In Light of the Recent Legal Reforms to Anti-Money Laundering Laws, is the Regulatory Framework now Sufficiently Robust to Combat the Problem of Money Laundering in the Kingdom of Saudi Arabia?

Abstract

As the world strives to tackle money laundering (ML) in all its forms, the Kingdom of Saudi Arabia (KSA) faces a growing challenge. Money laundering is a growing phenomenon, and becoming ever more complex. Furthermore, the practice has moved over into the capital markets area, using traded securities on open exchanges. In addition to Shari’a law, the Kingdom has developed specific legislation to prevent money laundering, with recent important reforms in 2017 which address the shortcomings of previous legislation and respond to international standards, specifically those of the Financial Action Task Force (FATF). This paper critically analyses these reforms, and highlights the progress made, such as strict control on the banking sectors, increased number of suspicious transactions by financial institutions and application of due diligence on the customers. However, although individuals and firms engaged in capital markets and the country's stock exchange are subject to AML/CTF standards set by the Capital Market Authority, capital markets are not targeted as a specific area of concern. As such, problematic issues include that no red flag system is used for capital markets transactions. There is also a lack of sufficient expertise. Accordingly, despite the new 2017 law, further steps are needed