Regulating Non-Profit Organisations Against Money Laundering and Terrorism Financing in Saudi Arabia

Abstract

Since 9/11, the Non-Profit Organisations (NPOs) sector has faced continuous pressure and risks over money laundering (ML) and terrorist financing (TF) abuse, in response to this, the Financial Action Task Force (FAFT), the global standard-setter for Anti-Money Laundering and Counter-Terrorism Financing issued Recommendation eight aiming to protect the NPOs. This thesis, therefore, will explore the role of NPOs in ML and TF with specific reference to the Saudi Arabian context. Saudi Arabia, among other nations, has suffered terribly at the hand of Islamic terrorist organisations, and it has an underdeveloped NPO sector. However, and despite these challenges, in 2016 the Saudi Government announced its ambitious Vision 2030 and a plan to substantially develop and expand the NPO sector by 2030. This has highlighted some potential risks and concerns regarding ML and TF activities. The aim of this thesis is to analyse the existing policies and practices associated with antimoney laundering (AML) and countering the financing of terrorism (CFT), in order to assess their strengths and weaknesses. This research also aimed at investigating the extent to which legal norms play a role in achieving a balanced approach to regulating ML and TF in a way that does not jeopardise NPOs’ economic and social benefits. This thesis is a social-legal study and has gathered data through academic literature and resources such as government regulations, policies and reports. That applied a qualitative approach employing face-to-face semi-structured interviews with key informants from both governmental and non-governmental authorities in AML/CFT and NPOs in Saudi Arabia. This thesis is a multidisciplinary study, and it draws on contributions from law, terrorism, and economics studies. More importantly, this thesis has utilised Douglass North's Theory. This thesis finds that formal rules (e.g. laws and regulations) alone are not enough to achieve a balance between expanding and protecting the Saudi NOP sector. Social norms also play a major part in this process and social change is required to achieve the goal of protecting the economy and maintaining the social benefits of NPOs. This research provides original contributions to the knowledge gap in the area of ML and TF, with empirical evidence that can be used to enhance the protection of NPOs and minimise the risks of ML and TF abuse. This thesis concludes by suggesting potential improvements to the legal framework and recommendations for policymakers.