Dear audience,
It is my pleasure to welcome you all in the eighth Forum on Compliance and Combating Money Laundering. In the beginning, I would like to thank all who have participated in the organization and preparation of this forum, especially the Institute of Finance, Thomson Reuters, speakers and attendants.
Dear audience,
Holding this forum for eight consecutive years signifies the importance of complying with laws and instructions and combating money laundering, as well as their impacts on enhancing confidence in the financial system and on achieving its stability and soundness. It also shows the authorities' commitment to pursue the implementation of the best practices followed in compliance with laws, standards and instructions, which is considered the success formula for financial institutions in maintaining their reputation and credibility, in addition to protecting them against penalties. This is a collective responsibility that lies with all concerned parties, each according to its powers, roles and mandates entrusted to it. This gathering is important for enhancing and advancing efforts for compliance and combating money laundering. SAMA is a key member in Basel Committee on Banking Supervision; and it has already participated in preparing the compliance principles. Additionally, SAMA also joined FATF as an observer member and it is now working within a framework for obtaining the full membership in June 2018. This enormous responsibility has been assumed well by SAMA since 2013, the onset of its efforts in this area.
Dear audience,
This forum will address a critical issue, which is combating money laundering. Let me touch upon the worst impacts on the economy and the financial sector when financial transactions are not properly controlled and illegal transactions are not well confronted. This crime leads to weaker confidence in the financial system and impairs financial stability, which is the key pillar for a stable economy and community. This, in turn, negatively affects production of goods and services and leads to higher unemployment, low savings, slower economic growth and lower national income. Furthermore, it may create an unattractive investment environment and non-productive segments of people who earn illegal incomes on the expense of the others, which may, in turn, expand the gap between social classes. Other negative effects also include a wider corruption and briberies, misleading economic indicators and a nation's damaged status and reputation before international bodies.
Dear audience,
We cannot discuss compliance and combating ML apart from terrorist financing. If ML is a crime, terrorist financing is a much more griever crime. In this regard, I will mention the most significant issues discussed in the FATF meeting, held in February in France, on Draft Correspondent Bank Services Manual, which addresses de-risking in the relationships of correspondent banks and providers of money transfer services through supporting and developing the joint understanding of the risk-based approach. It also aims at demonstrating the interaction between FATF standard on correspondent banks and providers of money transfer services (Recommendation 13), FATF standard on customer due diligence (Recommendation 10) and FATF standard on money transfer (Recommendation 16). The discussion focused on the need to elaborate on the nature of the relationship between those recommendations to ensure a balance between customer due diligence and requirements for developing controls that curb risks of illegal transactions. The meeting recommended that the manual should better be rebuilt and developed through consultation with countries and the private sector while focusing on de-risking, which FATF is working on and developing, in cooperation with other relevant organizations , according to a risk- based approach, so that the manual be submitted and approved in the upcoming meeting in June 2016.
At the same meeting, FATF also adopted FATF's Consolidated Strategy for Combating Terrorist Financing, which includes procedures and mechanisms for combating such financing and current threats, as well as high-priority procedures that will be taken by FATF and the international network. Combating Terrorist Financing Booklet on Freeze Request Procedures, which contains forms to be filled with information that are to be supplied by practitioners when there is a freeze request, has been sent to countries, so that the forms therein be filled and, then, this booklet will be approved in the upcoming FATF meeting in June 2016.
Dear audience,
It is noteworthy to refer to the development of AML phases as the currently adopted international standards are technically different from that of 2012, where FATF, in participation with peer regional groups (including MENAFATF), has developed the new assessment methodology that was issued in February 2013 and is to be implemented by countries starting from 2014. Assessment components of this methodology revolved around specific results of evaluating effectiveness that largely rely on data, statistics and information, supplied by countries' different sectors, mainly the financial sector, that are issued by international financial organizations or published in widely circulated official publications, which depends on the development level of supervisory and regulatory systems in such countries.
To implement this new methodology that goes in line with the international standards, countries will face challenges that make it imperative for countries to work on a national assessed risk-based approach, including assessment at the financial sector level. Countries have become obliged to identify, assess and understand AML/CFT risks that they may confront and must ensure that their preventive measures are commensurate with risks identified. The application of this methodology will take long time and needs enormous efforts. It also needs sufficient human resources, enhancing expertise and skills of all financial sectors and ensuring effective domestic coordination. It also needs provision and sharing of quantitative and qualitative data between public and private sector and continued updating of risk assessment processes.
It is important to recognize that the burden and responsibility of ensuring the effectiveness of applied systems for AML/CFT combating lay upon the country as a whole and all of us, each according to his/her jurisdiction, within an integrated, consistent and interconnected system.
Dear audience,
Based on what I have already mentioned about the methodology for evaluating the efficiency of implementation; and to ensure that sufficient legal and regulatory frameworks are in place, Saudi Arabia is currently following-up and evaluating the application of frameworks and measures at the technical level. It is also working on measuring their efficiency and deliverables. In light of its endeavor to obtain full membership, Saudi Arabia is preparing for mutual-assessment during 2017. The report will be discussed during the general FATF meeting in June 2018. The Kingdom is currently preparing for this evaluation through reviewing laws and measures relevant to technical compliance, reviewing the results of applying such measures and considering their efficiency and minimizing their risks. The Kingdom is implementing several programs in this regard at the legislative, regulatory and executive levels as part of its efforts to prepare for the mutual-assessment.
Dear audience,
In last year's seventh forum, light was shed on some topics that I saw deserve discussion. In this forum, I will repeat my request for discussing several subjects about domestic, regional and international efforts exerted in the arena of laws compliance and combating money laundering. Among the most important of these subjects are: full compliance with standards, set by Basel Committee and FATF, as minimum requirements for implementation and AML/CFT frameworks, setting a main platform for enhancing cooperation and coordination, absolute readiness for sharing information among concerned entities, sharing expertise and knowledge in this field, the relationship between correspondent banks with each other, their understanding of their responsibility towards their customers, developing methods and best practices for correspondent banks and understanding national AML risks in accordance with the requirement of the Recommendation I of FATF recommendations.
Dear audience,
I have seen the program of this forum, which includes several significant and fruitful topics that will be presented by a group of experts in this area. I call on all of you to seize this opportunity that will have positive impacts on our efforts towards enhancing principles of compliance and combating money laundering.
Again, I welcome you all; and I thank you for listening. I wish you good luck and a successful and fruitful forum.
