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Digital wallet operators in Saudi Arabia will have to keep "detailed records" on transactions and obtain "full knowledge" of their customers before opening an account, under draft rules sent out for comment on Wednesday (May 15).
The draft Rules for Opening Electronic Wallets, sent to stakeholders by the Saudi Arabian Monetary Authority (SAMA), will apply to the 11 companies that currently hold electronic money institution (EMI) licences in Saudi Arabia, as well as future licence holders. Stakeholders are invited to submit comments by May 30.
The rules, if adopted in their current form, introduce specific customer due diligence requirements for compliance officers based on Saudi Arabia’s Anti-Money Laundering Law.
Staff must have “full knowledge” and a “complete understanding” of each customer and the “nature of their activities and transactions” prior to opening an account, it says.
EMIs must also ensure that the national ID, residence, commercial registry and/or self-employment licences of each customer are linked to only one electronic wallet account. And they must verify that the phone number registered to the electronic wallet belongs to the customer.
Compliance staff must have “timely access” to customer identification data, transactions and other relevant information. Further rules stipulating required know your customer (KYC) documentation for individual and business accounts are also included.
For business accounts, the rules vary significantly depending on whether the customer is self-employed, a licensed business, shop or institution, a civil association or a recognised sports club.
Finally, all EMIs must use an automated control system to detect and limit internal and external fraud, and these systems must be regularly reviewed and updated.
Growing sector
Saudi Arabia’s adoption of electronic wallets has moved at a swift pace since SAMA awarded its first EMI licence to STC Pay, the country’s largest wallet by number of users, in January 2020.
This was followed a month later by two more EMI licences for Halalah and Bayanpay. Saudi Arabia’s 11 EMIs now manage more than 21m wallets in a country of 36m people, SAMA said.
The formalisation of the sector has helped Saudi Arabia to hit a key digital payments target two years ahead of schedule.
Earlier this year, SAMA published new data showing that, in 2023, 70 percent of all consumer retail payments were made using digital channels, up from 62 percent in 2022.
Under Saudi Arabia’s National Fintech Strategy, the country had set itself a target of ensuring that 70 percent of payments by individuals are made using digital channels by 2025.
Current rules
SAMA’s current rulemaking authority is granted under the Law of Payments and Payment Services, which came into effect in February 2022.
In June 2023, SAMA imposed specific requirements on a wide range of payment service providers (PSPs) under the Implementing Regulations of the Law of Payments and Payment Services.
These regulations contain key information for EMIs, such as details on corporate structure, licence fees, issuance limits, transaction limits, user contract rules and business continuity requirements.
However, the Implementing Regulations do not contain specific requirements for account opening procedures beyond those that apply to “issuing electronic money, whether by opening electronic wallets or otherwise”.
