Graduation Year

2024

Document Type

Dissertation

Degree

D.B.A.

Degree Granting Department

Business Administration

Major Professor

Mark H. Taylor, Ph.D.

Co-Major Professor

Grandon Gill, Ph.D.

Committee Member

Robert Hammond, DBA.

Committee Member

Matthew Mullarkey, Ph.D.

Keywords

Anti-Money Laundering, Financial Action Task Force, Financing of Terrorism, Internal Audit, Internal Audit Obligations, Saudi Arabian Financial Investigation Unit

Abstract

Money laundering (ML) presents a significant challenge to Saudi Arabia's financial system, hence the need for comprehensive measures for detection and prevention. This study will analyze various aspects of ML within Saudi Arabia, focusing on its complexities, regulatory landscape, and ongoing efforts to combat it. Saudi Arabia, as a key financial center, faces unique challenges in addressing ML due to its strategic location, substantial oil reserves, and intricate financial transactions. The country's dynamic financial sector and technological advancements amplify these challenges, requiring vigilant measures to counter illicit financial flows effectively. The regulatory framework governing anti-money laundering in Saudi Arabia is the center of discussion. In adherence to international standards set by the Financial Action Task Force (FATF), Saudi Arabia has several laws and regulation concerned AML these include the Anti Money laundering Law of 2017 and the law amending the Anti Money L undertaken in 2018 (Saudi government, 2017, Financial Action Task Force, 2018).

AML laws and regulations such as customer due diligence, suspicious transaction reporting, and the establishment of the Saudi Arabian Financial Investigations Unit (SAFIU) to enhance detection and investigation capabilities. Despite these efforts, ML activities persist. The evolving nature of illegal financial schemes and the rise of digital currencies pose significant challenges. Moreover, the interconnection between ML and other illicit activities, such as terrorism financing and corruption necessitates a comprehensive approach. To address these challenges, taking advantage of technology and data analytics is essential. Innovations like artificial intelligence and machine learning provide promising solutions for detecting suspicious transactions. Capacity building initiatives and training programs are also important in enhancing the skills of financial professionals to identify and report potential ML risks. Therefore, continuous vigilance and adaptation to evolving ML threats are essential. Strengthening public-private partnerships, enhancing regulatory supervision, and promoting a culture of compliance are key steps. Additionally, creating international cooperation and sharing best practices globally will bolster Saudi Arabia's position in combating financial crimes.

The study will provide valuable insights into combating ML in Saudi Arabia. By adopting a multifaceted approach encompassing robust regulations, technological innovation, and international cooperation, Saudi Arabia can enhance its AML capabilities and safeguard its financial system against illicit activities.

Based on the findings from a series of semi-structured interviews with eight Internal Audit directors in Saudi Arabia, this qualitative study examines internal auditors’ role in the identification and prevention of Money Laundering (ML). Many of these auditors outlined what they saw as their new roles and responsibilities as not just producing accurate reports but being more ‘transparent’ and ‘aligned’ to what they acknowledged as international standards. The work shows that auditors perceive anti-ML efforts as a collective endeavor, for which professional updating, teamwork, secure whistle blowing procedures and sophisticated technology are required. Furthermore, it was stated that communication and joint work between professionals and regulatory organizations should be enhanced. The paper aims at enhancing the knowledge on issues and prospects of internal auditors on tackling ML and provides clear recommendations for enhancing auditing practice in emergent market settings. The implications of these MIs include policy transformation and organizational cleaner in auditor training, safe reporting tools and technology application for more effective identification of indications of ML.

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