Saudi Court Takes Strong Action Against Illegal Business Cover Up
In a recent case highlighting Saudi Arabia’s strict enforcement of business laws, a criminal court has penalized three individuals for engaging in illegal commercial activities. The case involved a Saudi woman and two Bangladeshi nationals who were found guilty of “tasattur” – a practice where foreigners illegally operate businesses under a local citizen’s name. The court imposed a fine of 150,000 Saudi riyals (about $40,000) and ordered the complete shutdown of their transport and logistics business.
The investigation began when officials from Saudi Arabia’s Ministry of Commerce in Makkah noticed irregularities in a transport company that was officially registered under a Saudi woman’s name. Upon closer examination, they discovered that the business was actually being run by two Bangladeshi expatriates. These foreign nationals had used the woman’s commercial registration documents to secure a substantial bank loan, which they then used to purchase vehicles for their logistics operation.
This practice, known as commercial cover-up, is strictly prohibited under Saudi law. The kingdom’s regulations require that businesses be genuinely owned and managed by the person under whose name they are registered. The law aims to protect the local economy, ensure fair competition, and prevent illegal financial activities. In this case, the Bangladeshi nationals were essentially using the Saudi woman’s identity as a front to operate their business illegally.
When the case went to court, the judge ruled decisively against all three individuals. In addition to the financial penalty, the court canceled the company’s commercial registration and business license, effectively shutting down the operation permanently. The two Bangladeshi nationals faced even harsher consequences – they were deported from Saudi Arabia and placed on a permanent blacklist, meaning they can never legally return to the country.
The Saudi legal system treats commercial cover-up as a serious offense. Current laws prescribe severe punishments for those caught engaging in this practice, including prison sentences of up to five years and fines reaching as high as 5 million riyals (approximately $1.3 million). Authorities may also impose temporary or permanent bans on business activities, depending on the severity of the violation.
This case is part of Saudi Arabia’s broader crackdown on illegal business practices. In recent years, the government has intensified efforts to identify and penalize commercial cover-ups across various sectors. Special investigative teams regularly inspect businesses to verify their compliance with ownership regulations. The campaign reflects Saudi Arabia’s commitment to creating a transparent and fair business environment as part of its Vision 2030 economic reform program.
The Ministry of Commerce has been actively encouraging citizens and residents to report suspected cases of commercial cover-up through official channels. They’ve established multiple reporting mechanisms, including a dedicated hotline and mobile application, to make it easier for people to come forward with information about illegal business activities.
For legitimate foreign investors, Saudi Arabia offers proper channels to establish businesses through partnerships with Saudi citizens or through the foreign investment license system. The government has been working to streamline these legal processes while simultaneously cracking down on illegal operations that undermine the formal economy.
This recent court decision sends a strong message to anyone considering similar illegal arrangements. It demonstrates that Saudi authorities have both the capability and determination to uncover commercial cover-ups and impose significant penalties on those involved. As Saudi Arabia continues its economic transformation, such enforcement actions will likely become more frequent, ensuring that all businesses operate within the legal framework and contribute properly to the nation’s economic development.
The case also serves as a warning to Saudi citizens who might be tempted to lend their names to such illegal operations. Even though the Bangladeshi nationals faced deportation, the Saudi woman involved also suffered serious consequences, including the financial penalty and damage to her reputation. The government’s stance is clear – both parties in a cover-up arrangement will be held accountable for breaking the law.
As Saudi Arabia works to attract foreign investment and diversify its economy, maintaining the integrity of its business environment remains a top priority. Cases like this one demonstrate the kingdom’s commitment to enforcing its regulations fairly and firmly, ensuring that all businesses operate transparently and contribute to the country’s economic growth in a legitimate manner.
