Subject to Supervision and Regulation by SAMA.

We would like to inform you of the following amendments to the aforementioned circular:

1. The first paragraph of the circular is amended to read: "Banks, finance companies, and insurance companies must engage with certified real estate appraisers who hold a valid license to practice appraisal."
2. A new paragraph is added as follows: "Bank, finance companies, and insurance companies must provide the customer with a copy of the property appraisal report."

Pursuant to the powers vested to SAMA under the Finance Companies Control Law issued by Royal Decree No. (M/51) dated 13/08/1433 H, and in line with Finance Consumers protection Principles that emphasize disclosure, transparency, customer education and awareness, including verifying that the customer has read all the terms and conditions before committing to the products offered by the finance company.

In order to ensure that customers (natural persons) dealing with finance companies receive fair treatment with transparency, honesty, and integrity, finance companies are required to obtain the customer's (natural person) signature on all pages of the contracts and agreements they are a party to. Finance companies have the option to apply this requirement to legal entities, while emphasizing the finance companies' responsibility for risks associated with the lack of signatures from customers who are legal entities on all pages of contracts and agreements.

In reference to Article 21 of the Finance Companies Control Law, issued by Royal Decree No. M/51 dated 13/8/1433H, which states: "SAMA shall supervise the activities of finance companies and exercise its powers pursuant to the provisions of this Law and its Regulation." and in the interest of SAMA to ensure fair dealings and protect the rights of customers and financial companies.

Financial companies are required to adhere to the following regulations:

1. Create an independent department named "Customer Care Department" by a decision from the Board of Directors. This department should report directly to the CEO or General Manager or their deputy and must not be administratively linked to any other department, particularly not to the legal or regulatory departments.
    
2. Provide the "Customer Care Department" with sufficient authority, financial, technical, and human resources to perform its duties effectively.
    
3. The company must employ a suitable number of staff based on its activity, branches, number of customers, and the volume of complaints received against the company.
    
4. The company must obtain written non-objection letter from SAMA when appointing the Director of the "Customer Care Department".
    
5. The Director of the "Customer Care Department" and all department staff must possess adequate knowledge and experience in finance and customer service. The company must continuously train them through relevant training programs suitable for their roles.
    

   6.  The department is responsible for the care of the company’s customers, ensuring they are treated fairly and transparently at all stages of their interaction with the company, and ensuring they receive appropriate services and products smoothly, easily, and with high quality. This includes:

• Ensuring that the company’s departments comply with procedures related to customers in accordance with the regulations and instructions issued by SAMA that govern the relationship between the company and its customers.
   
• Developing an internal policy to protect customer rights throughout all stages of their interaction with the company (e.g., marketing and sales procedures, post-sale service quality assurance procedures, complaint handling procedures, customer communication procedures).
   
• Handling customer complaints and inquiries received directly by the company or through SAMA’s channels, in accordance with relevant regulations and instructions.
   
• Monitoring market developments and understanding customer priorities and behaviors to ensure the continuous improvement of the company’s services and products to meet changing customer needs.
   
• Ensuring ongoing development of frontline employees’ knowledge of the company’s products and services through relevant training programs and information from the concerned departments.
   

7. Ensuring the availability of multiple channels for receiving customer complaints and inquiries, allowing them to contact the company easily and conveniently at their preferred times, obtain the required information, track their complaints, and be provided with a specific contact reference when submitting a complaint.
    
8. The administration must have technical systems that support the acceptance and documentation of the receipt and tracking of complaint processing, including date, time, and details of recipients and handlers of each complaint, allowing for the monitoring of the complaint status and actions taken. These systems should also support direct automatic integration with any databases created by SAMA for regulatory purposes.
    
9. The company must enable customers to assess their satisfaction with the complaint handling results, and this must be documented in the automated system.
    
10. The administration must develop a working mechanism with the relevant departments, including service level agreements and an escalation process to ensure complaints are addressed within regulatory timeframes. This mechanism should be implemented technically, and adherence by departments should be measured.
     
11. The administration must develop a policy for analyzing complaints and their patterns, addressing their causes and sources. The administration should document these reports and measure their effectiveness in addressing the sources of recurring complaints.
     
12. The administration must provide the CEO, general manager, or their direct deputy with a monthly report on the nature of received complaints, the actions taken regarding them, and the level of customer satisfaction with the outcome of complaints resolution. Additionally, a report should be prepared to measure the effectiveness of all customer-related procedures (e.g., customer waiting times in company branches or on the phone). The administration must also prepare quarterly reports on complaints expected to be referred to court and submit them to the Risk Committee.
     
13. The administration must be subject to review and audit by the Internal Audit Department and the Compliance Department on a semi-annual basis to ensure the accuracy of the provided data.
     
