Article 2 of the Saudi Banking Control Law
المادة 2 من نظام مراقبة البنوك
The article prohibits anyone not licensed under the law from carrying on banking business as a principal activity in the Kingdom, with exceptions for entities licensed under another law and licensed money changers for currency exchange.
Official text (Arabic)
This article has not been amended since the law was issued.
يحظر على أي شخص طبيعي أو اعتباري غير مرخص له طبقا لأحكام هذا النظام أن يزاول في المملكة أي عمل من الأعمال المصرفية بصفة أساسية، ومع ذلك:
أ - يجوز للأشخاص الاعتبارية المرخص لها بموجب نظام آخر أو مرسوم خاص بمزاولة الأعمال المصرفية، أن تزاول هذه الأعمال في حدود أغراضها.
ب - يجوز للصيارفة المرخص لهم أن يزاولوا بصفة أساسية أعمال تبديل العملة نقودا معدنية أو أوراقا نقدية دون سائر الأعمال المصرفية.
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 2 explained in plain English
This article sets the law's basic rule: no banking business as a principal activity without a license. Every person, individual or company, who wants to carry on in the Kingdom any of the banking business defined in Article 1 (such as receiving deposits, opening accounts and letters of credit, letters of guarantee and foreign exchange) as his principal activity must obtain a license under the provisions of this law, and Article 3 explains how to apply for it and its conditions.
The article gives two exceptions:
- Legal persons licensed under another law or a special decree to carry on banking business: they may carry it on, but only within the limits of their purposes.
- Licensed money changers: they may carry on as a principal activity the business of exchanging currency, coins or banknotes, excluding other banking business; a money changer, for example, may not accept deposits or open accounts.
Note that the prohibition concerns carrying on banking business "as a principal activity", the same description on which the definition of bank in Article 1 rests. Anyone considering offering financial services close to banks' business should consult a lawyer specialized in banking and finance before starting.
Practical example
Salem opened a shop in Jeddah with a money-changing license, then began accepting sums from his customers that he held for them and from which they later withdrew as if they were current accounts. The money-changing license allows him to exchange currency only, excluding other banking business, so accepting deposits and managing accounts falls within banking business that needs a license under this law.
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 2 of the Saudi Banking Control Law
May banking business be carried on in Saudi Arabia without a license?
No. The article prohibits any natural or legal person not licensed under the law from carrying on any banking business as a principal activity in the Kingdom.
May a licensed money changer open accounts for customers?
No. The article allows licensed money changers to carry on currency exchange only, excluding other banking business.
Are there entities that carry on banking business without a license under this law?
Yes, legal persons licensed under another law or a special decree, but only within the limits of their purposes.
More articles on Licensing Banking Business
- Article 3
The article provides that a banking license application is submitted to the Agency, sets conditions for licensing a national bank, refers conditions for foreign bank branches to the Council of Ministers, and has the license issued by the Minister of Finance after approval.
يقدم طلب منح الترخيص لمزاولة الأعمال المصرفية في المملكة إلى المؤسسة التي تقوم بعد حصولها على كافة البيانات الضرورية، بدراسة الطلب وتقديم توصياتها بشأنه لوزير ا
- Article 4
The article keeps banking licenses and permits valid when the law took effect, with the Agency entitled to request documents and, with Council of Ministers approval, to require holders to meet Article 3.
استثناء من أحكام المادة السابقة، يعمل بالتراخيص والتصاريح الصادرة للأشخاص الذين يزاولون الأعمال المصرفية في المملكة والسارية المفعول في تاريخ نفاذ هذا النظام. و
- Article 5
The article prohibits anyone not licensed for banking business from using the word "bank" or its synonyms or equivalents in any language in their papers, printed matter, trade name or advertising.
يحظر على أي شخص غير مرخص له بمزاولة الأعمال المصرفية في المملكة بصفة أساسية أن يستعمل كلمة (بنك) ومرادفاتها أو أي تعبير يماثلها في أية لغة سواء في أوراقه، أو مط
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.