The Central Bank of Kuwait has called upon banks operating in Kuwait to provide updates on the establishment of a dedicated central unit for addressing cases of electronic financial fraud, set to operate 24/7. So, how have the banks responded?
The coordination team overseeing the establishment of this “Chamber” comprises representatives from the Union of Banks, the Public Prosecution, the Ministry of Interior, and Communications and Information Technology Regulatory Authority (CITRA).
The Banks have conveyed four key points to the Central Bank following their recent discussions saying the banks are nearing readiness for the establishment of the “Chamber.”
Current deliberations pertain to the necessary technical and human resources deployment to assemble specialized teams within each bank. These teams will be tasked with managing the goals of the “Chamber,” including receiving reports of financial fraud, monitoring and addressing them with speed and efficiency. Each bank will allocate dedicated employees for this purpose.
This is in addition to banks having received assurances from the prosecution indicating an intent to expedite procedures for freezing funds suspected of being linked to fraudulent activities.
The prosecution is also willing to respond rapidly to banking requests for placing holds on suspicious funds, aiming to ensure that they are returned to their rightful owners as quickly as possible.
Immediate freezing of fraudulent funds will be limited to local fund transfers within Kuwait. However, if a fraudster successfully convinces a victim to withdraw funds and transfer them abroad or engage in online purchases, the “Chamber” may face limitations in implementing its plans. Local measures will primarily revolve around freezing the funds within these transactions immediately.
There’s a possibility that the bank receiving the funds might be unable to freeze the fraudulent amounts promptly, even in cases involving two local banks. If the fraudster succeeds in withdrawing the cash amounts before receiving permission from the prosecution, the bank may need to employ traditional procedures, including contacting the intermediary bank to halt the flow of funds in the event of a transfer or purchase.
The success of these procedures hinges on the swiftness of reporting and other factors.
Moreover, the Central Bank has requested CITRA to take measures against fraudulent operations using phone numbers issued by telecommunications companies in Kuwait. They also aim to prevent impersonation of official institutions by requiring telecommunications companies to display the full name of the contacting party on the phone screen for communications with entities such as banks and government agencies. This will help reduce instances of individuals impersonating bank or government agency employees.
The significance of establishing the anticipated “central chamber” has increased due to the surge in financial fraud operations over the past three years. With many services and businesses transitioning to digital platforms, cybercrime, especially fraud aimed at stealing personal and banking data, has become more prevalent. This includes fraudsters posing as official or banking representatives to solicit personal information.
The Central Bank of Kuwait’s recent data shows a significant rise in bank card fraud cases at local banks, increasing sixfold last year compared to 2020.
The total number of bank card fraud cases between 2020 and 2022 surpassed 127,500, with 8,082 cases in 2020, rising to 65,492 cases in 2021, and then decreasing to 54,066 cases in 2022. The Central Bank has been actively engaging with banks since March 2023, conducting meetings to establish coordination and cooperation frameworks to combat electronic financial fraud.
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