Fines for the true beneficiary: The Ministry of Commerce imposes penalties of up to 80,000 riyals
Minister of Commerce Dr. Majid bin Abdullah Al-Qasabi issued a firm ministerial decision to impose monitoring mechanisms and escalating financial penalties on companies that violate the obligations to disclose the data of the "beneficial owner," as part of the Kingdom's ongoing efforts to enhance transparency in the business environment and combat commercial concealment and money laundering.
Context of the decision and its economic importance
This decision is an integral part of the legislative and regulatory reforms underway in the Kingdom of Saudi Arabia, in line with Vision 2030, which aims to create a safe and attractive investment environment. Disclosing the beneficial owner is a fundamental international requirement for enhancing financial integrity, as it helps identify individuals who effectively own or control companies, thus preventing illicit practices.
Through these measures, the Ministry of Commerce seeks to raise the Kingdom’s ranking in international transparency indicators and ensure the private sector’s commitment to global governance standards, which will positively impact the confidence of local and foreign investors in the Saudi market.
Details of financial penalties according to capital
The new decision stipulates that fines be classified based on the size of the capital of the violating company, to ensure proportionality between the size of the entity and the value of the penalty. The details are as follows:
- Small businesses: A fine of 4,000 riyals for companies whose capital is less than 500,000 riyals.
- Medium-sized companies: A fine of 20,000 riyals for companies whose capital ranges between 500,000 riyals and 2.5 million riyals.
- Large companies: A fine of 40,000 riyals for companies whose capital ranges between 2.5 million riyals and 5 million riyals.
- Large companies: A fine of 80,000 riyals for companies whose capital exceeds 5 million riyals.
Warning mechanism and corrective grace period
In accordance with the principle of graduated penalties, the decision stipulates that a preliminary warning be issued to non-compliant companies (whether for failure to disclose information or for failing to submit annual confirmations of data). The company is then granted a 30-day to rectify the situation, starting from the day following the date of the warning. If the situation is not rectified within this period, the prescribed financial penalty will be imposed immediately.
Stricter penalties in case of recurrence
The ministry emphasized that if the violation is repeated and the annual data confirmation is not submitted in the following year, and after the previous violation decision becomes final, the fine will be doubled. The regulations have set a maximum limit for total fines not exceeding 500,000 Saudi Riyals , reflecting the ministry's commitment to enforcing the regulations and deterring violators.
