THE SAUDI FINANCIAL INTELLIGENCE UNIT II: POWER

S E C R E T SECTION 01 OF 03 RIYADH 008404

SIPDIS

NOFORN
SIPDIS

TREASURY PLEASE PASS TO FINCEN

E.O. 12958: DECL: 10/22/2031
TAGS: EFIN PTER KTFN ETTC SA
SUBJECT: THE SAUDI FINANCIAL INTELLIGENCE UNIT II: POWER
STRUGGLE WITH SAMA

REF: A. RIYADH 9221

B. RIYADH 8401

Classified By: Acting Deputy Chief of Mission Robert Silverman for reas
ons 1.4 (b),(d) and (g).


1. (U) Summary: From September 16-19, Ahmed Elbashari,
representative of the U.S. Department of the Treasury's
Financial Crimes Enforcement Network (FinCEN),and EconOff,
met with senior management of the Saudi Arabia Financial
Investigation Unit (SA FIU) to assess the SA FIU for
membership in the Egmont financial intelligence units. This
cable is one of four reviewing the FinCEN visit, and focuses
on the SA FIU's relationship with the Saudi Arabian Monetary
Agency (SAMA). End Summary.


2. (U) Senior Saudi Arabian Government (SAG) interlocutors
on the central bank part of the assessment included:

--Dr. Saud Al-Murieshd, Director of the SA FIU;
--Naser Al-Omair, Head of the Department of Information
Exchange and Follow up of the SA FIU;
--Musfer Kahtani, Deputy Head of the Department of
Information Exchange and Follow up of the SA FIU;
--Mohammed Al-Shayi, Director of Inspection Department of
SAMA; and
--Bank compliance officers from Al Rajhi Bank, The Saudi
British Bank, Saudi American Bank (SAMBA) and Al-Bilad Bank.


3. (SBU) The FinCEN delegation requested separate meetings
with bank compliance officers at their respective banks.
However SAMA scheduled one meeting with all bank compliance
officers. The SA FIU Director and SAMA understood prior to
the on-site assessment that one bank compliance officer
meeting may not be adequate for recommendation for Egmont
membership.

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BANK REPORTING PRACTICES
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4. (SBU) During the FinCEN visit, SAMA told us they have
set the minimum threshold for banks' suspicious transaction
report (STR) reporting at a cumulative monthly value of SAR
100,000 (USD $26,667). Banks can report any suspicious
transaction above SAR 10,000.


5. (C) Any cash deposit of SAR 10,000 or less is
automatically disregarded. The compliance officers track
bank accounts using a scenario based monitoring approach
which creates profiles to capture various red-flag
transactions. On a daily basis, compliance officers track up
to twenty-five persons who are engaging in suspicious
transactions.


6. (U) The bank tellers or compliance officers can file an
STR, in which the Head of the Bank's Compliance Office sends
the STR to the SA FIU and notifies SAMA. If the SA FIU opens
a case, they correspond directly with the reporting bank.
However, if the SA FIU needs to contact a non-reporting bank,
they must request assistance from SAMA. A bank's
non-compliance will result in SAMA sanctions and an internal
investigation. The SA FIU provides feedback to the banks for
future monitoring of suspicious transactions of a specific
person/entity. According to the Anti-Money Laundering (AML)
law, if the SA FIU seeks an asset freeze, it must request the
Bureau of Investigation and Prosecution (BIP) to petition a
freeze of assets from SAMA.


7. (C) Comment. Neither SAMA nor the banks would provide
the number of STRs sent to the SA FIU. SAMA believes the
banks run well, SAMA will pass information as necessary to
the SA FIU. When asked about information-sharing through
Egmont, Al-Shayi was not keen on releasing SAMA information
to other FIUs, and requested an Memorandum of Understanding
between the Saudi Government and each country to share
information. End comment.


