300.1.5.2 Private Associations

No: 65681/67

Date(g): 3/7/2019 | Date(h): 1/11/1440

Status: In-Force

Effective from Jan 01 2024 - Dec 31 2023
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This rule has been amended according to the circular No. (106878603), Dated 01/07/1446H, corresponding to 31/12/2024H. Please refer to the Arabic version of this rule to read the last updated version.

The bank may open accounts only in Saudi riyal for private associations. The requirements are as follows:

a. Requirements and controls for opening and managing main bank accounts:

- Requirements for opening main account:

1.	A copy of the registration certificate issued by the National Center for the Development of the Non-Profit Sector (NCNP) (the Center).
2.	A copy of the association's bylaws, approved by the Center.
3.	A copy of the decision to form the board of directors and appoint the officials, which is approved by the Center, along with the verification of the board members' IDs.
4.	Copies of the IDs of persons authorized to operate and manage the account, and verification of their authorization by identifying them in the decision of the board of directors; such authorization shall allow for joint signature by two officials, and obtaining the approval of the Center when the authorized persons are from outside the board.
5.	Approval of the bank’s senior management to open the account in cases where required -in accordance with the provisions of the Guidance of Anti Money Laundering and Combating Terrorist Financing-.

- Controls for managing the main account:

1.	Cash donations or donations made via electronic channels may be accepted as long as these donations come from banking sources inside Saudi Arabia only, through which donor’s information can be retrieved.
2.	If disbursement is made by a check, the check shall be payable to the first beneficiary.
3.	ATM and/or credit cards shall not be issued for such accounts.
4.	No transactions (e.g. remittance, collection of checks, etc.) from the association’s accounts to any beneficiaries outside Saudi Arabia shall be made, except for transferring money for the purpose of managing the association’s activities. For example, remittance for paying fees of consulting services or of participation in external symposiums, conferences and the like may be made after the bank obtains the official approval therefore from the Center (NCNP).
5.	Remittances or checks coming from outside Saudi Arabia to the association’s account at the bank -or coming to other banks operating in Saudi Arabia via the bank- shall not be accepted, unless official approval therefore is obtained from the Center (NCNP).
6.	Sub-accounts may be opened for investing the association’s funds in activities with financial returns that would help the association achieve its objectives. To do so, the bank must first obtain the association’s rules that govern the investment of its surplus funds, which are approved by its general assembly.

b. Requirements and controls for opening and managing sub-accounts:

Sub-accounts may be opened for the various purposes of the association, such as the collection of Zakat, as follows:

1.	Only the documents for opening and managing the main account shall be required.
2.	These accounts shall be used only for the purpose for which they were opened.
3.	Cash donations or donations made via electronic channels may be accepted as long as these donations come from banking sources inside Saudi Arabia only, through which donor’s information can be retrieved.
4.

c. Requirements and controls for opening and managing sub-accounts for expenses:

One sub-account may be opened in Saudi riyal for each of the association’s branches that operate inside or outside the city where the association’s headquarters is located. Such sub-account shall be used only for "expenses", transferred to it from the main account. The following requirements and controls shall be met and applied:

- Requirements for opening sub-accounts for expenses:

1.	Approval of the MHRSD for opening a sub-account for expenses.
2.	A copy of the approval of the MHRSD and the supervisory authority for establishing the branch for which a sub-account is to be opened.
3.	A copy of the association's bylaws.
4.	A copy of the decision to form the association’s board and appoint its officials.
5.	Approval of the MHRSD for forming a committee of working members to supervise the association’s branch.
6.	Approval of the MHRSD for the Saudi persons authorized to manage the association’s bank account (with joint signature). The persons authorized to manage the account shall not be changed without obtaining the approval of the MHRSD therefor.
7.	Copies of the IDs of the members of the committee supervising the branch’s activities, including persons authorized to open and manage the branch’s account. Such copies shall be attested by the head office of the association.

- Controls for managing expense sub-accounts:

1.	Only one expense sub-account may be opened for each branch of the association, regardless of the number of the branch’s activities, programs and services and regardless of the branch’s other sub-accounts in other banks.
2.	The branch’s expense sub-account is considered a subordinate account under the main account of the association.
3.	The branch’s expense sub-account shall be named “Branch of... Association/Office in (City)-Subaccount of Periodic Advance”.
4.	The expense sub-account shall be opened in the same bank where the association’s main account is opened.
5.	Deposits in the expense sub-account shall be limited only to funds received from the main account of the association under a check, bank transfer, etc. No deposit of any funds in the expense sub-account shall be accepted other than the periodic expenses coming from the main account.
6.	Disbursements from the expense sub-account shall be limited to the following:
	■	Personal and bank checks withdrawn only by the first beneficiary.
	■	Transfers made to the bank accounts of beneficiaries of charity inside Saudi Arabia only. The transfer forms shall be filled out by the persons authorized to sign for the advances’ account. In addition, the transfers shall be monitored by the bank to ensure that they go in line with the nature of the branch’s activities.
	■	Paying salaries of the association branch’s staff.
	■	Paying utility bills and government invoices.
7.	ATM cards and/or credit cards shall not be issued for the expense account.
8.	Approval of the manager of compliance department at the bank for opening a sub-account for expenses.