The local banks and money exchange companies wants to know from the Central Bank of Kuwait, what if they discover that the name of one of their customers matches the name of a person whose account has been frozen or if his/her name is included on the list of persons involved in money laundering activities or financing of terrorism activity.
However, the Central Bank seeks to ensure that exchange companies, as well as banks and finance companies, are able to exceed the expected assessment that the Financial Action Task Force (FATF) will conduct within months, on the extent to which Kuwait and its financial institutions comply with the requirements of combating money laundering and terrorist financing, and to ensure that the correspondent bank used in transfers is not run by people on blocked lists, reports a local Arabic daily.
The relevance of the above question is the discussion that was recently opened between the Central Bank of Kuwait and exchange companies that are preparing for field visits expected to be directed to local financial institutions by the evaluation team from the National Anti-Money Laundering and Terrorist Financing Committee. However, none of its clients’ names matched those on the sanctions lists.
In addition, the supervisory regulator stressed that any financial entity that finds a match between the name of its client and another on the lists of sanctions, whether international or local, must inform the concerned authority of the measures taken in his regard, within 3 working days from the publication of the decision by the relevant committees. The ball will then be in the court of the Ministry of Foreign Affairs, with the data received by the affiliated units in this regard.
In a related context, responsible sources told the daily that the Central Bank of Kuwait has directed the exchange companies to ascertain the identity of the real beneficiaries and the periodicity of the verification work, by conducting what is known as due diligence and making use of the commercial registration data to ensure the identity of these personalities by comparing them with those registered on the Kuwait Chamber of Commerce and Industry data network, especially if they do not have direct access to the commercial registry database to verify the basic information of customers and real beneficiaries.
The supervisory regulator drew the attention of exchange companies to the fact that they must abide by the implementation of the decisions issued by the local authorities issued by the Committee of the Ministry of Foreign Affairs regarding freezing the accounts of individuals and entities, and not to deal with them in the future, stressing that this procedure is not only limited to individuals and entities whose balances are frozen only by a decision of UN Security Council sanctions committees.
The Central Bank stated that exchange companies should use companies that allow periodic and immediate updating of the freezing lists using specialized programs to ensure immediate compliance with the updates made to their lists of individuals and entities whose balances are frozen, after noting that they were manually updated, through the testimonies received by the Central Bank from some exchange companies.
It is noteworthy that the CBK has provided the financial institutions with 35 questions that were received by the National Committee for Combating Money Laundering and the Financing of Terrorism, which are expected to be addressed by the “FATF” team during its field visit to some units of banks and finance and exchange companies, as chosen, as part of its efforts to assess the extent of compliance with the requirements of anti-money laundering and financing of terrorism stressing the importance of demonstrating the effectiveness of the required commitment to the incoming requirements in the area of combating money laundering and financing of terrorism.
Among the questions that the Central Bank was likely to ask the local financial institutions about is whether they discovered suspicious cases in which the information kept about the real beneficiaries did not match the updated information about them, in addition to the procedures of verifying the identity of the real beneficiary when there is a foreign element.