Guide to Enforcing Security Council Resolutions Concerning the Prevention of WMD Proliferation and Their Financing

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In the name of Allah, the Most Gracious, the Most Merciful Saudi Arabian Monetary Authority (SAMA) Headquarters Anti-Money Laundering and Counter-Terrorism Financing Department No.: 391000077627 Date: 1439/07/09 (Hijri) Attachments: Guide "Circular" To:
The Esteemed Bank / Company / General Administration With regards, Subject: Guide to Implementing the Mechanism for Enforcing Security Council Resolutions Concerning the Prevention of WMD Proliferation and Their Financing.

In continuation of SAMA Circular No. 391000054107 dated 1439/05/12 (Hijri) regarding the mechanism for enforcing Security Council resolutions concerning WMD proliferation and financing, approved by Royal Decree No. 10130 dated 1439/3/1 (Hijri), and based on Article Eleven of the mechanism which stipulates: "Designated financial institutions, businesses, and non-financial professions must apply the necessary measures established by regulatory authorities to implement Security Council resolutions."

To ensure the optimal implementation of this mechanism by supervised financial institutions, SAMA has prepared a guide to implement it (attached), which facilitates the optimal application of SAMA's instructions in this regard. Accordingly, we expect compliance with this guide to implement the instructions outlined in the aforementioned circular.

Yours sincerely,
Ahmed bin Abdulrahman Al-Khalifa (Governor)

Distribution Scope:

• Banks operating in the Kingdom.
• Insurance companies operating in the Kingdom.
• Financing companies operating in the Kingdom.
• Licensed money exchange practitioners.
  P.O. Box 2992 - Riyadh 11169 - Phone: 011 4633000

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Saudi Arabian Monetary Authority (SAMA)
Guide to Implementing the Mechanism for Enforcing Security Council Resolutions Concerning WMD Proliferation and Financing Anti-Money Laundering and Counter-Terrorism Financing Department Rajab 1439 (Hijri) / March 2018

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Table of Contents

Paragraph No.	Subject	Page No.
--	Introduction	2
1	Freezing of Designated Funds According to the Issued Mechanism for Enforcing Security Council Resolutions Concerning WMD Proliferation and Financing	3
2	Funds to be Frozen Pursuant to Resolutions	4
3	Mechanism for Financial Institutions to Verify All Customers Against Listed Names on Security Council Lists	5
4	Procedures Financial Institutions Must Follow Upon Lifting of Freezing Order	6
5	Confidentiality of Information	6
6	SAMA's Mechanism to Verify Financial Institutions' Compliance with Security Council Resolutions Concerning WMD Proliferation and Financing	7
7	Penalties Applied in Case of Non-Compliance with Stipulated Requirements and Procedures for Enforcing Security Council Resolutions Concerning WMD Proliferation and Financing	7
--	SAMA Circular No. 391000054107 dated 1439/05/12 (Hijri) (Annex No. 1)	8

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Introduction:
Security Council resolutions issued under Chapter VII of the UN Charter concerning WMD proliferation and financing obligate states to promptly freeze all funds and assets of any person, group, or entity designated by the UN Security Council or a related committee as linked to WMD proliferation financing activities. They must also take all measures to prevent any other funds or assets from being made available to these persons, groups, or entities by anyone within Saudi territory or under its jurisdiction. Pursuant to this obligation, Royal Decree No. 10130 dated 1439/3/1 (Hijri) was issued, approving the "Mechanism for Enforcing Security Council Resolutions Issued under Chapter VII of the UN Charter Concerning WMD Proliferation and Financing."

Accordingly, SAMA directed supervised financial institutions via Circular No. 391000054107 dated 1439/05/12 (Hijri) (Annex No. 1) to take several measures implementing the aforementioned mechanism. To ensure optimal implementation by supervised institutions, SAMA prepared this guide to implement the mechanism for enforcing Security Council resolutions concerning WMD proliferation and financing.

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Guide to Implementing the Mechanism for Enforcing Security Council Resolutions Concerning WMD Proliferation and Financing

1. Freezing of Designated Funds According to the Issued Mechanism for Enforcing Security Council Resolutions Concerning WMD Proliferation and Financing:

1-1 In compliance with Security Council resolutions and implementing the mechanism, financial institutions must promptly (within hours) and without prior notice freeze any funds, economic resources, assets, or property owned, controlled, or held directly or indirectly by:
(a) any person, group, or entity designated by the UN Security Council or a related committee under relevant resolutions; (b) any person acting on behalf of, or directed by, a listed person/group/entity, or owned/controlled directly or indirectly (including through illegitimate means).

