Banking Transparency Under the Spotlight: Kuwait Central Bank issues guidelines

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KUWAIT CITY, Sept 24: According to reliable sources, banks have consulted the opinion of the Central Bank of Kuwait regarding the required control mechanism for banking operations between the accounts of bank employees and customers, reports Al-Rai daily.

They revealed that the banks asked the supervisory regulator to provide them with the adequacy of the procedures followed by them to monitor the accounts of their employees, and whether the Central Bank has any directives that must be taken into account.

In this regard, the Central Bank of Kuwait stated that banks must fulfill due diligence requirements to verify the integrity of the funds and information available to them, either about the movement of customer or employee accounts, and compare it with their financial data recorded in the “Know Your Customer” form, to ensure the extent of its consistency with the transactions executed on their accounts.

The Central Bank asked banks to rely on the instructions previously issued by it and amended in February, which specified the frameworks and concepts that banks must take into account when setting policies and work procedures that must be followed to verify compliance with fulfilling the requirements of the instructions for monitoring the accounts of their employees and customers.

The banks rely on the instructions of the Central Bank of Kuwait and their internal control systems for implementing oversight instructions on employees’ and customers’ accounts, especially with regard to unusual money flows to the client’s accounts, irrespective of whether he is an employee or a client outside the bank.

The banks follow a more careful policy on employee accounts, in accordance with the instructions of the Central Bank. As soon as suspiciously high amounts enter the employees’ accounts, the bank immediately inquires about the source of these funds, and seek evidence to confirm their legality, especially if the liquidity flowing to the employee’s account is high compared to the size of his salary and traditional income rates.

The sources affirmed that banks generally review customers’ account opening papers and review the negative lists before opening new accounts or conducting banking transactions with customers.

They said the banks audit the payments of funds received into the accounts, during which the equivalent of the usual income is taken into account, or proof of its legality is provided in the event that its level exceeds the traditional financial rates that enter the client’s accounts, especially those that enter his accounts on a regular basis.

The sources highlighted that banks, in the context of their audit of the movement of funds into accounts either for employees or customers, are committed to all procedures, and apply the requirements of the law and instructions for combating money laundering and terrorism financing, including ensuring when opening the account that the official identification documents match the customer’s ID.

They affirmed the banks’ commitment to the Central Bank of Kuwait’s close follow-up framework of developments in internal control trends at all established levels.

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