Article 7
| No: 14525 | Date(g): 8/11/2017 | Date(h): 19/2/1439 | Status: In-Force |
Effective from 2017-11-08 - Nov 07 2017
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| FIs and DNFBPs shall: | ||
| 1- | Apply due diligence measures to their customers and the Implementing Regulation shall set forth the instances in which such measures shall be taken and the types of measures to be taken. | |
| 2- | Determine the extent of due diligence measures based on the risks relation to a customer or business relationship. Where a higher risk of money laundering was identified, they shall apply enhanced due diligence measures. | |
7/1
A financial institution or designated non-financial business and profession shall undertake due diligence measures at the following times:
| a. | Before establishing a new business relationship or opening a new account; | |||
| b. | Before carrying out a transaction for a customer with whom the financial institution or designated non-financial business and profession is not in an established business relationship, whether the transaction was conducted for one time or several times where the transactions would appear linked to each other; | |||
| c. | Before carrying out a wire transfer as prescribed by Article 10 of the Law for a customer with whom the financial institution or designated non-financial business and profession ion are not in an established business relationship; | |||
| d. | Whenever there is a suspicion of money laundering, regardless of the amounts involved; or | |||
| e. | Whenever the financial institution or designated non-financial business and profession has doubts either about the veracity or adequacy of previously obtained customer information or identification data. | |||
7/2
Due diligence measures shall be based on risk and, at a minimum, comprise of the following:
| a. | Identify the customer and verify the customer’s identity, using reliable, independent source documents, data or information: | |||||
| 1. | For a customer that is a natural person, the financial institution or designated non-financial business and profession shall obtain and verify the full legal name, residential or the national address, date and place of birth, and nationality; | |||||
| 2. | For a customer that is a legal person or a legal arrangement, the financial institution or designated non-financial business and profession shall, at a minimum, obtain and verify the name, legal form and proof of existence, the powers that regulate and bind the legal person or legal arrangement, the names of all directors, senior managers or trustees, and the address of the registered office and, if different, the principal place of business. | |||||
| 3. | Depending on the risk posed by a specific customer, the financial institution or designated nonfinancial business and profession shall determine whether any additional information must be collected and verified. | |||||
| b. | Verify that any person purporting to act on behalf of a customer is so authorized, and identify and verify the identity of that person in line with subsection (a); | |||||
| c. | Identify the beneficial owner and take reasonable measures to verify the identity of the beneficial owners, using information and data obtained from a reliable source, such that the financial institution or designated non-financial business and profession is satisfied it knows who the beneficial owner is, as following: | |||||
| 1. | For a customer that is a legal person, a financial institution or designated non-financial business and profession shall identify and take reasonable measures to verify the identity of the natural person who ultimately owns or controls 25% or more of the legal entity’s shares. | |||||
| 2. | Where no controlling ownership interest exists as stipulated in the previous para (1), or there is doubt whether the controlling shareholder is not indeed the beneficial owner, the identity of the natural person exercising control of the legal person through other means; or, as a last means, the identity of the natural person who holds the position of senior managing official, and verify it. | |||||
| 3. | For a customer that is a legal arrangement, a financial institution or designated non-financial business and profession shall identify and take reasonable measures to verify the identity of the endower, beholder, the beneficiaries or classes of beneficiaries, and any other natural person exercising ultimate effective control over the legal arrangement. | |||||
| d. | Understand and obtain additional information on the purpose and intended nature of the business relationship, as appropriate. | |||||
| e. | For the legal persons or legal arrangement, the ownership and control structure of the customer should be understood. | |||||
7/3
A financial institution or designated non-financial business and profession shall verify the identity of the customer and beneficial owners before or during the course of establishing a business relationship or opening an account; or before carrying out a transaction for a customer with whom the financial institution or designated non-financial business and profession is not in an established business relationship. Where the money laundering risk is low, a financial institution or designated non-financial business and profession may complete verification of the customer’s identity as soon as practicable after the establishment of the business relationship if postponing the verification is essential not to interrupt the normal conduct of business and the financial institution or designated non-financial business and profession shall apply appropriate measures to manage the money laundering risk. The financial institution or designated nonfinancial business and profession shall take measures to managing the risk in the circumstances where the customer benefit from the business relationship before the verification is completed.
