Under the new, 29-article legislation, financial institutions will be required to keep records of transactions for at least 10 years and to introduce mechanisms aimed at preventing or uncovering money laundering. Among the steps to be taken to detect and prevent money laundering will be the establishment of in-house intelligence departments which will draw up reports on suspicious transactions.

The new law stipulates that offenders laundering money through charities or other organisations for the purpose of financing terrorism will face jail terms of up to 15 years and fines of $1.9 million. Other money laundering offences will be punished with 10 years in prison and fines of $1.3 million. The law will come into effect within 60 days.

'This is a move to comply with international standards,' says a Riyadh-based economist. 'In a way it was a formality as the Saudi Arabian Monetary Agency (SAMA - central bank) has always had strict regulations. The law alleviates enforcing the power of the regulations.'

The approval of the law precedes plans by the GCC and the FATF to evaluate Saudi Arabia's measures taken to fight money laundering in late September. The GCC is a member of the FATF, both of which have already jointly evaluated the five other member states of the council.

The FATF has set out 40 recommendations for anti-money laundering efforts and provides a complete set of counter-measures against money laundering covering the criminal justice system and law enforcement, the financial system and its regulation and international co-operation.