financial fraud

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Abu Dhabi: Saudi Arabia has tightened penalties for business licensing fraud, also known as Tasattur or cover ups, in which foreign nationals owning businesses in the kingdom while using the names of Saudi citizens, local media reported.

A new anti-business licensing fraud regime passed by the Saudi Cabinet Tuesday, seeks to eliminate the shadow economy and includes tough penalties for offenders of up to 5 years in prison and a fine of up to 5 million riyals.

A ministerial committee was set up to take on commercial fraud and propose solutions to bring down its impact.

The committee will take aim at activities such as foreign nationals owning businesses in the kingdom while using the names of Saudi citizens.

There will be advanced levels of coordination among authorities issuing business licenses and manpower visas.

The Saudi Data and Artificial Intelligence Authority will build an index to measure the percentage of suspected cases of commercial cover-ups and keep updating the records based on the data it receives from the authorities.

The new anti-business fraud regime protects whistleblowers and reward them up to 30 per cent of the fine collected after a final court ruling is issued.

The system stipulated proactive measures to prevent the occurrence of cover-up crimes to narrow the sources of this phenomenon by addressing the stages that preceded

The crime, and punishments, the most important of which is the seizure and confiscation of the unlawful funds of the perpetrators of the crime after the issuance of final court rulings against them.

The system enables the relevant government agencies to curb business licensing fraud or cover-up crimes , demanding that each entity that issues licenses to businesses follow up on them, and inform the Ministry of Commerce of any suspicious practices.

The new system authorises relevant entities

to use technology to prove the crimes and violations of the commercial concealment through “electronic evidence” in addition to other methods of proof.

The system also allows commuting or exempting from penalties for those who report any fraudulent activities.

The new anti-cover-up system contributes to encouraging small and medium enterprises and protecting consumers from the negative effects of concealment.

The Ministry of Commerce has the mandate to control businesses, receive reports and control crimes and violations stipulated in the system.

Banks brought in

Saudi Arabian Monetary Agency (SAMA) has demanded all banks inform the Ministry of Commerce and Industry about deposits not commensurate with salaries and other sources of income of account holders.

All business owners will be asked to present Saudiasation certificates from the Ministry of Labor before getting their licenses renewed. The ministries of interior and labor will continue to work toward Saudiasation of business activity that have good returns and thus be able to attract the citizens.

The move is in line with Saudi efforts to put a limit to the control of expatriates over some commercial activities, more commonly known as ‘Tasattur’.

A direct electronic link-up with all government and semi-government authorities through the Ministry of Interior’s national information center will provide relevant data of an individual to the Ministry of Commerce and Industry and other authorities.

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