Regulatory Alerts2021-03-01
Emphasize the Mandatory Verification of Customers and the Effectiveness of Procedures to Adhere with the Know Your Customer (KYC) Principle Before Initiating Point-of-Sale Device Sales or Purchases
The Saudi Central Bank (SAMA) issued this circular to mandate that payment service companies verify customers and ensure the effectiveness of their "Know Your Customer (KYC)" procedures before selling or operating point-of-sale devices. The directive requires licensed marketing entities to implement comprehensive internal policies that identify, monitor, and report potential risks, while ensuring each device is exclusively linked to the customer's bank account. Payment service companies must comply with these verification and risk management requirements effective immediately to maintain regulatory adherence.
Saudi Central Bank (SAMA)
Circular
To the Esteemed,
Peace, mercy, and blessings of God be upon you,
Subject: Emphasizing the mandatory verification of customers and the effectiveness of procedures followed to adhere to the "Know Your Customer (KYC)" principle before initiating the sale or operation of point-of-sale devices.
Based on the Banking Control System issued by Royal Decree No. M/5 dated 22/07/1386 AH, and referring to the powers granted to the Saudi Central Bank by Cabinet Decision No. (26) dated 05/1440 AH, confirming it as the competent authority under the system for operating, monitoring, and supervising payment systems, clearing, and related services in the Kingdom, with the authority to issue regulations, instructions, and licenses according to applicable standards; and based on Article 3 of the Regulatory Rules for Payment Services, which stipulates that "inviting or encouraging any person in the Kingdom to conclude or enter into an agreement related to one or more payment services, or marketing or promoting them after providing payment services in the Kingdom requires obtaining a license from the Central Bank; and referring to Article 8 of the Rules, which mandates establishing policies and procedures for detecting fraud cases and mechanisms for handling them, in addition to notifying the competent authorities in the country and informing the Central Bank according to the specified format.
The Saudi Central Bank wishes to emphasize the importance of verifying the effectiveness of procedures followed to adhere to the "Know Your Customer (KYC)" principle before initiating the sale or operation of point-of-sale devices, and that the party entrusted with marketing and promoting the devices is an entity licensed by the Saudi Central Bank, in addition to the importance of verifying the comprehensiveness and appropriateness of internal policies and procedures established by the company for all customer categories benefiting from these services, which include identifying potential risk types, monitoring and managing them, and reporting on them; we also wish to emphasize the importance of verifying that the point-of-sale device is connected only to the customer's bank account and not accepted for transfer to another person's account.
For information and action, effective from its date. Yours sincerely,
Fahad bin Ibrahim Al-Shathri Deputy Governor for Supervision
Distribution Scope: Payment Service Companies.
No.: 42050337 Date: 18/07/1442 Attachments: None
P.O. Box 2992 Riyadh 11169, Kingdom of Saudi Arabia Tel: +966 11 463 3000 P.O. Box 2992, Riyadh 11169, Kingdom of Saudi Arabia Tel: +966 11 463 3000