Saudi Arabia’s financial sector is undergoing rapid transformation, driven by regulatory advancements and economic diversification under Saudi Vision 2030. The Capital Market Authority (CMA) plays a pivotal role in ensuring transparency, governance, and risk management in the Kingdom’s capital markets.

For businesses operating in Saudi Arabia, compliance with CMA regulations is a strategic imperative. Non-compliance not only exposes firms to regulatory penalties but also threatens their market reputation and operational stability. This guide outlines the key aspects of CMA compliance, the challenges businesses face, and best practices for ensuring regulatory adherence.

Understanding the CMA’s Regulatory Framework

The CMA enforces a comprehensive regulatory framework covering multiple aspects of financial services, capital markets, and corporate governance. Key regulations include:

Key CMA Regulations:

• Corporate Governance Regulations (CGR): Strengthens governance frameworks for publicly listed companies, ensuring accountability and transparency.

• Investment Funds Regulations: Covers licensing and operational requirements for fund managers and investment firms.

• Anti-Money Laundering (AML) & Counter-Terrorist Financing (CTF) Regulations: Mandates stringent AML controls to combat financial crime.

• FinTech Regulatory Framework: Provides guidelines for licensing and operation of FinTech firms, ensuring innovation within compliance parameters.

Why It Matters

A report by PwC found that 70% of financial institutions in the GCC are prioritising compliance automation to navigate increasing regulatory complexity. In Saudi Arabia, CMA enforcement actions have grown by 40% in the last two years, underscoring the importance of proactive compliance measures.

Compliance Challenges for Saudi Businesses

While CMA compliance is essential, businesses often encounter challenges, including:

• Regulatory Complexity: Frequent updates to CMA rules require continuous monitoring and adaptation.

• High Compliance Costs: Implementing robust compliance frameworks demands significant financial and operational resources.

• AML & CTF Risks: Saudi Arabia’s Financial Action Task Force (FATF) membership has led to increased scrutiny of AML procedures.

• Digital Transformation Pressures: The shift to compliance automation requires investment in regulatory technology (RegTech).

“Regulators in Saudi Arabia are increasingly focusing on digitalisation in compliance to improve transparency and efficiency.” – Mark Scott, Director- Risk, j. awan & partners

Best Practices for Ensuring CMA Compliance

A. Strengthening Governance & Internal Controls

• Establish a Board-driven compliance culture to ensure regulatory alignment.

• Implement risk and compliance committees for ongoing oversight.

B. Leveraging Technology-Driven Compliance Solutions

• Adopt AI-driven RegTech platforms for KYC, AML monitoring, and automated reporting.

• Implement risk assessment frameworks to streamline compliance workflows.

C. Continuous Training & Regulatory Awareness

• Conduct mandatory CMA compliance training for employees across all levels.

• Engage in regulatory stress testing to assess operational resilience.

D. Engaging Third-Party Compliance Support

• Partner with specialist compliance consultancies to conduct independent audits.

• Utilise outsourced compliance officers to enhance governance oversight.

The Role of CMA in Saudi Vision 2030

CMA’s strategic regulatory initiatives align with Saudi Arabia’s economic transformation goals by:

• Enhancing Capital Market Attractiveness: Streamlining regulatory processes to attract foreign investments.

• Strengthening Investor Protection: Enforcing stricter governance and transparency frameworks.

• Fostering FinTech Growth: Establishing FinTech sandboxes to promote innovation while ensuring regulatory compliance.

According to the Saudi CMA, foreign ownership in the Saudi stock market has increased by 150% between 2018 and 2023, reflecting the success of regulatory enhancements in attracting global investors.

How j. awan & partners Can Help

At j. awan & partners, we provide tailored compliance solutions to help businesses navigate Saudi Arabia’s regulatory environment, including:

• Regulatory Licensing & Approvals: Assisting financial institutions and FinTech firms in obtaining CMA approvals.

• AML & CTF Framework Implementation: Ensuring compliance with global and Saudi regulatory standards.

• Risk & Governance Advisory: Strengthening corporate governance structures and risk management practices.

• RegTech Solutions via azakaw: Leveraging AI-powered compliance automation tools for KYC and AML processes.

As Saudi Arabia’s financial sector evolves, businesses must stay ahead of regulatory developments to remain compliant, competitive, and resilient. Investing in compliance automation, governance frameworks, and expert advisory services will be key to successfully navigating CMA regulations.

Contact us today to explore how j. awan & partners can support your compliance journey.

Email: info@jawanpartners.com | Visit: jawanpartners.com