Get on top of your Saudi Arabia Compliance in 5 simple ways

by Scott Lane (Hong Kong) & Amani Allan (Jordan), The Red Flag Group®

In the immediate wake of the new anti-corruption compliance actions being imposed in the Kingdom, members of the international Compliance community with varying degrees of local commercial interest are waking up to the very clear and present reality that a tsunami of Integrity & Compliance changes that look set to sweep the nation, washing away a number of previously ingrained regional business practices which were at odds with certain elements of globally recognised industry best practise standards.

The Red Flag Group® has devised a concise list of 5 clear, actionable points that each and every Compliance Professional; irrespective of industry or sector can adopt to assist them in their mission to successfully navigate the rapidly evolving Saudi Risk & Compliance landscape and maintain business sustainability in Saudi Arabia. These 5 steps should be essential actions for anyone managing compliance in Saudi Arabia. Once these basic 5 steps are completed, you will be in a better position to decide how best to go forward.

Communication. Discuss with your Saudi team the impact of the recent announcements from the Anti-Corruption Committee. Make sure you lean-in to these discussions and engage with both local and regional management and get the Compliance team front of mind as a group that can help drive the business and manage any risks. Start a watching brief on the situation and create a small team to discuss any new developments and how they might affect your business. Compliance has a real opportunity here, is to have a seat at the table (and, preferably lead it) and being engaged in the discussions early on will be important. It is also a good idea to communicate across the company some of the proactive issues that might come up.  Even a holding statement that a team has been formed to look at the risks associated with your business in Saudi Arabia and that the company will be taking measures to ensure that the business and its third parties and relationship with the government is always full of integrity.

People under the spotlight. It is of vital importance to look at individuals that are being investigated and if they are connected to your company. In some instances, it may be the case that your local partner in Saudi Arabia has some association with the ruling family. If such close connections exist, you must perform a comprehensive compliance review of your Saudi operations to establish which parts of your business have had exposure following these recent revelations. Our suggestion is to get ahead of the curve and really understand the relationships you have and do an audit of those relationships quickly. This is an area where you should be proactive and drive this review.

Review payments. It is wise to inspect all payments/invoices related to operations in Saudi Arabia where there is the potential that such payments may have been made legitimately or illegitimately to entities under scrunity. Again, getting ahead of this and doing this proactively is always the best approach. It can be done ‘quietly’ across the company, but it should be done. The last thing you want is for operations in Saudi to be tainted in some way because of their connections. The clear message risk is corruption. You need to make sure that any visits to your offices, any gifts or any special engagements are well known and documented. You need to review any pending payments and put a stop to them or add in an extra layer of review.

Compliance enforcement. This is just the tip of the iceberg. You need to be prepared for more things to come out and you need to be ready for them. It is possible that the anti-corruption regulators may start to investigate further, engage in dawn raids and other fact-finding activities. Get ready for them.  Brush off your dawn raid procedures and get people trained on what to do in all Saudi offices.

Due Diligence to safeguard your business. If many of the issues above scare you because of your lack of knowledge, then this next piece will be even more of a discomfort.  Knowing your third parties and how they go about conducting business in Saudi Arabia is imperative. It was before and it will be even more important going forward. Take an immediate and closer look at your business associates in Saudi Arabia and conduct new (or refreshed) due diligence on them and their principals. Only detailed due diligence will determine where you stand and if you might be exposed to any potential risks through them being caught up in the investigations. Be ahead of the curve not behind it. Don’t assume that any due diligence you did before was deep enough.  It is strongly advisable to take a new look at this area and focus on it under your direction – not someone else’s.

To learn more about what you can do to enhance your grasp on your compliance practices, you can communicate with The Red Flag Group® team: 

Previous Article
Venezuelan Sanctions: Actions for any Compliance Officer managing Latin America
Venezuelan Sanctions: Actions for any Compliance Officer managing Latin America

The action for compliance officers is to engage in the business management, talk to them about the restrict...

Next Article
Data for due diligence: Relevant and meaningful or just data?
Data for due diligence: Relevant and meaningful or just data?

Any consumers of integrity due diligence reports should understand that without added value in the form of ...

Looking to build a perfect due diligence programme for your business?

Contact us