NCB is committed to participating in international efforts to combat money laundering and terrorist financing. Towards this end, NCB has developed a Bank-wide Anti-Money Laundering and Combating Terrorist Financing Policy that is based upon the Saudi Arabian laws and regulations and compliant with international best practices such as recommendations made by the Financial Action Task Force (FATF). This Policy was approved by the NCB Board of Directors.
The NCB AML/CTF Policy is the minimum standard that all operations of the Bank, overseas offices, branches, subsidiaries or associates must follow. In addition to this, all overseas offices, branches, subsidiaries or associates are required to comply with their local anti-money laundering and combating terrorist financing laws and regulations, which may be more stringent. Further to the AML/CTF Policy, detailed desk-top processes and procedures have been defined and put in place covering the Investigations, Reporting, Sanctions, Advisory and AML/CTF Monitoring.
The AML/CTF Compliance Programme has been approved by the Compliance Committee (Management Committee). All AML/CTF related issues are escalated to Chief Compliance Officer and subsequently forthwith referred to the Compliance Committee. The Compliance Committee would then elevate these issues up to the Audit Committee (Board Committee). All issues are raised in writing to the Compliance Committee who meets quarterly while ad-hoc meetings can be called for whenever deemed necessary.
Anti-Money Laundering Department (AMLD)
The SAMA Anti-Money Laundering and Terrorist Financing Guide require that all Banks within Saudi Arabia must establish a dedicated Unit to combat money laundering and terrorist financing. NCB is in full compliance with this directive that a dedicated AML/CTF Department has been established with a Senior Bank Officer made primarily responsible for this Department.
The AMLD is responsible for and principally tasked with the monitoring, investigation and reporting of suspicious or unusual transactions to the relevant Authorities. The AMLD is manned by espicialised human resources committed to address any and all relevant questions and issues pertaining, among others, to AML/CTF Investigations, Sanctions, AML/CTF Efficiency and AML/CTF Monitoring.
Anti-Bribery and Corruption
NCB has a robust anti-corruption measures and practices to protect the reputation and the interests of all stakeholders. The monitoring of these crimes have been imbedded within our AML/CTF Transaction Monitoring System and covers all of our customers. In addition, a process is in place for all employees to raise their suspicions through an STR or through our Whistleblowing Hotline when this type of activity is suspected.
Internal Audit Function
NCB established a central and independent Internal Audit Division (IAD) that report directly to the Audit Committee of the Board of Directors. IAD conducts assessments of banking areas including overseas branches to evaluate the effectiveness of risk management, control and governance processes. This include reviews of internal policies and procedures to ensure that defined operational procedures are being adhered to. The IAD uses a Risk-Based Approach to schedule audit reviews to ensure that high-risk areas are tested more frequently. The IAD Audit Plan is approved annually by the Audit Committee after obtaining input from Senior Management. The results of the reviews are reported to Management and the Audit Committee with detailed recommendations for improvements that are tracked to ensure full resolution. As part of the approved Audit Plan, Compliance and AML are reviewed periodically.
Customer Risk Assessment
NCB uses a Risk Based Approach (RBA) and undertakes all reasonable steps to verify the identity of our customers, including the beneficial owners of corporate entities, the principals behind customers who are acting as agents and the monitoring of their business activities. NCB has a defined customer risk assessment methodology for AML/CTF. All NCB relationships are risk-ranked based on FATF recommendations and the SAMA rules using a number of financial and non-financial factors/criteria that categorise them into three (3) distinct bands: Low, Medium and High. All “High Risk” relationships are closely monitored, approved by the CEO/Senior Management and Compliance at inception or when a relationship becomes “High Risk”. A corresponding annual review is also undertaken to ascertain the propriety of maintaining these business relationship(s).
Know Your Customer (KYC), Due Diligence and Enhanced Due Diligence
NCB takes all reasonable steps to ensure that ‘Know Your Customer’ information is collected and kept up-to-date and that identification information is updated when changes occur in any relationship. NCB has processes for the identification of customers on whose behalf it maintains or operates accounts or conducts transactions. At the onset of establishing a relationship all customers must complete fully an Account On-Boarding pack at one of NCB’s Branches through the Customer Services Representative which is then validated and approved by the Branch Manager/Customer Service Manager. These On-Boarding documents are then reviewed by a centralised KYC Team to ensure that all required information and documents have been met. A consistent process is applied to all customers using standard system generated On-Boarding forms. NCB has a process well-integrated in their systems to review and, where appropriate, update customer information relating to high-risk customers. As mentioned above, all ‘High Risk” customers are reviewed on an annual basis.
