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2018-02-19

The Spread of Advertisements for Lending and Debt Repayment from Unlicensed Parties

The Saudi Arabian Monetary Authority (SAMA) mandates licensed financial institutions to intensively monitor, review, and report on early debt repayment operations linked to unlicensed entities, ensuring compliance with the Banking Control Law and Financial Companies Control Law. Institutions must remove related ATM stickers on a semi-monthly basis, conduct at least semi-annual internal reviews of these transactions, and submit quarterly violation reports to SAMA for field verification. This directive aims to mitigate negative economic impacts by curbing suspicious financial advertisements and strengthening oversight of unlicensed debt repayment activities.

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In the Name of Allah, the Most Gracious, the Most Merciful Saudi Arabian Monetary Authority (SAMA) Headquarters

Office of the Deputy Governor for Supervision

Reference No.: 391000063139 Date: 1439/06/03 AH Attachments:

Circular

To: [Respected]

With greetings, Subject: The Phenomenon of the Spread of Lending and Debt Repayment Advertisements from Unlicensed Entities.

In continuation of the Authority's circulars No. 51224/MS/995 dated 30/10/1430 AH, No. 27780/MS/13135 dated 27/05/1431 AH, No. 351000047332 dated 13/04/1435 AH, and No. 351000086328 dated 05/07/1435 AH regarding the phenomenon of the spread of commercial advertisements in media concerning suspicious financial operations related to lending or repayment of bank-issued loans, as well as stickers on ATMs.

And since these activities, which violate the Banking Control Law and the Financial Companies Control Law, have negative economic and financial impacts and reflect a negative image of the situation in the Kingdom, addressing these violations is done in cooperation with financial institutions; therefore, the Authority confirms the following regarding this matter:

  1. Compliance with the provisions of the aforementioned Authority circulars regarding monitoring ATMs and removing stickers related to early repayment and loan granting on a semi-monthly basis.

  2. Financial institutions are committed to taking the following measures: a) Intensive and continuous monitoring and tracking of customers' early repayment operations through periodic reports aimed at verifying the integrity of transferred funds used in early repayment, and ensuring no relationship exists between a financial institution's customer debt repayment and any person suspected of conducting banking or financing activities without a license as debt repayment practitioners, and notifying the General Department of Financial Investigations about the person suspected of conducting such operation. b) Reviewing all early repayment operations periodically and at least semi-annually through one of the internal supervision departments in financial institutions to ensure the integrity of taken measures and their compliance with approved internal policies and procedures, in addition to what was mentioned in paragraph (a) above. c) Providing the Authority with a report containing all violations identified during the review process on a quarterly basis, and the Authority will conduct field visits to verify the integrity of these measures.

For information and action as of its date. Yours sincerely,

Ahmed bin Abdullah Al-Sheikh Deputy Governor for Supervision

Distribution Scope:

  • Banks licensed by the Authority.
  • Financial companies licensed by the Authority.
  • Supervision Department Offices

P.O. Box 2992, Riyadh 11169, Tel: 4662300 - Fax: 4662543

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