The Central Bank of Kuwait has approved the implementation of the Gulf Payments System Initiative “Aafaq” at the level of the banking sector. According to the supervisory decision, it has become mandatory for local banks to join the system, provided that it is used as one of the options available for money transfers between Gulf countries.
In this regard, a local Arabic daily said, it was proposed to form a working group headed by the Central Bank, represented by the Deputy Director of the External Operations Department, in addition to representatives from banks being nominated, in order to ensure the speedy completion of the project.
The Central Bank pointed out that in order for the team to be more effective, the following must be taken into account:
1 – The team members should not exceed 8, including the Central Bank representative.
2 – That there be representation from all conventional and Islamic banks and branches of foreign banks, represented by two conventional banks, two Islamic banks and a foreign bank.
One of the most important tasks of the team is to determine the general objectives of the project, follow-up the timetable for joining, and define the roles and responsibilities of team members, while defining the human resources required to implement the project.
The launch of the “Aafaq” payment system in Kuwait comes as part of the Central Bank’s efforts to develop cross-border payment systems and adopt the latest technologies in this field in order to improve efficiency and reduce dependence on financial systems and external transfer networks, and contribute to reducing the cost of transfers to customers.
“Aafaq” is a regional payment system provided by the Gulf Payments Company that aims to implement remittances in the local currencies of the Gulf Cooperation Council countries and other currencies in a short record time and at low costs within a secure and stable environment.
The company was established after the efforts made by the central banks in the Gulf Cooperation Council countries, and its launch is part of a regional infrastructure that “Aafaq” is working on to operate and develop, on which the regional payment systems among the GCC countries are based, by providing a real-time settlement system between the Gulf central banks.
The “Aafaq” payment system comes with more advanced features by providing instant transfer and deposit feature, low service fees, regulating and enhancing the management of liquidity and financial centers, enhancing operational capabilities and reducing expenses, reducing the amount of various risks, and applying unified operating regulations and systems in accordance with best practices. Afaq business model
The joint regional payments platform connects the Real-Time Gross Settlement Systems (RTGS) of each of the GCC countries, whereby the instant processing of remittances between the GCC countries is carried out at the end of the day, including the total settlements.
Aafaq’s operational model includes, in its first phase, multiple services for transfers in the currencies of the GCC states, and in the second phase, other currencies will be included within services such as the dollar and the euro, which will enable the processing of a large proportion of cross-border payments in addition to the advantages of settlement on the same day for the balances of central and commercial banks and its financial centers.