Many expats in private companies in the Kingdom who run their own companies have halted business activity fearing punitive action from authorities.
Saudi banks have now begun to monitor expat bank accounts for their sources of income. A client will not be able to carry out transactions if the amount of money in an account is not proportionate to the account holder’s average income.
Expats often perform commercial work other than their regular jobs to improve their financial situation. Expats with good salaries may open up small mobile stores, advertising agencies or computer maintenance shops to increase their income.
However, new government regulations stipulate that expats must work for their sponsors, which makes it illegal for them to open up small enterprises. Expats have been able to send remittances to the tune of SR109 billion during the current year thanks to such commercial activity.
A World Bank report said that at $28.4 billion, Saudi Arabia ranked first among the Arab countries and third globally in terms of the volume of remittances to developing countries.
Some expats have cited low salaries in the companies they work for as the reason behind embarking on commercial ventures.
Talaat Hafiz, secretary-general of Media and Banking Awareness Committee of Saudi Banks (MBAC), confirmed that the new banking system has banned the opening of bank accounts for expats who are not authorized to work.
Saudi banks routinely monitor transactions to ensure that the amount of money being transferred is relative to a client’s average income.
“Saudi banks also apply ‘know your client’ strategies designed to examine the clients’ identification,” Hafiz said.
Personal documents are verified to confirm they are genuine.
Banks that suspect irregular activity may notify police for investigation.
Private companies transfer their employees’ salaries to their bank accounts. Saudi banks have previously received around 4 million requests from expatriates who are working in the private sector to open new bank accounts.
Some expats have one bank account for their monthly salary and a second for income from commercial activity.
“I am working as designer at a private company,” Khaled Abu Muatath, a Yemeni resident in Jeddah, told Arab News. “But I earn a monthly salary of only about SR400.
Therefore, I design commercial logos and advertisements for other companies to increase my income. Now with the new banking system, I will have to stop my business.”
Abdul Aziz Al-Shami, a Syrian resident, told Arab News that he and a friend had opened a small mobile store on Palestine Street. He is also working at a private company.
“Now that my account will be monitored for the large amount of money in it, I am planning to close shop to avoid any trouble with the labor authorities,” Al-Shami said.
As new laws take effect, expats shutter personal businesses