2-1 The mechanism prohibits any natural or legal person, including all financial institution categories, from making funds, economic resources, assets, or property available to any listed person/group/entity, and prohibits providing financial or other services directly or indirectly to them or for their benefit, unless the name is removed from Security Council committees or prior written approval is obtained from SAMA.

3-1 The mechanism requires daily monitoring of updates to listed names on Security Council sanctions committees, by referring to the UN Security Council resolutions website at:
http://www.un.org/ar/sc/documents/resolutions/

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4-1 SAMA must be notified upon freezing, within five working days (maximum), providing full details of the account or transaction as detailed in paragraph 3-3(c) of this guide.

5-1 Payments due to listed names may be credited to frozen accounts, provided they remain frozen and are reported to SAMA.

2. Funds to be Frozen Pursuant to Resolutions:

1-2 The obligations stipulated in the mechanism apply to all "funds", defined as: assets, economic resources, or property of any value, type, or ownership method, whether tangible/intangible, movable/immovable, physical/digital, or digital, and bank credits indicating ownership or interest therein, including but not limited to checks, remittances, shares, securities, bonds, promissory notes, letters of credit, and any interest, profits, or income derived from these funds/assets, whether within or outside the Kingdom.

2-2 The freezing order extends to funds owned or controlled directly/indirectly by the concerned person. It includes companies controlled (directly/indirectly, even without formal ownership) by the listed person, such as joint bank accounts, trust funds, shell companies used indirectly (e.g., by minor children or spouses), joint ventures, and complex/ambiguous corporate structures designed to conceal control or ownership. These examples illustrate that any funds under the control or ownership of a listed person, regardless of the mechanism, fall within Security Council resolutions.

3-2 It is important to note that funds jointly owned, controlled, or held by a listed person/group/entity and an unlisted person/group/entity are fully subject to the freezing order, including the portion owned/controlled by the unlisted party. Disposal requires referring to SAMA, which consults the Ministry of Foreign Affairs (Standing Committee for Enforcing Security Council Resolutions under Chapter VII, established by Royal Decree No. 7753/M/B dated 1427/10/29 Hijri) to address each case individually.

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3. Mechanism for Financial Institutions to Verify All Customers Against Listed Names on Security Council Lists:

1-3 Financial institutions must continuously verify customer databases and obtained information about potential/existing customers against Security Council lists concerning WMD proliferation/financing, determining if they hold or manage funds subject to resolutions. An updated list of listed entities and persons must be maintained in the database.

2-3 Some institutions rely on electronic screening services to ensure customers are not subject to Security Council sanctions. While useful, these do not guarantee full compliance and must be supplemented by continuous daily verification against Security Council sanctions committees. The primary source for monitoring updates and ensuring application of sanctions on listed names remains the aforementioned website in paragraph 1-3.

3-3 If a financial institution discovers funds under its custody/management are subject to freezing, it must:
(a) promptly freeze all such funds and any derived/accrued funds within hours without prior notice; (b) refrain from providing financial or other services to or for the benefit of listed persons/groups/entities, including account opening, consulting, financial/intermediation/investment services, or any assets/property (tangible/intangible, movable/immovable) directly/indirectly; (c) notify SAMA within five working days (maximum) of the freezing date, providing information on fund status, measures taken, nature/quantity of frozen funds, and other relevant details to facilitate compliance. Institutions must ensure accuracy of information provided to SAMA.

4-3 If an institution determines it holds no targeted funds, it must still immediately notify SAMA if a previous or transacting customer is a listed person/group/entity.

5-3 For similar names, institutions must immediately search available systematic means for information confirming match or non-match. If unable to confirm match/non-match, they must immediately notify SAMA without taking any action.

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4. Procedures Financial Institutions Must Follow Upon Lifting of Freezing Order:

1-4 If a name is removed from Security Council sanctions committees, institutions must promptly lift the freeze (within hours) without prior notice and notify SAMA (as clarified in paragraph 4-2 below), unless prior written notice of non-lifting is received from SAMA.

2-4 Institutions must notify SAMA of the lifted freeze within five working days (maximum) of the lifting date, providing information on fund status, measures taken, nature/quantity of unfrozen funds, and other relevant details. Institutions must ensure accuracy of provided information.

3-4 If the Security Council approves partial lifting of other identified funds/assets, SAMA will notify supervised institutions accordingly.

5. Confidentiality of Information:
   Financial institutions must ensure confidentiality of information regarding listed names per Security Council resolutions, in accordance with relevant regulations and instructions, including the Anti-Money Laundering Law, Counter-Terrorism Financing Crimes Law, and SAMA's AML/CFT rules.

