Kuwait’s recent tightening of money transfer regulations has raised concerns among individuals and businesses engaged in regular financial transactions. Those who frequently send money to friends, especially through nearby exchange companies, or act as intermediaries for businesses with employees abroad may face increased scrutiny.
Sources indicate that the Central Bank of Kuwait is enforcing stricter measures to verify the actual beneficiaries of financial transfers, even for amounts below 50 dinars. This heightened scrutiny applies to recurring or consistent transactions, requiring individuals to justify their transfers—even if they have a good relationship with the exchange company’s management.
These regulatory measures aim to strengthen efforts against money laundering and terrorist financing, in alignment with the Financial Action Task Force (FATF) guidelines. The new rules enhance the Central Bank’s oversight, ensuring that financial transfers to and from Kuwait adhere to FATF standards.
Under these regulations, exchange companies must verify customer information and beneficiary details throughout transactions, keeping records updated and ensuring accuracy. They must also assess and enhance automated systems that detect and prevent financial crimes.
Sources emphasize that transaction and customer records must be retained for at least five years. This includes verifying data for transfers exceeding 3,000 dinars (or its foreign currency equivalent) in a single day. Exchange companies are also required to report any suspicious transactions that may involve criminal proceeds or potential links to terrorist financing.
Additionally, the Central Bank mandates that exchange companies maintain effective procedures for detecting and reporting suspicious activities. If a transaction appears illicit, companies must conduct thorough investigations, document findings, and identify all involved parties to ensure full compliance with anti-money laundering and counter-terrorism financing regulations.
To strengthen compliance, exchange companies must implement risk-based customer due diligence measures, classifying customers as low, medium, or high risk. High-risk customers will be subject to increased scrutiny, including detailed reviews of their transactions.
Furthermore, exchange companies must engage an audit office—preferably affiliated with an international firm—to assess their adherence to Law No. 106 of 2013. These audits focus on unusual transactions lacking clear economic justification, with reports submitted semi-annually on June 30 and December 31.
As part of ongoing compliance efforts, exchange companies must also deploy an automated system to cross-check customer names against lists of individuals and entities subject to financial sanctions. This includes sanctions imposed by the UN Security Council and Kuwait’s Ministry of Foreign Affairs.
Under the new framework, exchange companies are strictly prohibited from offering financial services to any individuals, entities, or organizations listed in these sanctions, reinforcing Kuwait’s commitment to global security measures.
As these regulations take effect, those involved in financial transactions must adapt to stricter compliance requirements, ensuring their operations align with the new standards.
