RIYADH, 21 August 2003 — A committee is to be set up under Interior Minister Prince Naif and Minister of Finance Dr. Ibrahim Al-Assaf to help monitor financial transactions through banks as part of an intensive drive against money laundering. Until the regulations are in place, remittances sent abroad by Islamic and charitable organizations will remain suspended, Motashar T. Al-Murshed, a financial consultant told Arab News.

He said there were 241 charitable societies in the Kingdom which provide scholarships to Muslim students, financial assistance to medical, social and religious organizations as well as orphanages within and outside the Kingdom.

The regulation would choke off funding in that direction. Al-Murshed described as unfair charges in the Western media that the Kingdom was not doing enough to crack down on money laundering activities.

He said the situation had resulted from a lack of understanding of the cultural peculiarities that distinguish Saudi society from others. “A majority of the Saudis find it uncomfortable to use credit cards or invest in interest-bearing funds. That makes Saudi Arabia the only country in the world with over 56 percent of SR270 billion deposits in non-interest-bearing accounts. Thus, while they do not earn anything out of this idle money, the banks are making a killing by putting these huge deposits to profitable use.”

He said another distinctive feature of Saudi society was a reluctance to use credit and ATM cards for financial transactions.

In this context, he referred to a wealthy businessman who paid out millions of riyals in cash for a particular deal instead of going through a bank. “Of course, I have cited an extreme case. But even for minor transactions, many Saudis prefer payment by cash rather than by check or credit card.

“This is where the trouble starts as there is no record of the movement of funds. The thrust of the anti-money laundering legislation is to track money transfers and prevent their diversion into suspect accounts.” Al-Murshed said the Kingdom’s regulations were much more stringent than the EU money-laundering regulations of 1993. Whereas the EU regulations require banks to keep records of financial transactions for a minimum of five years, the Kingdom’s regulations stipulate a minimum ten-year period.

Also, any money laundering activity through charities or organized gangs carries jail terms of up to 15 years and a fine of SR7 million ($1.86 million).

Such a stiff punishment signals the Kingdom’s determination to root out this problem, he said, adding that the death penalty for drug smugglers was well known to every visitor to this country.

He said banks already appointed a money laundering reporting officer, as in the EU. They maintain a system to ensure that suspicious transactions are reported to the police. SAMA has also organized training programs for bank employees to ensure that staff are adequately trained in anti-money laundering compliance. Asked what could be done to motivate Saudis who are reluctant to use credit and debit cards for monitoring cash movements, Al-Murshed suggested that Islamic credit cards, already in circulation in some Muslim countries, could also be introduced in the Kingdom.