Inside Saudi Arabia’s Covert Expat Money Laundering Schemes

Saturday 13 May 201704:40 pm
“How do I get my money out of Saudi Arabia?” A question many expats find themselves asking in the conservative Islamic kingdom. Likely they are employed in the private sector, with their own businesses on the side—an illegal activity according to the kingdom’s stringent laws governing foreigners working there. The difficulties faced by the private sector in Saudi Arabia on the back of the general recession in the local market have caused many of these foreign workers to begin considering returning to their own countries, and taking their savings along with them. However, due to the local laws and regulations, foreign residents of the kingdom must disclose the source of their money, should they wish to transfer remittances of values higher than their salaries. Thus, a foreigner working as a secretary, for example, would likely not agree to transfer three million Saudi riyals ($800,000) abroad, as this would be a probable indicator that the money was obtained through illegitimate means. Saudi regulations prohibit foreign workers from undertaking independent business outside of their official employment registered by their Saudi sponsors (kafeel). Moreover, the foreign worker must work within the sponsor’s employment, either as a domestic servant or in a Saudi sponsoring company. Should the sponsor retain sponsorship of a foreign worker while he/she is employed elsewhere, this is considered concealment on the behalf of the foreign worker. This would subject the sponsor to a fine valued at approximately 100,000 Saudi riyals. However, expat workers looking to repatriate their hard-earned cash have found a loophole they can exploit, through resorting to local businessmen who make “donations” abroad using the foreign workers' savings, in return for a specified sum or percentage. Saeed al-Shahrany affirms to Raseef22 that social media networks have recently reported on unconfirmed rumors that prominent Saudi businessmen have announced investments and donations abroad. Meanwhile, it is well known that these same businessmen have reduced their activities in the Saudi market. “It’s difficult to inspect these businessmen without hard evidence that they are involved in money smuggling operations, but this phenomenon has become conspicuous in the aftermath of the significant exodus of migrant workers from Saudi Arabia,” al-Shahrany continues. Meanwhile, the economic crimes bureau recently concluded its investigations into money laundering schemes valued at 16 billion Saudi riyals. Numerous suspects were involved, including Saudis as well as a number of foreign residents. The investigations revealed that the sums involved belonged to foreign residents in the kingdom that were deposited in Saudi businessmen’s accounts in order to then be transferred abroad. [h2]New Business Opportunities[/h2] According to Fouad al-Nassar, who owns Al-Takamul Contracting Est. in Jeddah, many contracting business owners who were forced to shut down due to the economic difficulties resorted to striking deals with the workers under their sponsorship to smuggle their money out of the country, on the condition that they would receive a percentage. Al-Nassar notes that some of the foreigners registered under such companies have other business activities, albeit with the approval of their sponsors. Moreover, foreign workers are legally entitled to large end-of-service bonuses, which they can transfer abroad without hurdles, as the source of the money is known. However, there are suspicions over the large sums claimed to be bonuses, and for employees with incomes lower than 3,000 Saudi riyals, it is necessary to declare the source of the sum. Hamed Awadallah is a Sudanese national who worked in Saudi Arabia for 30 years as a commercial supervisor in a clothing store. He was able to save enough money to buy a partner’s share in his sponsor’s shop, after selling some property in his hometown. However, the recession in the oil-dependent kingdom resulted in a lull in the retail market, pushing Awadallah to consider returning home. It was then that he was confronted with the difficulties of transferring the large sum of money he had accrued home. Awadallah affirms that he has no intention to resort to illegitimate means to smuggle his money abroad through fake donations from his sponsor or other Saudi nationals. He says he will comply with any questions regarding the source of his money, should they arise. [h2]Money Laundering Penalties[/h2] According to Saudi law, these covert transfer operations are classed as money laundering operations. They include transfers made with knowledge that the money comes from illegitimate or unregulated sources, as well as withholding or obscuring the nature of the money, its source, or its ownership. Article 9 of the Anti-Money Laundering Regulation states that the penalty for perpetrators is imprisonment for up to 15 years, and a fine of seven million Saudi riyals, if the operation is conducted by an organized gang or using violence or weapons. The penalty also applies if the perpetrator occupies a public position that has been compromised by the crime, or if the crime was committed through the cover of a development, charity, or educational organization, among others.
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