Central Bank warns lease-to-own ads are illegal financing by unlicensed entities
Authorities warn that the dangers extend beyond unlicensed financing. These cash-based operations can expose customers to fraud and carry suspicions of money laundering, especially because transactions are frequently conducted outside formal banking channels.
If you use social media regularly, you have likely come across the popular advertisement: “Don’t worry if it’s 40 percent over.” These promotions, pushed by various companies, target customers whose monthly installment payments exceed 40 percent of their salary — offering lease-to-own services under enticing terms.
But these ads have now drawn the close scrutiny of the Ministry of Commerce and Industry, the Central Bank of Kuwait, and other relevant regulators, amid growing concerns that some companies are exploiting installment-sales activities to practice unlicensed financing.
According to informed sources, authorities are examining the financial and economic implications of these practices, as well as tracking violators and imposing penalties, reports Al-Rai daily.
Central Bank: This Is Banking Activity, and It Requires a License
The Central Bank has referred the issue back to the Ministry of Commerce and Industry, given its mandate to regulate commercial licenses and monitor companies.
It clarified that the product advertised under the slogan “Don’t worry if it’s 40 percent” falls under lease-to-own activity — a form of banking function.
As such, it may only be practiced by licensed banks and financial institutions under the Central Bank’s supervision, as stipulated in Article (59) of Law No. 32 of 1968.
This law clearly states that no entity may conduct banking activities unless it is registered in the Central Bank’s official register of banks.
It also prohibits unregistered institutions from using terminology that may mislead the public into believing they are licensed financial entities. Violations can result in license withdrawal and additional measures to halt the activity.
Unlicensed Lending and Misleading Ads
Both the Ministry of Commerce and the Central Bank agree that loan-related advertisements by unlicensed entities on social media mislead the public and undermine trust in Kuwait’s regulated financial system.
However, the issue of determining which authority is responsible for enforcing action against these entities continues to resurface.
This regulatory debate has revived concerns around the more dangerous issue of loan cashing—a long-standing problem in Kuwait’s informal credit market. The threat is amplified by the fact that these loans often come from unknown or unregulated sources, increasing the risks of fraud, exploitation, and even extortion through illicit guarantees.
The Broader Challenge: Loan Cashing and Rescheduling
Advertisements for cashing or rescheduling loans have proliferated for years on social media and even roadside banners, promising to help customers settle outstanding debts and obtain new loans with minimal paperwork, unconventional guarantees, and no consideration of salary-to-installment ratios—often at exorbitant interest rates.
Authorities warn that the dangers extend beyond unlicensed financing. These cash-based operations can expose customers to fraud and carry suspicions of money laundering, especially because transactions are frequently conducted outside formal banking channels.
Regulatory Jurisdiction: A Legislative Gap
Officials at the Ministry of Commerce argue that monitoring such advertisements lies outside their jurisdiction, because the entities behind them are neither registered companies nor licensed institutions.
As a result, the Ministry’s Commercial Control and Consumer Protection Department cannot legally pursue them or shut down their activities—even if they are operating illegally.
Instead, these cases fall under cybercrime violations, handled by the appropriate authorities through account suspensions, investigations, and referral for charges related to fraud and deception.
