Once seen as a concern primarily for retail and commercial banks, AML scrutiny is now intensifying in the investment space — especially in the Gulf region.
Napier AI, a provider of AI-powered AML solutions, recently outlined three of the AML challenges facing capital markets in Saudi Arabia.
Capital markets handle thousands of transactions per second, particularly in equities, derivatives, and foreign exchange (FX). These trades often involve cross-border flows, layered instruments, and complicated ownership structures, making it difficult to trace the source of funds or identify the ultimate beneficial owner (UBO).
These complexities create opportunities for money launderers, who exploit loopholes through methods such as ‘free of payment’ transfers, mirror trading, and non-standard settlement practices. Traditional AML systems, built for lower-volume environments, often can’t keep up with the scale or sophistication of these risks, leading to false positives and delayed trades.
The regulatory framework in Saudi Arabia continues to evolve. From April 2025, new UBO rules require most companies to disclose and maintain accurate ownership information in a central register with the Ministry of Commerce. This move aligns with international standards and reflects the country’s push for corporate transparency and accountability.
In addition, the Capital Market Authority (CMA) recently introduced a major change by allowing foreign investors to hold shares in Saudi-listed firms that own property in Makkah and Madinah. This has triggered a rise in cross-border investment activity, adding to the compliance workload for capital markets firms.
However, many firms still rely on outdated compliance tools that are not designed for high-speed, real-time trading environments. Upgrading to modern systems that support contextual, AI-driven screening is expensive and complex, but increasingly necessary.
Next-generation AML solutions are designed to meet these challenges. According to the Napier AI / AML Index, Saudi Arabia could cut its compliance costs by more than 50% by adopting AI-powered compliance technology. For capital markets, this means faster and more accurate screening—even for high-frequency, cross-border, and derivative trades.
Napier AI’s platform uses fuzzy matching, contextual risk scoring, and real-time configuration to reduce false positives and maintain operational efficiency. It can also adapt to new investor profiles—such as foreign investors in sensitive real estate sectors—and handle complex UBO disclosure requirements. The system learns continuously from analyst feedback, improving alert quality over time and allowing firms to adjust screening rules for specific asset classes or jurisdictions.
Real-time screening is essential in today’s capital markets. With thousands of trades happening per second, firms need tools that can apply multiple configurations simultaneously across different counterparties and regions. This ensures that strict rules can be enforced where needed—such as for real estate holdings or complex ownership structures—while lighter screening can be applied to lower-risk segments, keeping operations moving smoothly.
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