No documents, no transfer: Exchange firms enforce tough new transparency rules

Exchange companies have begun tightening precautionary measures governing customer money transfers, significantly strengthening verification procedures related to the source of funds, in line with enhanced regulatory requirements aimed at combating financial crimes and improving transparency.

The stricter controls come at a time when paying for purchases — even through bank balances at gold, jewelry, and exchange outlets — is no longer sufficient to prove the legitimacy of funds unless the actual beneficiary is disclosed and the full payment is made through verified channels without accepting cash transactions.

The new approach reflects a growing compliance focus summarized by one central question increasingly posed to customers: “Where did you obtain these funds?”

According to informed sources, exchange companies now require customers to provide documented proof of the source of transferred funds, particularly when transfer amounts significantly exceed the customer’s declared income recorded under “Know Your Customer” (KYC) data or when transactions are repeated frequently, reports Al-Rai daily.

This development coincides with the decision of the Central Bank of Kuwait to reduce the maximum daily cash amount accepted for transfers from 3,000 dinars to 1,000 dinars per customer.

Customers must now substantiate the origin of transferred funds even when the money comes from their personal bank balances.

Acceptable sources include savings, proceeds from asset sales, loans, or end-of-service benefits, supported by bank statements clearly showing account activity.

Transfers directed to third parties or companies also require clarification of the relationship between sender and beneficiary.

Sources noted that some exchange companies begin enhanced verification procedures for transfers starting at 10,000 dinars when transaction values do not match salary levels, while others apply scrutiny at lower thresholds in cases of repeated transactions within short periods.

Unlike previous practices — where beneficiary declarations were often recorded without verification — customers are now required to submit supporting documentation proving the accuracy of their statements.

Failure to provide the requested documents will result in rejection of the transfer. The stricter measures apply across all exchange company branches, including online transfers, with the aim of strengthening data reliability and ensuring transparency regarding the real sources of funds.

Officials stressed that the new procedures do not impose limits on transfer amounts. Customers remain free to transfer any sums provided they can demonstrate the legitimacy of their funds through proper documentation, particularly in large or unusual transactions that exceed normal income patterns.

The measures form part of exchange companies’ commitment to international compliance standards and recommendations issued by the Financial Action Task Force (FATF), aimed at combating money laundering, terrorist financing, and the proliferation of illicit financial activities while enhancing accountability across the sector.

Required documentation includes:

• Bank account statement
• Proof of source of funds (savings, sale proceeds, loan, or end-of-service benefits)
• Clear clarification of the relationship between sender and recipient, including corporate beneficiaries