The Central Bank of Kuwait has received a request from the local banks to exempt them from providing it with details of money transfers and cash deposits of 3,000 dinars and more to and from Kuwait during official holidays saying it will increase their operational costs.

A local Arabic daily quoting CBK sources, said the Central Bank officials have yet to reveal its position on the request, but expectations are rife that the response will come soon, meaning likely that a decision will be issued before the start of the next holiday, especially since the procedure went into effect Sunday, July, 4, 2022.

In their letter to the Central Bank, local banks officials pointed out that providing the required supervisory database on a daily basis, including holidays will increase the operational cost on the banks, as it will require them to assign the automated sector and the relevant employees to work overtime to sort out all the bank’s operations related to the formation of a database.

As a result, bankers believe that generalizing the procedure throughout the year will result in banks charging additional, non-urgent operating expenses, which leads accounting to reduce profitability rates, even at a low rate.

The Central Bank circulated to the banks that it was decided to establish a database (TRS) for the transactions to be reported, and related to each of the cash deposits made to customer accounts (LCT) and the money transfers executed to Kuwait for the benefit of customers (FCT), which are equal to or more than 3 thousand dinars or its equivalent in foreign currencies per day per customer.

It was also decided that receiving the required information (TRS) about the data related to that from (LCT) and (FCT) should be latest by 10:00 am the following day for transactions done the day before including on official holidays.

The bank must provide the justifications and explanations for any delay that may be caused to the Coordination and Monitoring Unit on Information Systems in the Control Sector at the Central Bank, and a decision will then be taken for appropriate supervisory action in the absence of explanations acceptable to the CBK in this regard.

Bank officials suggested that the Central Bank be provided with data on holidays and vacations on subsequent working days, and in this way the supervisory requirement would be achieved without the banks incurring additional operating costs, even if they were forced to do so, at a much lower rate.

They also stated that what increases the relevance of this proposal is that holidays and vacations are not exclusive to banks, as they include the “CBK” itself and all government agencies, including the “investigation unit”, bearing in mind that the official authorities in the state usually decide longer holidays than banks, which means that providing the required data during holidays will not help the regulator much.

Assuming that the banking database uploaded during the holidays revealed what merits taking a specific action against it, this will only be available on official working days, whether at banks or government agencies.

The sources indicated that the Central Bank indicated in its circular regarding the implementation of the procedure that it seeks to double oversight follow-up with the Financial Intelligence Unit, with the aim of verifying the unusual financial transactions in and out of Kuwait.

The sources pointed out that the Central Bank plans to create more tools in this regard, which contribute to increasing the ability to query and follow-up, and analyze patterns and behavior of unusual operations, noting that excluding holidays and vacations with compensation will not reduce the effectiveness of the supervisory follow-up.

Responsible banking sources expected that the database of these transactions would expand compared to the numbers that the Central Bank had collected years ago, specifically before the establishment of the Financial Intelligence Unit in 2014.

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