SAMA Initiates Action To Curb Illegal Money Transactions

RIYADH, 30 June 2003 — In a major move to curb illegal money transactions, Saudi Arabia has asked money exchange firms not to send remittances outside the Kingdom to unknown customers or dubious business entities.

The money exchange firms, on the other hand, are also currently unifying their efforts to merge and form full-fledged licensed banking entities on a par with the Kingdom’s other commercial banks which offer the whole range of banking services.

Ibrahim Al-Subeie, a member of the board of directors of Al-Subeie Money Exchange Firm, said that Saudi Arabian Monetary Agency (SAMA) had imposed tighter restrictions on money exchange firms.

Al-Subeie said that SAMA had asked his firm and other firms to stop remittance and credit services to customers not known to them. SAMA, however, is still allowing the money exchange firms to remit money to a limited number of known individual customers, companies and foreign banks.

“This new SAMA regulation will reduce the chances of money being used in suspect operations,” said Al-Subeie, adding that the total volume of remittances sent by money exchange firms had gone down following the implementation of this new rule.

The Kingdom has one of the largest remittance markets in the world and its seven million foreign workers have been sending some SR78 billion annually to their respective countries. They earn about SR132 billion annually.

In first reactions to the move, leading businessman and TV presenter Hussein Shobokshi said: “SAMA has been backward in its approach and confusing the public for quite some time by allowing money exchange firms to send remittances without fully licensing them as banks. The ban on the remittance services of these money exchange firms does not come because of an improvement in SAMA’s managerial profile; rather it has been imposed because of security and political reasons.”

According to Fahd Abdullah Al-Rajhi, deputy general manager of Al-Rajhi Banking and Investment Corporation, the move to ban remittance services by exchange firms will help monitor the remittance business in a better way.

Besides money exchange firms, local commercial banks were also told by SAMA earlier to ensure clean banking operations. This forced them to set up internal audit departments, which have geared themselves to monitor suspicious accounts within the framework of the guidelines issued by SAMA and other international regulatory bodies.

Local banks have also been reporting suspicious activities to a financial action task force constituted by the G-7 industrialized nations in 1989 to monitor money laundering cases and to take punitive measures.

Add Comment