Saudi Gazette report
Riyadh — The Central Bank of Saudi Arabia (SAMA) has banned local Saudi banks from allowing the opening of accounts by entities involved in illegal operations. The Central Bank has also asked banks to inform customers of the freezing of their accounts at least 30 days before the date of the freezing.
These rules are contained in the updated bank account rules which are mandatory and must be applied by Saudi banks as of February 2.
These rules replace the fourth update of the rules for opening bank accounts and general rules for their operation in commercial banks operating in the Kingdom.
The updated rules would allow banks to transact outbound remittances and checks sold only by account-holding customers.
The rules prohibit banks from opening bank accounts for investment companies, investment funds, foreign financial institutions, including investment companies in Gulf countries or their intermediaries who 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. However, there are exemptions for categories of entities that the Saudi Capital Market Authority has allowed to invest in shares of Saudi joint-stock companies.
SAMA has called on all Saudi National Banks to submit a statement by the end of March each year to the Central Bank, according to the schedule presented, this statement will 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 mention of personal information, at the end of December of the previous year.
The Central Bank pointed out that these unclaimed and abandoned accounts will be subject to an internal audit program once every two years, and the report will be submitted to the audit committee, provided that the annual audit program is not linked to any other periodic program linked to the accounts.
The updated rules granted Saudi banks the right to freeze the account upon expiry of the validity of the official employment contract or in case of non-update of bank details, as well as in case of non-submission financial and personal information and addresses of account holders.
The rules also prohibit banks from allowing the customer to personally carry out banking operations using the account after the expiry of the validity of his identifier except after renewal of the latter or updating of 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 granted to the accounts of government employees whose salaries are collected through banks, but whose accounts have been frozen or they have been unable to provide a national identity card due to a legal problem.
These employees will be granted a grace period of 180 days from the date their credentials expire or were last updated.
According to the rules, it is mandatory for banks to open an account for any customer who applies for it provided that he submits all the required documents and fulfills the conditions of the account opening process.
Banks must agree to open the account with no conditions to deposit monies at the time of opening the account. In the event of non-payment of the sums within 90 days after the opening of the account, the banks must close the account.
However, there will be an exemption for government agency accounts and it is with the approval of the Ministry of Finance to open it without depositing any amount for the period determined by the ministry.
According to the rules, inmates’ bank accounts must be opened when they approach banks accompanied by security guards affiliated with the General Administration of Prisons.
Banks must obtain from the guards a letter from the prison administration of the city where the prison is located, addressed to the bank branch, mentioning the name of the inmate, his identity card or his iqama number, and his intention to detain. open the account.