Applying KYC Principles to Prepaid Service Product Customers

In the name of Allah, the Most Gracious, the Most Merciful Saudi Arabian Monetary Authority Headquarters Banking Policy Department

Reference No.: 381000025290
Date: 1438/03/06
Attachments:

Circular

To: Your Excellency,
With regards,
Subject: Applying the Know Your Customer (KYC) Principle to Customers of Prepaid Service Products.

With reference to the Authority's Circular No. A/Q 10631 dated 1437/6/11H regarding the application of prepaid payment services rules, and Instruction No. 671000092918 dated 1437/7/2H regarding the update of those rules for the salary card product and its inclusion on applying the Know Your Customer principle, and in order to support and develop prepaid payment services procedures and expand the offering of its products without compromising supervisory and regulatory requirements, it has been decided as follows:

• The Know Your Customer principle shall apply to the main account holder (the contracting entity, whether corporate or individual) and not the cardholder, provided that there are no credit services for the product and no deposits are accepted except from the contracting entity's account.
• The issuing bank shall request the contracting entity to provide the necessary data required for the issuance process and sufficient evidence to verify the cardholder, as well as the contracting entity's endorsement and confirmation of the accuracy of the submitted information and data, with its commitment to notify the bank of any amendments thereto. Appropriate procedures shall be in place enabling the bank to access such data or conduct audits of these data when needed.
• The card-issuing bank must verify and match the data submitted by the contracting entity with the data available at the National Center for Information to ensure that requested cards are not issued unless such data match. This excludes closed-loop prepaid payment products.
• The issuing bank shall develop operational monitoring systems for transactions conducted through these products to ensure their integrity and consistency with the purpose for which they were issued, and that they are free from any erroneous practices.

Regarding the delivery and activation procedures for these cards, the issuing bank may deliver and activate them by personally meeting the beneficiary at branches or at the contracting entity's premises, or by delivering inactive cards to the contracting entity, its authorized representatives, or an entity contracted with by the bank. Such cards shall be activated through the bank's electronic channels after verifying the beneficiary's identity using a verified mobile number, if obtained directly from the beneficiary, or through fingerprint matching systems and solutions available at the National Center for Information.

For your information and action,
Respectfully,
Yours sincerely and esteemed,

Ahmed bin Abdullah Al-Sheikh
Deputy Governor for Supervision

Distribution Scope:
The Bank, Banks operating in the Kingdom

P.O. Box 2992, Riyadh 11179, Postal Address: Central, Telex 404600, Tel. 4132000, Fax 4777414