Non-Resident FOREX Companies Conducting Banking Activities in the Kingdom without a License

Saudi Central Bank Head Office Banking Policies Department Ref: 381000088793 Date: 22/08/1438 AH Attachments:

Circular

Dear Sir/Madam,

Greetings,

Subject: Non-Resident FOREX Companies Conducting Banking Activities in the Kingdom without a License.

With reference to Article Two of the Banking Control Law, which prohibits conducting banking activities in the Kingdom without a license, and the continuous warning and awareness circulars issued by the Saudi Central Bank (the "Authority") on the aforementioned subject, the latest being Supplementary Circular No. 371000053452 dated 08/05/1437 AH, and the joint warning statement issued by the Authority and the Capital Market Authority (the "CMA") on 19/12/2016 CE regarding this matter, and in accordance with the responsibility incumbent upon the financial sector and continuing its role, demonstrating diligence and cooperation to protect citizens and residents from dealing with what those companies expose on suspicious websites or through violating local and foreign agents and offices that promote their activities, the Authority wishes to inform and emphasize the following:

First: The violating activities prohibited from being conducted in the Kingdom regarding the aforementioned matter are as follows:

1. Foreign exchange (FOREX) companies and those in the same category that do not have contracts with banks, investment companies, banks, and money changers (licensed) operating in the Kingdom, particularly delegation of duties contracts, and which promote and market their activities by any means (websites, phone contact, etc.), whether through direct calls to deal with them or by exploiting relationships, services, and other means provided by the local financial sector.
2. Unlicensed persons (natural or legal) conducting banking activities in the Kingdom who market FOREX companies and act as their direct or indirect agents and brokers, and use their accounts and financial relationships in the local financial sector in the Kingdom for this purpose, contrary to the purpose for which those accounts were opened and relationships established.

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Saudi Central Bank Head Office Banking Policies Department

Date: Corresponding Date:

3. Persons (natural or legal) who directly transfer funds to FOREX companies outside the Kingdom using their accounts and financial relationships with banks, banks, and money changers (licensed) in the Kingdom for transfer operations, contrary to the purposes for which the accounts and relationships (personal or commercial) were opened.

Second: Required Measures and Precautions:

1. Adherence to the provisions of the account opening rules and general operating rules in commercial banks in the Kingdom regarding account controls for non-resident persons whose accounts are prohibited from being opened. And monitoring the use of accounts solely for the purposes they were opened for.
2. Adherence to the Anti-Money Laundering Law and the AML/CFT rules for banks, money exchange houses, and branches of foreign banks operating in the Kingdom of Saudi Arabia regarding reporting to the General Directorate of Financial Investigations suspicious operations and accounts, including remittances and operations believed or suspected to be related to foreign exchange trading outside the Kingdom.
3. Monitoring remittances that customers request to transfer outside the Kingdom, and if it becomes apparent that the purpose is to send them to any FOREX companies, those remittances shall be halted, the customer shall be notified, the relationship shall be re-evaluated, and due diligence shall be applied with them.
4. Monitoring incoming remittances from FOREX companies outside the Kingdom, and if it becomes apparent that the source is the beneficiary's dealings with them, the remittance shall be returned to its source.
5. Updating the list of companies previously circulated by the Authority regarding violating companies and linking it to electronic systems so that specialists in branches, transfer centers, and monitoring can track violating remittances.
6. Taking into consideration that some FOREX companies periodically change their names to avoid the ban previously announced on the trading name, in order to continue defrauding citizens and residents.
7. Continuously notifying the Authority of any new violating companies that become apparent or are discovered and have not been previously included in the prior lists.
8. Sharing information and countermeasures among banks and financial institutions through joint banking committees (Compliance, Operations, Financial Crime Prevention) held by banks on a monthly basis.

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Saudi Central Bank Head Office Banking Policies Department

Date: Corresponding Date:

9. Periodically raising awareness among relevant employees regarding related violations, methods of commission, and countermeasures.
10. Raising customer awareness regarding the risks of dealing with persons, websites, and phone calls promoting investment opportunities in foreign exchange trading that are not licensed in the Kingdom or are not linked to contracts with banks and financial institutions operating in the Kingdom, and informing them that any outgoing or incoming remittance related to FOREX companies will be cancelled, with awareness and notification delivered through appropriate means.

For information and necessary action.

Yours sincerely,

Ahmed bin Abdullah Al Sheikh Deputy Governor for Supervision

On behalf of / Dr. Fahd bin Ibrahim Al Shathri Deputy Governor for Research and International Affairs

Distribution Scope:

• Banks and financial institutions operating in the Kingdom.
• Category (A) Money Changers.

P.O. Box 2992, Riyadh 11169, Telegram: MARKAZI, Telex: 404400, Tel: 4633000, Fax: 4662414