SAMA bans banks from opening accounts for entities involved in illegal operations
The Saudi Central Bank (SAMA) has banned Saudi local banks from allowing the opening of accounts by entities that are involved in illegal operations. The Central Bank also instructed that banks shall notify customers about freezing of their accounts at least 30 days before the date of freezing.
These rules are contained in the updated Bank Account Rules that are mandatory and to be enforced by the Saudi banks effective from Feb. 2.
These rules replace the fourth update of the rules for opening bank accounts and the general rules for their operation in commercial banks operating in the Kingdom.
The updated rules would allow banks to carry out transactions of outgoing remittances and sold checks only by customers who are accountholders.
The rules prohibit banks from opening bank accounts for investment companies, investment funds, foreign financial institutions, including investment companies in the Gulf countries or their intermediaries that sell their products illegally in the Kingdom and collect money in Saudi riyals and foreign currencies.
Saudi banks are also not allowed to facilitate such illegal businesses in any way whatsoever. However, there are exemptions for the categories of entities that the Saudi Capital Market Authority allowed to invest in shares of Saudi joint stock companies.
SAMA called on all Saudi national banks to submit a statement at the end of March annually to the Central Bank, according to the presented schedule, this statement shall include an inventory of unclaimed accounts and abandoned accounts whose holders have been cut off from the bank.
The statement will be in accordance with the nature and category of accounts and account numbers without mentioning personal information, as of the end of December of the previous year.The Central Bank stressed that such unclaimed and abandoned accounts shall be subjected to internal audit program once every two years, and the report shall be submitted to the audit committee, provided that the annual audit program is not linked to any other periodic programs related to the accounts.
The updated rules have granted Saudi banks the right to freeze the account upon the expiry of the validity of the official labor contract or the failure to update the banking data, as well as failure to submit financial and personal information and addresses of account holders.
The rules also prohibit banks from enabling the customer to personally carry out banking operations using the account after the expiry of the validity of his ID except after renewing it or updating the “know your customer” data.
There will be an exemption for deposits of all kinds, including incoming local and international transfers. Exemptions will also be given to accounts of government employees whose salaries are received through the banks, but their accounts were frozen or they were unable to provide national identity cards due to any legal problem.
Such employees will be granted a grace period of 180 days from the date of the expiry of their IDs or from the last date for the update.
According to the rules, it is mandatory for the banks to open an account for any customer who makes a request in this regard provided that he shall submit all the required documents and fulfill the conditions for the account opening process.
The banks must agree to open the account without putting conditions to deposit any amounts at the time of opening the account. In the event of not depositing any amounts within a period of 90 days after opening the account, the banks must close the account.
However, there will be an exemption for the accounts of government agencies and that is with the approval of the Ministry of Finance to open it without depositing any amounts for the period determined by the ministry.
According to the rules, the bank accounts of prison inmates shall be opened when they approach the banks accompanied by security guards affiliated with the General Administration of Prisons.
The banks must obtain from the guards a letter from the prison administration in the city where the prison is located, addressed to the bank branch mentioning the prisoner’s name, ID or iqama number, and his intention to open the account.
These rules replace the fourth update of the rules for opening bank accounts and the general rules for their operation in commercial banks operating in the Kingdom.
The updated rules would allow banks to carry out transactions of outgoing remittances and sold checks only by customers who are accountholders.
The rules prohibit banks from opening bank accounts for investment companies, investment funds, foreign financial institutions, including investment companies in the Gulf countries or their intermediaries that sell their products illegally in the Kingdom and collect money in Saudi riyals and foreign currencies.
Saudi banks are also not allowed to facilitate such illegal businesses in any way whatsoever. However, there are exemptions for the categories of entities that the Saudi Capital Market Authority allowed to invest in shares of Saudi joint stock companies.
SAMA called on all Saudi national banks to submit a statement at the end of March annually to the Central Bank, according to the presented schedule, this statement shall include an inventory of unclaimed accounts and abandoned accounts whose holders have been cut off from the bank.
The statement will be in accordance with the nature and category of accounts and account numbers without mentioning personal information, as of the end of December of the previous year.The Central Bank stressed that such unclaimed and abandoned accounts shall be subjected to internal audit program once every two years, and the report shall be submitted to the audit committee, provided that the annual audit program is not linked to any other periodic programs related to the accounts.
The updated rules have granted Saudi banks the right to freeze the account upon the expiry of the validity of the official labor contract or the failure to update the banking data, as well as failure to submit financial and personal information and addresses of account holders.
The rules also prohibit banks from enabling the customer to personally carry out banking operations using the account after the expiry of the validity of his ID except after renewing it or updating the “know your customer” data.
There will be an exemption for deposits of all kinds, including incoming local and international transfers. Exemptions will also be given to accounts of government employees whose salaries are received through the banks, but their accounts were frozen or they were unable to provide national identity cards due to any legal problem.
Such employees will be granted a grace period of 180 days from the date of the expiry of their IDs or from the last date for the update.
According to the rules, it is mandatory for the banks to open an account for any customer who makes a request in this regard provided that he shall submit all the required documents and fulfill the conditions for the account opening process.
The banks must agree to open the account without putting conditions to deposit any amounts at the time of opening the account. In the event of not depositing any amounts within a period of 90 days after opening the account, the banks must close the account.
However, there will be an exemption for the accounts of government agencies and that is with the approval of the Ministry of Finance to open it without depositing any amounts for the period determined by the ministry.
According to the rules, the bank accounts of prison inmates shall be opened when they approach the banks accompanied by security guards affiliated with the General Administration of Prisons.
The banks must obtain from the guards a letter from the prison administration in the city where the prison is located, addressed to the bank branch mentioning the prisoner’s name, ID or iqama number, and his intention to open the account.