7/4
In addition to the measures under Section 7/2, a financial institution shall, in relation to a beneficiary of a saving and protection insurance or other investment related insurance policy, apply the following due diligence measures as soon as the beneficiary is identified or designated:
| a. | For a beneficiary identified by name, take the name of that person whether it is natural or legal person; | |||
| b. | For a beneficiary designated by class or characteristics or any other means such as deeds , obtain sufficient information concerning the beneficiary to ensure that the financial institution will be able to identify the beneficiary prior to payout; | |||
In all cases, a financial institution shall verify the identity of the beneficiary prior to a payout under the insurance policy or prior to the exercising of any rights related to the policy.
7/5
A financial institution, when determining whether enhanced due diligence measures are required in relation to a specific policy, shall take into account risk factors relating to the beneficiary of the policy and, if the financial institution considers that a beneficiary poses a higher risk, shall in all cases identify and verify the identity of the beneficial owner of the beneficiary at the time of payout.
7/6
A financial institution or designated non-financial business and profession shall carry out ongoing due diligence on all business relationships in accordance with the risks posed, verify the transition throughout the business relationship to ensure the consistency with customer’s data, activities and risk posed by customer. Also It should be ensured that documents, data and information collected under the due diligence process is kept up-dates and relevant by undertaking reviews of existing records, in particular for higher risk customers.
7/7
A financial institution or designated non-financial business and profession shall apply due diligence measures to customers and business relationships that existed at the date of coming into force of the Law and this Implementing Regulations. A financial institution or designated non-financial business and profession shall apply due diligence measures to existing customers and business relationships based on materiality and risk and conduct ongoing due diligence on such existing customers and business relationships at appropriate times, taking into account whether and when due diligence measures have previously been undertaken, and the adequacy of data obtained.
7/8
A financial institution or designated non-financial business and profession that is unable to comply with the due diligence obligations may not open the account, establish the business relationship or carry out the transaction; or in relation to existing customers or business relationships, shall terminate the business relationship; and shall in all cases consider submitting a suspicious transaction report to the Directorate.
7/9
Where a financial institution or designated non-financial business and profession has a suspicion of money laundering and it reasonably believes that performing due diligence may tip off the customer, it may opt to not carry out due diligence measures and shall submit a suspicious transaction report to the Directorate of financial intelligence , and stating the reasons as to why due diligence was not applied.
7/10
A financial institution or designated non-financial business and profession may rely on another financial institution or designated non-financial business and profession to perform identification and verification of the customer; identification and verification of the beneficial owner; and to take the necessary measures to understand the nature and intended purpose of the business relationship.
7/11
If financial institution or designated non-financial business and profession place reliance on another party as stated in 7/10, they shall do the following:
| a. | immediately obtains all necessary information as required under Article 7 of the Law and this Implementing Regulation; | |||
| b. | take measures to satisfy that copies of identification data and other relevant documentation relating to the due diligence measures will be made available , and without delay; | |||
| c. | ensure that financial institution or designated non-financial business and profession relied upon is regulated, supervised for and has measures in place for compliance with due diligence and record keeping requirements in line with the requirements stipulated under the Law and this Implementing Regulation. | |||
| d. | Take into account information available with (AMLPC) and the Directorate of Financial intelligence with regard to high-risk countries identified. | |||
The ultimate responsibility of all requirements stipulated in this law and its implementing regulation relay on the requesting financial institution and designated non-financial business and profession.
7/12
when a financial institution is being relied upon by another domestic or foreign financial institution, confidentially requirements under Saudi law shall not preclude a financial institution from exchanging information as required for the reliant party to determine whether the relied upon financial institutions applies appropriate standards
7/13
A financial institution or designated non-financial business and profession that relies on a financial institution or designated non-financial business and profession that is part of the same financial group may consider that the financial institution or designated non-financial business and profession relied upon meets the requirements under Article 7/10 and 7/11 provided the group applies due diligence and record keeping requirements in line with the Law and this Implementing Regulation, the implementation of such policies is supervised at the group level by a competent authority and any higher country risk is adequately mitigated by the group’s policies and controls.
7/14
A financial institution or designated non-financial business and profession shall determine the extent and depth of application of due diligence measures under Article 7 of the Law based on the types and levels of risk posed by a specific customer or business relationship.
Where the risk of money laundering is higher, a financial institution or designated non-financial business and profession shall apply enhanced due diligence measures consistent with the risks identified. Where the risk of money laundering is lower, a financial institution or designated non-financial business and profession may conduct simplified due diligence measures provided there is no suspicion of money laundering, in which case simplified due diligence shall not be permitted. The simplified measures shall be commensurate with the lower risk.