The Saudi Central Bank sets rules for regulating cash centers

In a significant regulatory step aimed at strengthening the financial sector and enhancing its stability, the Saudi Central Bank (SAMA) has released draft rules governing the management and operation of cash centers. This move is part of the bank's ongoing efforts to develop the Kingdom's financial infrastructure and ensure its alignment with international best practices, in line with the objectives of the Financial Sector Development Program stemming from Saudi Vision 2030.

General context and importance of regulating cash centers

Cash centers play a vital role in the economy's monetary cycle, receiving, sorting, counting, storing, and distributing banknotes and coins on behalf of banks and major financial institutions. Given the sensitivity of this activity and its importance to maintaining the integrity of the financial system, a comprehensive and robust regulatory framework has become essential. The new rules aim to enhance the security and operational efficiency of these centers, reduce the risks associated with manual processes, and strengthen oversight mechanisms to combat financial crimes such as money laundering and counterfeiting.

Key features of the new regulations

The draft proposal issued by the Central Bank for public consultation sets out a number of strict requirements that companies wishing to engage in this activity must comply with, and the most prominent of these can be summarized in the following points:

• Mandatory licensing: The new rules require any entity wishing to manage and operate a cash center to obtain a prior license from the Central Bank, submitting a separate application for each center individually, thus ensuring close monitoring of each operational site.
• Legal and financial entity requirements: The draft stipulated that the applicant must be a joint-stock company or a limited liability company, with the necessity of proving financial solvency and operational capability by submitting an approved feasibility study and audited financial statements.
• Integrity and efficiency standards: The rules stressed the need to meet the integrity and suitability standards set by the central bank, to ensure that this sensitive sector is managed by entities with competence and a good reputation.

Technology and automation: Banning manual systems

Perhaps the most notable aspect of the draft is the move towards full automation and the prohibition of manual systems in counting and sorting operations. The regulations require operators to equip cash centers with the latest systems and machines capable of accurately detecting damaged and counterfeit banknotes. This requirement reflects a strategic direction to reduce human error, enhance security, expedite cash flow, and strengthen the ability to trace funds and comply with anti-money laundering and counter-terrorism financing requirements.

Expected impact on the Saudi financial sector

These regulations are expected to have multiple positive impacts both domestically and internationally. Domestically, they will enhance confidence in financial transactions, foster a regulated and competitive environment among specialized companies, and encourage investment in advanced financial technology. Regionally and internationally, this step strengthens the Kingdom's position as a leading financial center in the region and underscores its commitment to implementing the highest international standards in financial oversight, thereby raising the ranking of the Saudi financial sector with global financial organizations and institutions.