14. These guidelines are considered the minimum requirements for the company’s customer care practices. The company must continuously develop its internal procedures in this regard, aligning them with the nature and scale of its business and with the best local and international standards and practices.
     
15. SAMA emphasizes that companies must immediately start taking the necessary actions to ensure full compliance with the directives outlined in this circular, no later than November 1, 2018G. SAMA will take all regulatory measures against finance companies that do not meet the requirements specified in this circular.

Based on the powers vested to SAMA under the Finance Companies Control Law issued by Royal Decree No. (M/51) dated 13/8/1433 H, and according to Article Two of the Implementing Regulation of the Finance Companies Control Law issued by the Governor’s Decision No. 2/MFC dated 14/4/1434 H, which states “SAMA shall organize the Finance sector and supervise the business of the Finance Companies in accordance with the Law and the Regulation as the following: including 2-Taking all actions necessary for maintaining the integrity and stability of the Finance sector and fairness of its transactions.3- Taking all actions necessary for encouraging legitimate and fair competition among Finance Companies.4-Issuing rules and instructions required to organize the Finance sector.

I would like to inform you that SAMA has decided the following:

Based on SAMA's supervisory and regulatory role over the banking and finance companies' sectors and its commitment to ensuring that all community categories receive the financing services and products they need at a reasonable cost, fairly, and transparently, and without discrimination, based on Principle (5/1) of Banking Consumers Protection Principles and Principle (4/1) of Finance Consumer Protection Principles. And referring to SAMA's circular No. (T.A'.M/157/201803) dated 15/3/2018 G to all insurance companies regarding insurance coverage for the actual user in vehicle leasing and financing leasing, which prohibits all insurance companies engaged in vehicle insurance from denying insurance coverage in mandatory vehicle insurance or comprehensive insurance due to the age of the actual user of the financed leased vehicle.

Therefore, SAMA confirms that all banks and finance companies should not discriminate between customers based on the age of the actual user of the financed leased vehicle.

Based on the powers vested to SAMA under the Finance Companies Control Law issued by Royal Decree No. M/51 dated 13/8/1433 H. In line with SAMA’s contribution to economic development by enhancing the role of finance companies in supporting the national economy and diversifying liquidity sources for financing companies to achieve the objectives of Saudi Vision 2030.

In coordination with the Capital Market Authority and without prejudice to the Finance Companies Control Law and its Implementing regulations, we inform you of the activities that finance companies can engage in with individuals licensed by the Capital Market Authority:

In reference to Article 11 of the Implementing Regulations of the Real Estate Finance Law issued by Royal Decree No. M/50 dated 13/8/1433H, which states that "The real estate finance entity shall not extend credit on any form of finance exceeding 70 percent of the value of the dwelling subject of the real estate finance contract. SAMA may change such percentage according to prevailing market conditions," and to Circular No. 371000064087 dated 6/6/1437H and Circular No. 381000039082 dated 10/4/1438H, and based on public interest.

SAMA has decided to increase the maximum financing amount percentage to the value of the residential property specified in Article 11 of the Implementing Regulations of the Real Estate Finance Law, as amended by the aforementioned circulars, from (85%) to (90%) for the first home of citizens only. Banks will continue to provide real estate financing at (70%) and (85%) for the second home and beyond, respectively, for all beneficiaries.

SAMA emphasizes the importance of reviewing the risk management policy to enhance procedures for maintaining financial stability, including monitoring and measuring credit concentrations, and ensuring verification of the beneficiary's ability to repay before granting financing – of all types – taking into account the beneficiary’s financial and credit obligations, while adhering to relevant SAMA instructions.

In reference to the powers vested to SAMA under the Finance Lease Law issued by Royal Decree No. (M/48) dated 13/8/1433 H, and based on Article 27 of the Finance Lease Law, which states that "The Governor shall, in agreement with the Minister of Justice, issue the Implementing Regulations of this Law within 90 days from the date of issuance," and following the agreement with His Excellency the Minister of Justice.

We inform you of the issuance of His Excellency the Governor's Decision No. 93/M SH T dated 18/10/1441 H, which includes the amendment of certain articles in the Implementing Regulations of the Finance Lease Law as follows:

Based on the powers vested to SAMA under Saudi Arabian Monetary Authority Law issued by Royal Decree No. (23) dated 23/5/1377 H, the Banking Control Law issued by Royal Decree No. (M/5) dated 22/2/1386 H, and the Finance Companies Control Law issued by Royal Decree No. (M/51) dated 13/8/1433 H, and referring to the Law of White Land Tax issued by Royal Decree No. (M/4) dated 12/2/1437 H, and its Implementing Regulations issued by the esteemed Minister Council Decision No. (379) dated 8/9/1437 H.

SAMA emphasizes that banks and finance companies must register land subject to the fees within the specified period to avoid financial penalties for the actual owners.

