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CMA: Strict Measures to Ensure Capital Market’s Integrity and Safety from Money Laundering and Terrorism Financing
07/12/2015

​The Capital Market Authority (CMA) confirmed its commitment to ensure the safety of invested money in the capital market and its alignment with the applicable laws in the country. Several measures are taken such to ensure that suspicious funds related to money laundering or terrorism financing are not entered into the capital market.

On December 2008, CMA issued (Anti-Money Laundering and Counter-Terrorist Financing Rules). Article (1) states that the objectives of these Rules are that all authorised and registered persons must comply fully with the controls and procedures issued by the Capital Market Authority to ensure that fully apply the Anti-Money Laundering Law issued by Royal Decree and its implementing Regulation, and apply the requirements of the FATF's 40 Recommendations in addition to international conventions and Security Council Resolutions in this regard. The Article explains that these Rules aim to maintain the credibility, integrity and reputation of the capital market and protect the Authorised Persons and their clients from illegal transactions involving money laundering, terrorist financing or other criminal activity.

CMA states that Authorised Persons (financial institutions authorized by CMA to conduct securities business) shall develop and implement internal policies, procedures and controls to help prevent money laundering and terrorist financing and must communicate these to its employees. The compliance officer must also ensure compliance with the AML/CFT policies, procedures and controls. All of this is part of CMA's efforts to ensure the safety and integrity of the market.

Article (23) of the Rules states that the policies, procedures and controls must include, amongst other things, Customer Due Diligence (CDD) measures, record retention, the detection of unusual and/or suspicious transactions and the obligation to make a Suspicious Transaction Report (STR) to the Financial Intelligence Unit at the Ministry of Interior.

An Authorised Person must ensure that the Money Laundering and Terrorism Financing Reporting Officer (MLRO) and any of its staff (performing compliance function) have timely access to all client and transaction records and other relevant information which they require to discharge their functions.

Based on Article 20, the Authorised Person must appoint an appropriately senior employee within the Authorised Person to whom all staff are instructed to promptly refer all complex, huge or unusual transaction or raises doubt and suspicion concerning its nature and purpose, or is related to money laundering, financing of terrorism, terrorist acts, or terrorist organizations, for possible referral to the FIU as an STR. The senior officer (MLRO) must be a registered person, and have sufficient academic, scientific and practical experience in AML/CFT.

MLRO's duties include the following:

  • Develop, update and implement the Authorised Person’s system, procedures and controls on AML/CFT.
  • Keep pace with developments in AML/CFT laws and regulations, trends, techniques, and update indicators of money laundering or terrorist financing.
  • Ensure that the Authorised Person complies with its policies and procedures.
  • Receive directly from staff any reports of suspicious transactions or activity and analyze those reports and then decide whether to file an STR with the FIU.
  • Prepare an annual report to the board of the Authorised Person stating all actions that have been taken to implement internal policies, procedures, controls and proposals for increasing the effectiveness and efficiency of the procedures. The officer must then submit the report to CMA.
  • Ensure that staff of the Authorised Person maintains all necessary records.
  • Organize ongoing training for all staff of the Authorised Person.