Article 5 of the Saudi Anti-Money Laundering Law
المادة 5 من نظام مكافحة غسل الأموال · الفصل الثالث: التدابير الوقائية
The article requires financial institutions and designated non-financial businesses and professions to identify, assess, document and continually update their money laundering risks, and to provide reports on them on request.
Official text (Arabic)
This article has not been amended since the law was issued.
على المؤسسات المالية، والأعمال والمهن غير المالية المحددة؛ تحديد مخاطر احتمال وقوع غسل الأموال لديها وتقييمها وتوثيقها وتحديثها بشكل مستمر، من خلال الجوانب المتعددة للمخاطر بما فيها العوامل المرتبطة بعملائها والدول الأخرى والمناطق الجغرافية والمنتجات والخدمات والمعاملات وقنوات التسليم، وتوفير تقارير عن ذلك للجهات الرقابية عند الطلب. وعليها أن تراعي -عند قيامها بذلك- المخاطر المرتبطة بالمنتجات الجديدة وممارسات العمل والتقنيات قبل استخدامها.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 5 explained in plain English
This article sets the first preventive obligation on financial institutions and designated non-financial businesses and professions, which are the bodies whose activities the Implementing Regulations specify in line with the definitions in Article 1. The idea is that each body must know where its activity could be exploited for money laundering.
The obligations include:
- Identifying the risks of money laundering occurring in its business.
- Assessing these risks, documenting them and updating them continually; a single fixed assessment is not enough.
- Considering the multiple aspects of risk, including factors related to customers, other countries, geographic areas, products and services, transactions and delivery channels.
- Providing reports on this to the supervisory authorities when requested.
- Taking into account the risks associated with new products, business practices and technologies before starting to use them.
Many of the later obligations are built on this assessment; Article 7, for example, links the scope of due diligence measures to the level of risk, and requires enhanced measures when risk is high.
The article does not state the form of the assessment or its details; those are regulatory matters outside its text. Entities subject to the law may use a lawyer or an adviser who specializes in banking, finance and compliance when preparing a risk assessment framework.
Practical example
A finance company in Riyadh intends to launch an app for transferring money by phone. Before launching it, it must assess the risk that this new technology could be exploited for money laundering, document and update that assessment, and provide a report on it if the supervisory authority requests it.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 5 of the Saudi Anti-Money Laundering Law
Which bodies must assess money laundering risks?
Financial institutions and designated non-financial businesses and professions, which are the bodies whose activities the Implementing Regulations specify.
What factors must be considered in the risk assessment?
These include factors related to customers, other countries, geographic areas, products and services, transactions and delivery channels.
Must new products be assessed before they are launched?
Yes. The entity must take into account the risks associated with new products, business practices and technologies before using them.
More articles on Risk Assessment and Due Diligence
- Article 6
The article prohibits financial institutions from opening or keeping numbered, anonymous or fictitious-name accounts.
لا يجوز للمؤسسات المالية أن تفتح أو تحتفظ بحسابات مرقّمة أو مجهولة الاسم أو باسم وهمي.
- Article 7
The article requires financial institutions and designated non-financial businesses and professions to apply due diligence measures to customers according to risk level, with enhanced measures when risk is high.
على المؤسسات المالية، والأعمال والمهن غير المالية المحددة؛ القيام بالآتي: 1- أن تطبق على عملائها تدابير العناية الواجبة. وتحدد اللائحة الحالات التي تطبق فيها هذ
- Article 8
The article requires financial institutions and designated non-financial businesses and professions to determine whether a customer or beneficial owner holds senior public functions, and to apply additional measures to them.
على المؤسسات المالية، والأعمال والمهن غير المالية المحددة؛ استخدام أدوات مناسبة لتحديد ما إذا كان العميل أو المستفيد الحقيقي مكلفاً -أو أصبح مكلفاً- بمهمات عامة
- Article 11
The article requires enhanced due diligence for business relationships and transactions with persons from high-risk countries, and application of the measures set by the Standing Committee for Anti-Money Laundering.
1- على المؤسسات المالية، والأعمال والمهن غير المالية المحددة؛ تطبيق تدابير العناية الواجبة المشددة المتناسبة مع المخاطر التي قد تنشأ من علاقات عمل ومعاملات مع ش
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.