Endowments: Regulations regarding the true beneficiary and preventing non-residents from serving as trustees

The General Authority for Endowments has issued a set of binding regulations aimed at identifying the "beneficiary" of endowment assets, a pivotal step seeking to enhance transparency and financial governance within the endowment sector in Saudi Arabia. These measures are part of a comprehensive strategy to protect the sector from the risks of financial crimes, particularly money laundering and the financing of terrorism.

A regulatory framework that aligns with international standards and Vision 2030

This decision is not an isolated measure, but rather comes in the context of the major transformations taking place in the non-profit sector in the Kingdom, which is one of the pillars of Saudi Vision 2030. Through these regulations, the Authority seeks to raise the efficiency and reliability of the sector, which enhances its contribution to the gross domestic product.

The Authority’s Board of Directors adopted these standards to ensure full compliance with the requirements of the Financial Action Task Force (FATF), the international body responsible for setting global standards to combat money laundering. This commitment underscores the Kingdom’s dedication to applying the highest standards of financial integrity, thereby enhancing its credit rating and strengthening confidence in its investment and endowment environment.

Limiting the scope of the program to residents and defining the beneficiary

The new regulations explicitly prohibit the management of Saudi endowments by non-Saudi individuals residing permanently outside the Kingdom. The Authority stipulated that oversight must be restricted to trustees residing within the Kingdom to ensure legal oversight, effective monitoring, and compliance with local regulations.

The regulations define the "beneficiary" as the natural person who owns or exercises effective and ultimate control over the endowment, whether it be the endower himself, the trustee, or any person with the authority to make binding decisions. If the beneficiary is a legal entity, the chain of ownership down to the individuals who actually control the endowment must be disclosed.

Precise commitments and historical records

The new standards require supervisors to maintain accurate and up-to-date records containing detailed information (name, nationality, address, identity, and bank details). They also mandate updating this information within 15 days of any change and requiring an annual review of this data.

To enhance post-audit oversight, the Authority stressed the necessity for supervisors to retain all financial records, documents, and payment classifications for a minimum of ten years, and to hand over these archives to their successors immediately upon the expiration of their term. Those who fail to comply with these regulations will be subject to legal accountability according to the approved penalty schedule, reflecting the Authority's commitment to regulating the sector and protecting its assets from any illicit exploitation.