Banking Control Law

Purpose and scope

• Governs banking business and the central bank's supervision of it; unlicensed persons may not carry on banking as their main business, though licensed money-changers may exchange currency (Article 2).

Key rules, rights and obligations

• Unlicensed persons may not use the word bank or its equivalents in their papers, trade name or advertising (Article 5).
• Deposit liabilities may not exceed fifteen times reserves and capital (Article 6), and lending or guarantees to a single person may not exceed 25% of reserves and capital (Article 8).
• Unsecured lending to directors, auditors or their businesses is prohibited (Article 9), and at least 25% of net profit must go to the statutory reserve before distribution (Article 13 as amended).
• Disclosing or using information obtained in applying the law is prohibited (Article 19).

Violations, penalties and common problems

• Unlicensed banking: up to two years in prison and up to five thousand riyals per day of continuation, or either; disclosure of information: up to two years and up to twenty thousand riyals (Article 23).
• On breach or a threat to liquidity, the central bank may appoint an adviser, suspend or remove directors or staff, or restrict lending or deposit-taking (Article 22); the chairman, directors and managers are liable within their remit (Article 24).

Procedures and key deadlines

• Each bank sends a consolidated monthly statement of its position by the end of the following month (Article 15).
• A committee of three persons from outside the central bank decides violations (Article 25).

An advisory summary prepared by Al-Bayan Al-Wadih Law Firm. It is not an official text and does not replace the law, its implementing regulations, or advice from a specialised lawyer. The official published text and its amendments prevail.