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Money Exchange Companies in Kuwait Rocked by Illicit Transfers Scandal

Due to illegal “black market” money transfer activity on certain currencies, particularly the Indian rupee and the Egyptian pound, exchange companies suffered over the past year. This was particularly problematic given the significant fluctuations in these currencies’ exchange rates, which caused approximately 41.3% of their profits to be lost in 2023.

At around 25.2 million dinars, the profits of 32 Kuwaiti exchange companies, which are supervised by the Central Bank and members of the Kuwaiti Union of Exchange Companies, have dropped to their lowest levels in three years. After a peak of 45 million dinars in 2021 and 36.3 million dinars in 2020, the 2022 data, which were at 43 million dinars, contrast dramatically with this fall.

Banking sources that Al-Seyassah referenced claim that exchange rate fluctuations have given illegal parties opportunity to take advantage of, leading to money transfers at exorbitant costs and operating beyond the bounds of banking laws. As a result, this pattern has negatively impacted exchange businesses’ earnings. This decline is highlighted by data from the Central Bank of Kuwait, which shows that during 2023, the net profits of exchange businesses decreased annually for the fourth time in a row by 41.3 percent. This decline was ascribed to a combination of dropping revenues and increasing expenses and operational responsibilities.

Exchange businesses declared a 25.29 million dinar net profit in 2023, a substantial decrease from the 43.09 million dinars they claimed in 2022. This decrease was partly caused by a rise in expenses, which came to 54.87 million dinars, 10.22% more than the previous year. 44.09 million dinars were spent on banking and administrative costs; bank interest came to 945.4 thousand dinars; allocations came to 8.66 million dinars; and other expenses came to 1.17 million dinars. Notwithstanding these difficulties, exchange activity revenues rose by about 13.68% to 80.16 million dinars in 2023—a slight decrease from the 92.87 million dinars reported in 2022. The total assets of exchange businesses doing business in Kuwait increased to roughly 298.1 million dinars at the end of December 2023 from roughly 283.3 million dinars in December 2022.

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