NAVIGATING OUTSOURCING RULES IN THE SAMA COMPLIANCE

Written by Midhlaj 

June 11th,2024

Risk Management

SAMA stresses the need for robust risk management in outsourcing, ensuring banks meet obligations even when using external providers.

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 1

Contractual Requirements

SAMA rules require detailed outsourcing contracts outlining work scope, service levels, performance, controls, audits, continuity plans, security, and dispute resolution.

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2

Monitoring and Oversight

Banks must consistently monitor outsourcing arrangements to ensure compliance with contracts and mitigate emerging risks.

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3

Focus on Core Functions

Outsourcing core banking functions is restricted and requires SAMA's permission, ensuring essential activities stay under the bank's direct control.

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4

Data Security and Privacy

SAMA prioritizes customer data protection, requiring banks to ensure outsourced providers uphold strong data security and privacy per regulations.

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5

Overseas Outsourcing

Outsourcing abroad requires banks to manage extra risks, including data residency and jurisdictional control issues, with foreign providers.

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6

Exit Strategy and Termination

SAMA rules likely mandate clear termination and transition terms in outsourcing contracts to ensure smooth handovers and minimize disruptions if the partnership ends.

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7

Subcontracting

The rules may limit subcontracting by approved providers, requiring banks to get SAMA's approval before tasks are assigned to another party.

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8

Impact on Innovation

SAMA rules may complicate adopting new technologies via outsourcing, requiring banks to navigate approvals while leveraging industry advancements.

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9

Regulatory Updates

Banks must stay updated on changes to SAMA Outsourcing Rules, as SAMA may revise them based on new security threats or best practices.

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 10

Understand the key elements of SAMA compliance with our detailed guide. Ensure your organization meets all regulatory requirements efficiently.