Article 7 of the Saudi Anti-Money Laundering Law
المادة 7 من نظام مكافحة غسل الأموال · الفصل الثالث: التدابير الوقائية
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.
Official text (Arabic)
This article has not been amended since the law was issued.
على المؤسسات المالية، والأعمال والمهن غير المالية المحددة؛ القيام بالآتي:
1- أن تطبق على عملائها تدابير العناية الواجبة. وتحدد اللائحة الحالات التي تطبق فيها هذه التدابير وأنواعها.
2- أن تحدد نطاق تدابير العناية الواجبة على أساس مستوى المخاطر المرتبطة بالعميل أو الأعمال أو العلاقات التجارية، وأن تطبق تدابير مشددة للعناية الواجبة عندما تكون مخاطر غسل الأموال مرتفعة.
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 7 explained in plain English
This article sets one of the most important day-to-day obligations in combating money laundering: applying due diligence measures to customers. Article 1 defines them as the process of identifying and verifying the information of the customer or beneficial owner, enabling the entity to assess its exposure to risk, and this is commonly known as the "know your customer" principle.
The article requires financial institutions and designated non-financial businesses and professions to do two things:
- Apply due diligence measures to their customers. The article leaves it to the Implementing Regulations to specify the cases in which these measures apply and their types.
- Determine the scope of the measures according to the risks associated with the customer, the business or the business relationships, applying enhanced measures when money laundering risks are high.
This means that due diligence is not a single procedure for everyone; a low-risk customer may need only ordinary procedures, while a high-risk customer requires deeper scrutiny. This is linked to the risk assessment required by Article 5, and to the additional measures for persons entrusted with senior public functions in Article 8.
The text does not list the required documents or the cases of application, which fall within the Implementing Regulations. Anyone who wants to know what applies to their business can consult a lawyer who specializes in banking, finance and compliance.
Practical example
A contracting company opened an account with a bank in Dammam, and then began receiving large, repeated transfers from several countries that do not fit its stated activity. The bank assesses this customer's risk as high, so it applies enhanced due diligence measures to it, such as requesting additional information about the source of the funds and their beneficial owner.
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 7 of the Saudi Anti-Money Laundering Law
Why does my bank ask me for information about my business and the source of my money?
Because the article requires financial institutions to apply due diligence measures to their customers, which is the process of identifying and verifying the information of the customer or beneficial owner.
When are enhanced due diligence measures applied?
When money laundering risks are high, according to the level of risk associated with the customer, the business or the business relationships.
Who determines the cases in which due diligence applies and its types?
The article refers this to the Implementing Regulations of the law.
More articles on Risk Assessment and Due Diligence
- Article 5
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.
على المؤسسات المالية، والأعمال والمهن غير المالية المحددة؛ تحديد مخاطر احتمال وقوع غسل الأموال لديها وتقييمها وتوثيقها وتحديثها بشكل مستمر، من خلال الجوانب المت
- 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 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.