Based on the powers vested to SAMA under the Saudi Arabian Monetary Authority Law issued by Royal Decree No. (23) dated 23/5/1377 H, The Banking Control Law issued by Royal Decree No. (M/5) dated 22/2/1386 H, and The Finance Companies Control Law issued by Royal Decree No. (M/51) dated 13/8/1433 H.

Considering the observed discrepancy and differences in the definition of (commercial real estate financing), and aiming to unify its definition and scope, commercial real estate financing is defined as providing credit to a natural or legal person for purchasing, developing, or constructing real estate. Financing is considered commercial real estate financing if one or more of the following criteria are met:

1. The beneficiary is a legal person.
2. The financed property contains five or more residential units.
3. The financed property is primarily used for non-residential purposes.
4. The financed property is an income-generating property.

For your information and action accordingly, and ensure to update policies, procedures, and data submitted to SAMA in accordance with this definition, starting from the third quarter of 2017.

Based on Article 71 of the Implementing Regulation of the Finance Companies Control Law, which stipulates that "The Finance Company must apply international accounting standards in the preparation of their accounts and financial statements," and referring to International Financial Reporting Standard No. 9 - Financial Instruments (IFRS 9), issued on July 24, 2014, by the International Accounting Standards Board as an alternative standard to International Accounting Standard No. 39 (IAS 39). This standard relies on a forward-looking approach in recognizing losses, which helps in developing standards for impairment of financial assets and protecting the company and its shareholders from unexpected losses and It consists of three parts: (classification and measurement, impairment, and hedge accounting). The standard is effective for periods beginning on or after January 1, 2018, with early adoption permitted.

Therefore, all licensed finance companies are required to begin preparing for the implementation of IFRS 9 - Financial Instruments immediately and to provide SAMA with a progress report on the implementation on a quarterly basis starting from the end of the first quarter of 2017. Please take note and act accordingly, and inform the General Administration of Financing Companies Control of receipt within a week from the date of this notice.

Based on Article 21 of the Finance Companies Control Law and Article 2 of the Implementing Regulation of the Finance Companies Control Law, SAMA would like to adhere with the following regarding the holidays and the National Day of the Kingdom:

First: Eid al-Fitr Holiday

The Eid al-Fitr holiday for finance companies operating in the Kingdom and their branches is set each year for four days, starting from the day following the 29th of Ramadan (according to the Umm al-Qura calendar).

Second: Eid al-Adha Holiday

The Eid al-Adha holiday for finance companies in the Kingdom and their branches is set each year for four days, starting from the Day of Arafah.

Third: National Day Holiday in the Kingdom

The first day of the Libra, the beginning of the solar Hijri year, corresponding to September 23 of the Gregorian year, is an official holiday for all finance companies operating in the Kingdom and their branches, if this day falls on a Saturday, it is compensated by the following Sunday, if it falls on a Friday, it is compensated by the preceding Thursday, otherwise the National Day is not compensated if it coincides with another official holiday.

Fourth: In the event of any amendments to the holiday dates (paragraphs: First and Second), SAMA will issue a circular accordingly.

Based on the powers vested to SAMA under the relevant regulations and instructions, we would like to inform that BNPL companies must adhere to the following:

Further to SAMA's Circular No. (45077226), dated 26/12/1445H, which refers to Circular No. (44055679), dated 08/07/1444H, concerning the restriction of the assignment of debt collection operations of banks and finance companies to debt collection entities Licensed by SAMA, it has been decided to extend the deadline for banks and finance companies to contract with debt collection Entities that have obtained initial approval from SAMA to engage in the debt collection activity until the end of September 2024G.

In light of SAMA's ongoing review of the regulations governing the debt collection activity, including licensing and direct supervision of the activity, it has been decided to further extend the deadline for banks and finance companies to contract with debt collection Entities that have obtained initial approval from SAMA to engage in debt collection, until the end of December 2024G, or the issuance of further instructions from SAMA, whichever comes first. For more details on the entities that have obtained initial approval from SAMA to engage in this activity, please refer to SAMA's official website.

In reference to SAMA's Circular No. (44055679) dated 08/07/1444H regarding the restriction of the assignment of debt collection operations of banks and finance companies to debt collection entities Licensed by SAMA, and in response to inquiries received by SAMA from some financing entities regarding the applicability of the above-mentioned circular to the collection of debts from clients located outside the Kingdom.

We would like to inform you that the above-mentioned circular is limited to the restriction of debt collection operations for clients located inside the Kingdom and does not include the collection of debts from clients located outside the Kingdom. This is in line with the provisions of the relevant laws and regulations, particularly the Instructions on Outsourcing for Finance Companies and the instructions related to the protection of personal data.