The frequency of the KYC review for “High Risk” relationships is annually, “Medium Risk” and “Low Risk” relationships are conducted within five years as a maximum. Moreover, ad-hoc reviews are conducted when “unusual” activity is detected. A process exists to trigger an off-cycle review when activity on the account is considered to be unusual for that Customers’ profile.
All documentation requirements follow the SAMA Rules of Opening Bank Accounts and the Anti-Money Laundering and Terrorist Financing Guide, for more information please visit: www.sama.gov.sa.
NCB undertakes Enhanced Due Diligence (EDD) on high-risk customers and transactions that have been identified to pose a heightened risk of illicit activity. The NCB AML/CTF Policy has defined the following objectives while conducting EDD:
- To obtain more information/documentation regarding the source(s) of funds and the client's nature of business;
- To obtain information regarding the client’s assets and transactions;
- To ensure a proper understanding of the client’s activities;
•To ensure that the account is used for the same purpose defined by the client while opening the account;
•To obtain additional documents or information to identify the customer; and
•To undertake customer site visits.
Politically Exposed Person (PEP)
NCB has a defined policy covering relationships with Politically Exposed Persons (PEP’s), their family members and close associates. According to the SAMA Anti-Money Laundering and Terrorist Financing Guide “Individuals who are or have been occupying or are expected to occupy in the future leadership positions, for example, heads of state or of government, senior public or government sector position, judicial or military officials, senior executives of state-owned corporations, important political party officials, or employees of regional and international organisations. In addition, business relationships with family members or close associates of PEPs involve reputation risks similar to those with PEPs themselves”.
PEPs are identified either through local knowledge/criteria or via utilisation of international database. NCB has a designated team to monitor and apply enhanced due diligence measures based on a risk-based approach for customers classified as “High Risk”. All PEPs are classified as “High Risk”. This involves obtaining additional information pertaining to their activities and business relationships and close monitoring of the financial transactions. All relationships classified as “PEPs” require the Chief Executive Officer’s approval at the start of the relationship, when a relationship becomes “PEP” or annually to maintain the relationship.
Neither NCB nor any institution within the shareholding structure are based on bearer shares. In addition, customers who hold bearer shares in their shareholding structure are prohibited from establishing/maintaining a relationship with NCB.
Transaction Monitoring of Suspicious or Unusual Transactions
NCB uses the BAE Systems Applied Intelligence (NetReveal®) Transaction Monitoring System which is a sophisticated automated solution to detect unusual or suspicious activity. This covers all financial and non-financial transactions. NCB has implemented rules/scenarios that identify transactions and activities outside of the customers’ profile and investigates these transactions accordingly.
Reporting of Suspicious Transactions
NCB employees have a legal responsibility to report all unusual or suspicious transactions which are overly complicated or do not make economic sense. Where suspicions arise, employees complete a “Suspicious Transaction Report” which is sent immediately to the AMLD and a new manual AML case is created within the BAE Systems Applied Intelligence (NetReveal®) Transaction Monitoring System. Further investigation is then undertaken by the AMLD who decide whether a formal report should be made to the Authorities. NCB has a policy of protecting employees if they report, in good faith, any suspicious activity. NCB employees are aware that the notification of suspicious transactions to the Authorities does not conflict with the provisions of banking secrecy and customer confidentiality under the Saudi Banking Laws and Regulations providing the report was made in good faith they will not be liable for breach of customer confidentiality if, following an investigation, it is discovered that the customer was not involved in any money laundering or terrorist financing activities.
A walk-in or occasional customers include citizens, residents and visitors on a temporary visa/residence. NCB’s policy states, among others, that any transactions from walk-in customers must not be accepted unless they fall under the following categories:
• Payment of utility bills;
• Government dues;
• Fines; and
• Purchase compulsory insurance product documents for visitors
Walk-in or occasional customers are also allowed to have currency exchange. The amount of each transaction shall not exceed SAR 5,000 or a total of SAR 50,000 during any given year.
Anonymous or Numbered Accounts
In accordance with the Anti-Money Laundering and Terrorist Financing Guide, NCB prohibits the opening of anonymous or numbered accounts. Valid identification is referenced to original identification documents. Thus, no accounts will be opened until a valid personal or commercial identity has been verified and established.
NCB has policies to reasonably ensure that it only transacts with correspondent banks that possess licenses to operate in their countries of origin. NCB complies with the SAMA rules and regulations that prohibit Saudi Arabian banks to establish any relationship with a Shell Bank.
