KUWAIT CITY, Dec 16: The issue of inflated accounts has come to the fore unnecessarily. The last chapter deals with referrals of famous accounts to the Financial Investigation Unit, which is being circulated in the social media, but the case began at least a year earlier, reports Al-Qabas daily.
The case revealed by the daily what has come to be known as the ‘Hospitality’ issue in terms of money spent by this department of the Ministry of Interior in late 2017, has touched its credibility since the issue is in front of the Public Prosecution – the issue of embezzlement of multimillion dinars.
The Central Bank of Kuwait (CBK) has been keen not to repeat what has happened, and has therefore put in place strict mechanisms to prevent money laundering and terrorist financing.
Kuwait has been committed to international standards and agreements in this area related to combating money laundering and financing terrorism.
In this, the banks are obliged to monitor any account that is inflated abnormally and needs to be thoroughly scrutinized. The bank is able to do so and knows the conditions of its customers, and has all the necessary information.
It can ask for information from the client when necessary and keep a close watch on infl ated accounts to know the source of funds and in case of suspicions, refer the issue to the Financial Investigation Unit (FIU) – an independent official body established on the basis of international requirements- and not subject to any authority.
However, it shall consider the assignments and carry out the necessary investigations, including referral to the Public Prosecution and all other relevant measures. The international conventions signed by Kuwait should be responsible for all inquiries related to infl ation of accounts and to consider the communications submitted directly to them by banks in this regard.
The law and agreements on infl ating the accounts address the banks that now have units dedicated to auditing, called the Compliance Unit, which has a number of employees concerned with the follow-up of accounts and deposits.
The law gives them the right to refer cases directly to the Financial Investigation Unit.
A decade ago, this responsibility was vested in the central banks, until international resolutions and agreements on combating terrorism and money laundering came to separate this responsibility from the central banks and attach them to an independent body.
The central banks are no longer directly responsible for following up the infl ation of accounts, receiving communications, and transferring the case to the prosecution. Their role in reviewing periodic follow-up reports and field inspection reports has declined due to the bank’s commitment to various instructions, including its commitment to follow the stipulated procedures without considering the cases and taking any action towards them such as transfer to the security and judicial authorities.
The role of the Central Bank is limited to the application of sanctions against the bank violating any instructions. On the level of sanctions, the daily said, the Central Bank of Kuwait has heavily fined some banks the first of its kind in the history of banking in Kuwait.
These resulted from the discovery of suspicious funds related to the domestic hospitality issue. This is the beginning of the methodical inspection that the banks wanted on their own and with the encouragement of the Central Bank of Kuwait.