Many investment and financial brokerage companies face a challenge of suspending the accounts of many of their clients trading on shares listed on the Kuwait Stock Exchange, especially those who are politically exposed, due to their inability to update their data, in accordance with the directives of the regulatory authorities and the inspection teams of the Capital Markets Authority that roam the companies and authorized entities.
In this context, investment sources told a local Arabic daily that this procedure leads to the freezing of hundreds of accounts belonging to investors until the data is updated, while the required update varies between personal data or the source of funds that are traded in shares, as the concerned authorities stop any inflation in the traders’ accounts, reports a local Arabic daily.
The sources pointed out that the companies are working to update the data of those politically exposed, including ministers, officials and government employees during a period that extends between one and two years, while the data of the average individual trader is updated every 3 to 4 years, which prompted the inspection teams to request a reduction in that period especially the data of investors from prohibited or high-risk countries or individuals classified as high-risk who should update annually.
And with the end of each period, companies are required to update this data, otherwise the accounts that have not been updated will not be allowed to buy and sell, which prompts some officials of investment and brokerage companies to suggest that “prevent any withdrawals from non-updated accounts, provided that the account remains active in trading until all information is submitted.”
The sources pointed out that the modernization in itself requires procedures that sometimes extend for days, as the process permeates legal reviews through compliance, explaining that companies understand the supervisory role of the “Markets Authority” and inspection teams, but the matter needs to take into account the special circumstances of customers sometimes.
The sources stated that the increase in the amounts of money in the accounts of some traders, especially those who are politically exposed, stops the regulatory authorities represented by the “Markets Authority” to clarify the source of the funds transferred from banks to the accounts of investors with the Kuwait Clearing Company, including to financial brokerage companies, for example, adding that “some accounts showed an increase in its monetary components during a period of a year or more, and in the event that this increase is the result of inheritance, real estate activities, or retirement, the inspection teams require supporting documents such as contracts, invoices, receipts, and others.
The sources confirmed that the transfers are made through the banks that are subject to the supervision of the Central Bank of Kuwait, and called for greater flexibility from the responsible authorities in this aspect, especially since there is a memorandum of understanding between the Markets Authority and the Central Bank.