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6. SAMA's Mechanism to Verify Financial Institutions' Compliance with Security Council Resolutions Concerning WMD Proliferation and Financing:
Financial institutions must take all measures ensuring full compliance with sanctions imposed on listed names. Compliance will be verified through field visits, and penalties stipulated in relevant laws will apply in case of negligence, delay, or non-implementation by institutions.

7. Penalties Applied in Case of Non-Compliance with Stipulated Requirements and Procedures for Enforcing Security Council Resolutions Concerning WMD Proliferation and Financing:
   Any person who neglects to impose or execute a freezing order against names subject to the mechanism, makes funds available or provides financial/other services to/in favor of a listed person contrary to the mechanism, fails to disclose or discloses inaccurate information intentionally or negligently, delays providing information, or commits other violations, shall be subject to accountability under relevant laws.

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(Annex No. 1)
In the name of Allah, the Most Gracious, the Most Merciful Saudi Arabian Monetary Authority (SAMA) Headquarters Anti-Money Laundering and Counter-Terrorism Financing Department No.: 391000054107 Date: 1439/05/12 (Hijri) Attachments:
"Circular"
To:
The Esteemed Bank / Company / General Administration With regards, Subject: Mechanism for Enforcing Security Council Resolutions Concerning WMD Proliferation and Financing.

Reference to SAMA instructions regarding the implementation of Security Council resolutions concerning WMD proliferation and financing, and other related resolutions, SAMA wishes to inform you of the issuance of Royal Decree No. 10130 dated 1439/3/1 (Hijri) approving the "Mechanism for Enforcing Security Council Resolutions Issued under Chapter VII of the UN Charter Concerning WMD Proliferation and Financing."

In implementation of the aforementioned mechanism, all financial institutions must take the following measures and report on their implementation within one week of its issuance:

1. Daily monitoring of updates to listed names on UN lists, by referring to the relevant Security Council committees website at:

• https://www.un.org/sc/suborg/ar

2. Immediate freezing without delay (within hours) and without prior notice, of any accounts, relationships, financial transactions, or funds belonging to those listed names (whether natural or legal persons) by the sanctions committee under Security Council resolutions, according to data available in the lists. This applies whether funds, accounts, relationships, or financial transactions are fully owned by the listed person/entity or jointly with any other person, whether held directly/indirectly, plus funds managed by any person acting on behalf of or directed by the listed person/entity (as stated in Article 3), and notifying SAMA.
   P.O. Box 2992 - Riyadh 11169 - Phone: 011 4633000

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In the name of Allah, the Most Gracious, the Most Merciful Saudi Arabian Monetary Authority (SAMA) Headquarters Anti-Money Laundering and Counter-Terrorism Financing Department Date:
Attachments:

Immediate freezing, providing full details of the account or transaction. In cases of similar names, SAMA must be notified before taking any action.

3. Prohibition of making any funds available or providing investment, intermediation, or other financial services directly/indirectly to persons/entities listed by the sanctions committee or Security Council decision, or for their benefit, or any person acting on behalf of/controlled by the listed person/entity (as stated in Article 4).

4. Acceptance of deposits into frozen accounts and immediate freezing when interest/profits are due, or payments due under contracts/agreements/obligations, or funds arising before the listing date, and notifying SAMA promptly (as stated in Article 5).

5. If the name is lifted by Security Council committees, institutions must promptly (within hours) and without prior notice lift the freeze and notify SAMA immediately, unless prior written notice of non-lifting is received.

6. Establishing effective verification procedures for all customers (individuals, entities, beneficial owners, etc.) against UN "listed persons" classifications during transactions (for existing customers) or before account opening/relationship establishment, particularly for fund transfers, verifying the names of both sender and beneficiary.

7. Maintaining an updated list in the database for listed entities and persons for monitoring purposes.

8. Monitoring sanctions lists issued and available from countries, verifying all transactions/transfers against them to avoid potential legal issues.

9. Providing SAMA immediately with any information related to Security Council decisions.

P.O. Box 2992 - Riyadh 11169 - Phone: 011 4633000

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In the name of Allah, the Most Gracious, the Most Merciful Saudi Arabian Monetary Authority (SAMA) Headquarters Anti-Money Laundering and Counter-Terrorism Financing Department Date:
Attachments:

10. Implementation of the mechanism's procedures is mandatory; negligence or delay will result in penalties for persons, including supervised financial institutions, per applicable laws.

Yours sincerely,
Ahmed bin Abdullah Al-Sheikh (Deputy Governor for Supervision)

Distribution Scope:

• All banks operating in the Kingdom.
• All insurance companies operating in the Kingdom.
• All financing companies operating in the Kingdom.
• All licensed money exchange institutions.
  P.O. Box 2992 - Riyadh 11169 - Phone: 011 4633000