8. (U) To run more efficiently, SAMA recently developed a
process for the banks to gather and distribute STRs. This
plan includes: 1) increasing the number of bank compliance
officers at each bank; 2) training on anti-money laundering

RIYADH 00008404 002 OF 003


and terrorist finance issues; and 3) upgrading technology
(i.e., computer systems).

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QUALIFICATIONS FOR BANK COMPLIANCE OFFICERS
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9. (U) SAMA and the bank compliance officers meet regularly
to discuss anti-money laundering issues, guidelines, and
requirements. In order to become a bank compliance officer,
the bank's Chief Executive Officer recommends the nomination
to the Board of Directors, and SAMA officially approves the
candidate. Minimum qualifications for a bank compliance
officer are as follows: 1) 2-5 years of experience in
anti-money laundering issues; 2) university graduate with a
Bachelor of Arts or MBA; 3) technical skills; 4) audit and
legal experience; 5) prior banking experience; and 6)
independence from bank businesses with no conflict of
interest with outside businesses. SAMA provides bank
compliance officers with training in strategic analysis,
tracking false positives and negatives, and quality control.


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SAMA'S BUSINESS PRACTICE
--------------


10. (U) In order to open a new personal bank account in the
Kingdom of Saudi Arabia (KSA),the applicant must present the
following documents: 1) a valid identification card (minimum
age is 15); 2) a current address and telephone number (no
P.O. box allowed); 3) employer pay stub. Additional SAMA
criteria include: 4) local residence; 5) the applicant must
be physically present (account holder). Diplomats can open
an account for three months with appropriate identification.
To open a business account, the business owners must present:
1) commercial registration; 2) valid identification card;
and 3) current address (no P.O. box allowed). The banks do
not accept walk in customers for any financial transaction.


11. (U) The AML law and SAMA regulations call for annual
audits on banks' compliance procedures. Banks utilize an
internal audit by officers of different branches and report
findings to SAMA. Banks rarely utilize independent auditors.



12. (U) SAMA's Inspection Department conducts sporadic
audits of bank practices through a full scope examination, a
special limited scope examination, or a supervisory visit. A
full scope examination, conducted every 3-5 years, audits all
aspects of the bank. A special limited scope examination
audits a specific area (e.g., examination on anti-money
laundering or embezzlement). In a supervisory visit, a five
person SAMA team meets with bank executives for discussions
on best practice, strategic planning and goals, and
recommended improvements. SAMA can sanction non-complying
banks.


13. (U) In order to facilitate information sharing,
bi-monthly bank meetings to discuss trends, patterns and
suspicious individuals/entities. SAMA considers itself a
pro-active government agency that utilizes public awareness
campaigns and participates actively on terrorist finance
committees and global initiatives, such as MENA-FATF.

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CHARITABLE ACCOUNTS
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14. (SBU) Only SAMA can authorize the opening of a
charitable institution account. Prior to authorizing such an
account, SAMA utilizes a financial crimes database populated
by quarterly reports and statistics on financial crimes to
vet the charity. Once an account is open, a charity is
allowed to open multiple sub-accounts under the main account.
SAMA has compliance procedures on charitable accounts to
include: 1) two signatures required for any withdrawal of
funds; 2) no cash withdrawals; and 3) no incoming or outgoing
transfer of money.


15. (S) Comment. SAMA has instructed banks to daily
monitor charitable accounts. Even though SAMA has strict

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guidelines regarding charitable accounts, the International
Islamic Relief Organization (IIRO),a Saudi-based charity,
has been known to regularly move funds within its world-wide
branches. End comment.

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COMMENT
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16. (C) During the FinCEN visit, SAMA failed to provide the
support needed to obtain unfettered access to the banks and
their compliance officers. During our meetings SAMA and bank
compliance officers were hesitant in answering Egmont
questions. For example, banks were not fully forthcoming
regarding their relationship with SAMA. With competing banks
present, bank compliance officers were not open about bank
practices and compliance procedures.
OBERWETTER