Money Laundering Punishment in Saudi Arabia: When Is It a Crime?

A colleague asks you to receive transfers from “customers” into your account and then pass them to another account, for SAR 500 per transaction. Or a relative asks to register a car in your name while he pays for it in cash. It looks like a small favour, but this is exactly how ordinary people are most often pulled into money laundering cases.

Money laundering in Saudi law means dealing with money you know comes from a crime: transferring or moving it to hide its source, acquiring, holding or using it, or hiding its true nature and ownership. The penalty is 2 to 10 years in prison, a fine of up to SAR 5 million, or both (Article 26 of the Anti-Money Laundering Law). The size of a transfer alone does not prove the crime. What matters is the source of the money and what you knew.

What acts count as money laundering?

Article 2 lists four forms:

1. Transferring or moving money, or carrying out any transaction with it, knowing it is the proceeds of a crime, to hide its source or to help the person who committed the original crime escape.
2. Acquiring, holding or using money knowing it is the proceeds of a crime or comes from an unlawful source.
3. Hiding or disguising the nature, source, movement, ownership or location of money, knowing it is the proceeds of a crime.
4. Attempting any of the above, or taking part in it by agreement, help, incitement, facilitation or cover-up.

So a person who receives fraud victims' money into his account and passes it on, knowing its source, may be held liable for money laundering even if he never contacted any victim. If the act is committed in the name of a company or for its account, the company is liable, and its managers and staff are not released from their personal liability (Article 3).

Must the owner of the money be convicted of the original crime first?

No. Article 4 makes money laundering a separate crime. It does not require anyone to be convicted of the original crime in order to convict the launderer or to treat the money as proceeds of crime, whether the original crime took place in Saudi Arabia or abroad. So saying “I did not commit the fraud” does not, on its own, answer your role in moving its money.

Knowledge and intent are drawn from “the objective and factual circumstances of the case” (Article 4(2)). The investigator does not wait for you to admit that you knew. A high commission for a simple transfer, people you do not know, and requests to delete chats are all circumstances that may be read against you. On the other hand, a business owner who sold real goods, delivered them and received the price with an invoice and contract has what he needs to prove the transaction was real.

What is the punishment for money laundering in Saudi Arabia?

The aggravating circumstances in Article 27 are: an organised criminal group; use of violence or weapons; a link to a public office or misuse of power or influence; human trafficking; exploiting a minor or someone in a similar position; committing the crime through a correctional, charitable or educational institution or a social service facility; and a previous local or foreign conviction of the offender.

After Article 28 was amended by Royal Decree M/223 dated 27/10/1447H, a Saudi sentenced to prison is banned from travel for a period equal to his prison term. A non-Saudi is deported after serving his sentence and banned from entering Saudi Arabia except to perform Hajj or Umrah under the rules that govern them. A summary of the final judgment may be published at the convicted person's expense (Article 32).

What happens to the money: account freezing and confiscation

During the investigation, the Public Prosecution may order a precautionary seizure of money that may be confiscated, for up to 60 days, without prior notice to its owner. The competent court may extend it (Article 44). This is a temporary measure, not a conviction.

On conviction, the laundered money, the proceeds and the means used are confiscated. If the proceeds were mixed with lawful money, an equal value is confiscated (Article 33(1)). The 1447H amendment added a new paragraph: at the request of the Public Prosecution, a court may confiscate other assets of the convicted person that are out of proportion to his lawful income, if it appears they come from criminal conduct, unless he proves they are lawful (Article 33(2)).

Confiscation may reach money held by another person. But it is not confiscated from him if he proves he obtained it for a fair price, for a service matching its value, or for another lawful reason, and that he did not know its unlawful source (Article 33(3)). So a person who bought a car at market price from someone who later turned out to be a money launderer is protected by proof of the price and his good faith.

Over two months, Fahd received 14 transfers from people he did not know, totalling SAR 230,000. He immediately transferred them to an account abroad for a 3% commission.

Fahd did not defraud anyone. But the pattern of transactions, the commission and his not knowing who owned the money are circumstances from which his knowledge that the money was unlawful may be drawn (Article 4(2)), so his act is examined under Article 2.

Compare this with a wholesaler who received SAR 230,000 for goods he delivered under a contract, invoice and bill of lading. His documents explain the transaction from start to finish.

Does reporting reduce the penalty?

Yes, with conditions. Article 29 allows a reduced penalty for a person who reported the crime to the authorities before they knew of it, or reported his partners, if this led to their arrest or the seizure of the money or proceeds. Article 30 allows a reduction to 1 to 7 years in prison or a fine of up to SAR 3 million if, after the authorities learned of the crime, he came forward with information that could not have been obtained another way and that helps to prevent another crime, prosecute the offenders, obtain evidence, or deprive organised groups of money. The reduction is at the court's discretion.

This is general information based on the official Arabic texts of Saudi laws, which prevail over any translation. It is not legal advice for your specific case.

Practical solutions for both sides

If you are asked to receive or pass on money:

• Do not give your account, card or login details to anyone, whatever the relationship or commission.
• Do not receive an amount whose source and reason you cannot explain with a document.
• If you have already received a suspicious amount, do not transfer or withdraw it. Keep the chats and contact your bank and the competent authority.
• Do not create backdated contracts or invoices to justify money you received. This turns suspicion into evidence against you.

If you own a business, or your account was frozen during an investigation:

• Keep, for every large transaction, its contract, invoice and proof of delivery or service.
• Know your customer before accepting payments from third parties that have nothing to do with the deal.
• If the seizure covers money that is lawfully yours, prepare proof of its source and of what you paid for it. This is what protects you under Article 33.
• Do not disclose to anyone the information requests you receive from the Public Prosecution, except within the limits allowed by Article 43.

If you have been summoned or your account frozen because of transfers whose origin you do not know, send us the bank statement and the related chats on WhatsApp, and we will review your position with you before the investigation.