Section 5: Simplified Due Diligence Measures
| No: 18318/486 | Date(g): 17/11/2019 | Date(h): 20/3/1441 |
Effective from 2019-11-17 - Nov 16 2019
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| The financial institution's adoption of the risk-based approach can result in identifying and classifying customers and business relationships of low risk from the AML/CTF perspective. Thus, it is possible for the financial institution to implement simplified measures in cases where the ML/TF risk assessment results indicate low risk. | ||
In order for the financial institution to reach such result, sufficient information about the customer must be collected to determine the related level of risk. | ||
| Article (5/5) of the Implementing Regulations of the Anti-Money Laundering Law and Article (17) of the Implementing Regulations of the Law on Combating Terrorism Crimes and Financing state that the financial institution may apply simplified measures when the ML/TF risks are low subject to the necessary conditions. | ||
5.1 | When the level of ML/TF risks is low, the financial institution may take simplified measures, provided that there is no suspicion of any ML/TF transaction. Such simplified measures shall be commensurate with the low risks and must include the adoption of simplified due diligence to identify and verify the customer’s identity. | |
| 5.2 | The financial institution shall include the simplified measures and procedures applied to low-risk customers and business relationships in the approved AML/CTF policies and procedures. | |
| 5.3 | Application of the simplified measures does not mean exemption from the requirements of customer due diligence, but rather the application of due diligence measures in a streamlined and simplified manner consistent with the ML/TF risks posed by the customer or beneficial owner. Regardless of the level of risk posed by the customer or business relationship, the financial institution shall comply with the following when applying due diligence: | |
| a) | Verifying the identity of the customer or the person acting on his behalf, relying on an authenticated and independent source. | |
| b) | Identifying and verifying the identity of the beneficial owner through a reliable and independent source to the satisfaction of the financial institution that it knows the beneficiary owner. | |
| c) | Understanding the nature and purpose of the business relationship. | |
| d) | Understanding the ownership and control structure of the customer who is a legal person. | |
| 5.4 | The financial institution may apply simplified due diligence measures for all the criteria mentioned in Paragraph (5.3) in the Simplified Due Diligence Section. The financial institution determines the nature and quality of these simplified due diligence measures according to its ML/TF risk assessment results. Such measures are usually associated with the following elements: | |
| a) | Timing of verification of the customer's information and associated documents. | |
| b) | The intensity and periodicity of the verification of customer information. | |
| c) | Details and nature of the information obtained from the customer. | |
| 5.5 | Having identified the customer, the financial institution may postpone the identity verification process, provided that it shall adhere to the following: | |
| a) | Verifying the information and documents of the customer as soon as possible. | |
| b) | Ensuring that it is necessary to postpone the verification of the customer’s identity to avoid interruption of usual business procedures. | |
| c) | Applying appropriate and effective measures to control ML/TF risks. | |
| d) | Ensuring that measures for risk management are in place regarding the situations in which a customer can benefit from a business relationship prior to the verification process. | |
| 5.6 | If simplified due diligence measures have been applied to certain customers and business relationships, they shall be subjected to monitoring by the financial institution, as described in Paragraph (7.3) in the Monitoring of Transactions and Activities Section. Based on continuous monitoring, the financial institution shall consider applying enhanced due diligence in the case of high ML/TF risks. | |
| 5.7 | When carrying out a transaction for an occasional customer, the financial institution shall obtain the information of the identity of the citizen/resident or the passport and visa information of the visitor/temporary resident and record the executed transactions number as a reference. If the transaction involves a money transfer or check, a copy of the ID or passport and visa shall be obtained and the requirements under the Wire Transfer Section shall be met. | |
| 5.8 | An occasional customer is allowed to execute the following transactions: | |
| a) | Payment of utility bills. | |
| b) | Payment of amounts payable to government entities. | |
| c) | Currency exchange, money transfer, and cashing of checks with a maximum amount of SAR 5,000 or its equivalent per transaction, or no more than SAR 50,000 or its equivalent in one year. | |
| d) | Purchase of visitor mandatory insurance policies. | |