The International Monetary Fund (IMF) has advised the Saudi government that the country's Banking Control Law (BCL) needs urgent updating to include new provisions to give the Saudi Arabian Monetary Agency (SAMA) greater operational independence. The Fund, in its latest Financial Sector Assessment Program (FSAP) Update on Saudi Arabia published late April 2012, which largely concentrates on whether SAMA is in compliance with the Basel Core Principles For Effective Banking Supervision, stressed that "the (Saudi Arabian banking) legal framework is old. The BCL has hardly been changed since enactment in 1966. It should be updated, especially as it provides for much less formal independence and authority for SAMA than is exercised in practice." According to the IMF, the Saudi authorities are resisting any suggestions to changing the BCL because "there would be more risk than benefits in amending it." The Saudi authorities also believe that the existing BCL is serving its purpose well and provides the necessary legal framework for implementing international standards and for taking all the required supervisory actions. For example, in exercise of powers under this law, SAMA has already implemented Basel-II /Basel-III and all other relevant international standards, Saudi Gazette reported.
