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Exchange companies complain to CBK local banks refusal to open accounts

‘Business significantly affected’

KUWAIT CITY, Nov 12: Some financial institutions and exchange companies that buy and sell currencies in the local market have complained to the Central Bank of Kuwait (CBK) that the local banks refuse to open or close accounts for them, although they are subject to CBK control, reports Al- Rai daily quoting informed sources.

These companies and institutions explained because of the refusal by the local banks it is not possible for them to obtain points of sale, which makes it difficult for them and has significantly affected their business. However, it is clear that the banks have their considerations that require them to be conservative in dealing with these financial institutions.

The sources pointed out members of the Anti-Money Laundering and Terrorism Financing Committee at the Union of Kuwait Banks concluded that diligent measures should be applied to these types of accounts because of their activity.

They also noted the inability of banks to assess or determine the quality of the application of this category of customers to the anti-money laundering and terrorist financing regulations.

The sources pointed out that taking into account the high degree of risk, associated with the activity of these customers, as well as the inability to stand, or assess the quality of due diligence measures applied in particular, or the extent of compliance with anti-money laundering and terrorist financing regulations, by those institutions and companies in general, banks have agreed to leave a rating to start or continue dealing with this category of customers in the light of the degree and sensitivity of the risks each bank wishes to take in light of its assessment and hedging the level of risk it wishes to be exposed to.

At the same time, the banks have stressed on the importance of serving the largest segment of customers without compromising the integrity of their financial positions or affecting the degree of risk they may face. In response to a query by the Central Bank regarding a complaint refusing to open or close the accounts of exchange institutions and companies that buy and sell currencies in the local market, the banks listed their reasons for adopting this trend, pointing out that local banks are keen to protect the banking and financial system.

The opinion of the members of the Anti- Money Laundering and Combating the Financing of Terrorism Committee of the Union was as follows:

■ Based on the Central Bank’s instructions issued on May 14, 2019 on the assessment of the risks of customers, products and countries, especially since those whose activities depend mainly on dealing in cash or conducting an activity related to a wide range of risks to money laundering and terrorist financing, banks have agreed to implement due diligence procedures.

■ The inability of banks to assess or determine the quality of the application of this category of customers to the anti-money laundering and terrorist financing regulations in terms of taking due diligence measures towards the clients of these establishments in terms of the establishment of the identity and obtaining supporting documents for amounts exceeding the stated limits and keeping records and documents; compliance with the decisions related to combating terrorism financing in terms of activating the systems for the mechanism of checking the names of customers, and ensuring that they are not included in the lists of terrorists, as these institutions and companies are under the control of the Ministry of Commerce and Industry

■ The inability of banks to implement the due diligence measures required towards customers from periodically updating the data for some of these sales, which necessitates the termination of the relationship according to the CBK’s instructions contained in item XIV and XIX.

■ Refusal of some foreign correspondent banks before the transfer of those institutions because of the high-risk institutions.

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