NCB uses a mixture of tailor-made and standard Wolfsberg questionnaires in order to examine and evaluate its correspondents’ AML/CTF policies or practices. A formal review is conducted by the Financial Institution Banking Department and Compliance on every Correspondent Bank on a regular basis utilising a Risk-Based Approach. The same procedure is being observed in relation to the establishment of new corresponding banking relationship. All documentation is reviewed to ascertain, among others, country of incorporation, office location, license, commercial registration, ownership structure, AML policy, board of directors and the fully completed AML/CTF questionnaire, etc. NCB does not allow Payable-Through-Accounts.
NCB internal policies require payment and non-payment messages to be transparent, in line with Basel requirements and FATF recommendations. Furthermore, NCB does not omit, delete or alter information in the payment messages or orders. All payments are screened against International and Local Sanction Lists (United Nations (UN), Saudi Arabian Monetary Authority (SAMA), Office of Foreign Asset Control (OFAC), Interpol, European Union (EU), and HM Treasury) using the BAE Systems Applied Intelligence (NetReveal®) Sanction Screening System in real-time. Subject to applicable local laws and regulations, NCB will cooperate as fully as practicable with other financial institutions in the payment inquiry when requested in order to provide information about the parties involved.
Sanctions and Embargoes
SAMA requires all Saudi Arabian banks to adhere fully to the UN and SAMA sanctioned countries, sanctioned entities and individuals’ lists. NCB has its own internal policies to manage local and international sanctions based on each sanctioned country and sanctions programme. In addition, NCB issues and frequently updates Sanctions Guidelines in order for Business Units to take the necessary actions when dealing with countries subject to restrictive measures including escalating cases that require compliance guidance/approval.
Furthermore, NCB screens all relationships, individuals, corporate customers and beneficial owners on a daily basis against International and Local Sanction Lists (UN, SAMA, OFAC, Interpol, EU, HM Treasury) through the BAE Systems Applied Intelligence (NetReveal®) Transaction Monitoring System, using the World-Check database. In addition, payment/non-payment messages are screened in real-time through the BAE Sanction Screening System (incoming/outgoing) prior to processing.
NCB has established an AML/CTF employee-training programme to educate employees about anti-money laundering and combating terrorist financing in order to assist them in identifying suspicious or unusual customer transactions. Employee anti-money laundering and combating terrorist financing training is an on-going process.
Training is conducted at the start of joining the Bank and then annually thereafter. The AML/CTF training includes:
• Identification and reporting of transactions that must be reported to government authorities through the Money Laundering Reporting Officer (MLRO)/ Deputy Money Laundering Reporting Officer (DMLRO) ;
• Examples of different forms of money laundering involving the Customer’s products and services;
• Internal policies to prevent money laundering and terrorist financing; and
• Informing Bank employees to comply with NCB’s internal policy and procedures and making them aware that warning customers (Tipping off) that a suspicious report has been made or that they are under suspicion/investigation constitutes a criminal offence.
Furthermore, changes in AML/CTF/Sanctions related laws or changes to existing policies or practices are communicated to relevant employees by distributing these new circulars/rules/laws through e-mails, revised policies and procedures and through the Banks’ Intranet site. Training NCB employees at foreign branches and subsidiaries is conducted by Compliance personal within these jurisdictions.
Retention of Records
SAMA requires financial institutions to maintain all types of records for ten (10) years, at a minimum. NCB retains all records/documents relating to their operations in accordance with normal banking practices, for ease of reference and for their own use as well as for the perusal and reference of its own Supervisory Authorities, Internal and External Auditors including other relevant Regulators.
Assessment of Overseas Branches and Subsidiaries
Pursuant to the Saudi Arabian AML/CTF Law and Anti-Money Laundering and Terrorist Financing Guide, NCB assesses its Overseas Branches and Subsidiaries. These assessments focus on the following main subjects:
• Governance and Oversight;
• AML/CTF and Sanctions Policy;
• Risk-Based Approach (RBA);
• Customer Risk Ranking/Profiling;
• Products, Services, Programmes and Channels Risk Assessment;
• Know Your Customer Procedures;
• Customer Identification Programme;
• Customer Due Diligence (CDD);
• Employee Training;
• Record Keeping;
• Transaction Monitoring (AML/CTF and Sanctions);
• Reporting; and
• FATF and Sanction Requirements.
If you have any questions or inquiries regarding The National Commercial Bank’s Anti-Money Laundering and Combating Terrorist Financing Programme, please contact:
Attention: Money Laundering Reporting Officer (MLRO), Compliance Division
|The National Commercial Bank, ||PO Box 3555, |
|Jeddah 21481, ||Kingdom of Saudi Arabia|