In reference to the Central Bank of Saudi Arabia's circulars No. (41051780) dated 08/08/1441 AH, and No. (43104408) dated 26/12/1443 AH regarding encouraging financing entities to provide their services to owners of micro, small, and medium-sized enterprise owners through the electronic "Tamweel Portal," and in reference to the request from the Small and Medium Enterprises Bank regarding notifying financing entities about the transfer of the electronic "Tamweel Portal" authority from the General Authority for Small and Medium Enterprises "Monsha'at" to be under the umbrella of Small and Medium Enterprises Bank via the link, the Central Bank is keen to empower the financial sector to support the growth of the private sector and its strategy aimed at activating the use of electronic channels to enhance the level of services provided in this regard.

Accordingly, the Central Bank reiterates its encouragement for providing financial products and services to owners of micro, small, and medium-sized enterprises through the electronic "Tamweel Portal," urging them to utilize the services offered through it and to process requests submitted to the portal within the specified timeframes. The Central Bank also hopes to contribute to media engagement and communication through various channels and social media regarding the transition of the aforementioned electronic "Funding Portal" to the Small and Medium Enterprises Bank.

Based on the powers vested in SAMA under its Law issued by Royal Decree No. (M/36) dated 11/04/1442H, and the Finance Companies Control Law issued by Royal Decree No. (M/51) dated 13/08/1433H,

We would like to inform you that His Excellency the Governor's Decision No. (162/MSHT) dated 27/03/1446H has been issued, which includes the approval of the amendment to the Rules for Engaging in Debt-Based Crowdfunding as per the attached version. Licensed debt-based crowdfunding companies are required to adjust their operations in accordance with the provisions of the rules within a period not exceeding (90) days from the date the rules are published on SAMA’s website.

In reference to SAMA Circular No. (44055679) dated 08/07/1444H regarding assigning debt collection operations of banks and finance companies to debt collection entities licensed by SAMA, starting from 01/01/2024G.

In light of SAMA's supervisory and regulatory role over banks, finance companies, and licensed debt collection entities, SAMA wishes to emphasize the importance of adhering to the deadline specified in the aforementioned circular. It is noted that banks, and finance companies may continue to contract with debt collection entities that have obtained initial approval from SAMA to conduct debt collection activities for finance entities until the end of June 2024G. A list of entities with initial approval from SAMA can be found on SAMA's official website.

*The deadline has been extended until the end of September 2024, under Circular No. (45077226) dated 26/12/1445 H.

In reference to SAMA Circular No. (44055679), dated 08/07/1444H regarding the restriction of the assignment of debt collection operations of banks and finance companies to debt collection entities Licensed by SAMA. Additionally, further to SAMA Circular No. (45029088), dated 01/05/1445H, which emphasizes the commitment to the specified deadline for restricting the assignment of debt collection operations of banks and finance companies to debt collection entities Licensed by SAMA.

In light of SAMA's supervisory and regulatory role over banks, finance companies and licensed debt collection entities, SAMA wishes to inform that the deadline for banks and finance companies to contract with debt collection entities that have obtained initial approval from SAMA to conduct debt collection activities for finance entities has been extended until the end of September 2024G. A list of entities with initial approval from SAMA can be found on SAMAs official website.

For your information and compliance.

 
Saudi Central Bank

Number: 45029088

Date: 01/05/1445

Attachments: None

Circular

Dear/                                                                        Respected

Peace be upon you, and God's mercy and blessings.

Subject: Confirmation of Compliance with the Deadline for Consolidating the Assignment of Debt Collection Tasks of Banks, Financial Institutions, and Financing Companies to Licensed Debt Collection Entities Authorized by the Central Bank.

In reference to the Central Bank Circular No. (44055679) dated 08/07/1444 AH regarding the consolidation of the assignment of debt collection tasks of banks, financial institutions, and financing companies to licensed debt collection entities authorized by the Central Bank, starting from 01/01/2024.

In light of the Central Bank's supervisory and regulatory role over banks, financial institutions, and licensed debt collection entities, the Central Bank would like to emphasize the importance of adhering to the deadline specified in the aforementioned circular. It is noted that banks, financial institutions, and financing companies may continue to contract with debt collection entities that have obtained preliminary approval from the Central Bank to conduct debt collection activities until the end of June 2024. A list of entities with preliminary approval from the Central Bank can be found on the Central Bank's official website.

For your information and compliance.

Best regards,

Yazeed bin Ahmed descendant of Al-Sheikh

Deputy Governor for Supervision

Distribution Scope:

- Banks and financial institutions operating in the Kingdom.

- Financing companies operating in the Kingdom.

- Licensed debt collection entities authorized by the Central Bank.

- Debt collection entities that have obtained preliminary approval from the Central Bank to conduct debt collection activities for financing entities.