The Saudi Central Bank (SAMA) enhances financial transparency
The Saudi Central Bank (SAMA) issued an official circular to all financial institutions under its supervision, emphasizing the need to expedite the completion of the technical integration with the "Wathiq" service of the Saudi Ministry of Commerce. This strategic step comes within the framework of ongoing efforts to enhance procedures for verifying the identity of the "beneficial owner" and to ensure that the financial sector has access to the latest updated and approved data for companies and commercial entities, in full compliance with the rules and procedures for beneficial owners issued by the Minister of Commerce.
General context and historical background of the real beneficiary system
To understand the importance of this directive, it is necessary to consider both the global and local contexts. The concept of the Ultimate Beneficial Owner (UBO) is one of the most important international standards adopted by the Financial Action Task Force (FATF) to combat commercial concealment, money laundering, and terrorist financing. Historically, shell companies or complex structures have been used to conceal the true identities of the owners of funds. In line with the Kingdom of Saudi Arabia’s commitment to international standards, the Ministry of Commerce, in cooperation with regulatory bodies, has established a national register of UBOs to ensure the identification of natural persons who effectively own or control legal entities.
The importance of technical integration with the "Wathiq" service and its expected impact
The Saudi Central Bank clarified that this directive is based on its regulatory authority to issue regulations and instructions governing the operations of financial institutions, within the framework of combating money laundering and terrorist financing. This measure has a significant impact on several levels:
- At the local level: The technical linkage via the “Watheq” service contributes to raising the efficiency of the due diligence measures taken by banks and financial institutions, as it allows for immediate and accurate inquiry into the data of the true beneficiary disclosed to the Ministry of Commerce, thus reducing operational and legal risks.
- At the regional and international level: This measure enhances the Kingdom’s position as a safe and transparent financial environment, which positively impacts the Kingdom’s ratings with international organizations and attracts more foreign direct investment looking for markets with high governance, which is in line with the objectives of Saudi Vision 2030.
Compliance with regulatory requirements and controls
In a related context, SAMA emphasized to financial institutions the necessity of full compliance with all requirements and regulations pertaining to the technical linkage process. This includes the obligation for institutions to notify the Ministry of Commerce via the designated platform if an undisclosed beneficial owner is discovered, or if any material discrepancies are detected in the available information. The central bank also stressed the importance of ensuring that these reporting procedures do not conflict in any way with the requirements for reporting suspicious transactions to the competent authorities, or with the provisions of the Personal Data Protection Law, which guarantees the confidentiality and privacy of customer information.
Strict enforcement of regulations and details of penalties
To ensure full compliance, the instructions included detailed penalties for failing to disclose the beneficial owner. According to the regulations, a graduated scale of fines was established based on the size of the offending company's capital. These penalties reach a maximum fine of SAR 80,000 for companies with a capital exceeding SAR 5 million. This rigorous enforcement of the regulations reflects the seriousness of Saudi regulatory authorities in purging the business environment of any illicit financial practices and ensuring that all commercial and financial entities adhere to the highest standards of integrity and transparency.
