Arab Times, 10 February 2025: Kuwait has recently implemented stricter regulations on money transfers, raising concerns for individuals and companies involved in regular financial transactions.

Those who frequently assist friends with money transfers or act as intermediaries for businesses with employees abroad may find their transactions under increased scrutiny.

The Central Bank of Kuwait is enforcing more rigorous measures to verify the actual beneficiaries of financial transfers, even for amounts under 50 dinars.

This scrutiny applies to recurring transactions, requiring individuals to justify the reasons for their transfers, regardless of their relationship with the exchange company.

These regulatory changes aim to strengthen efforts against money laundering and terrorist financing, aligning with the Financial Action Task Force (FATF) guidelines.

The new rules enhance the Central Bank’s oversight, ensuring that financial transfers comply with FATF standards.

Exchange companies must verify customer information and beneficiary data throughout the transaction process, keeping this information updated and confirming its validity.

Due diligence measures include assessing the effectiveness of automated systems that monitor and prevent illicit activities.

Customer and transaction records must be retained for at least five years after a transaction, with data accuracy verified for transactions exceeding 3,000 dinars in one day.

Exchange companies are also required to report suspicious transactions potentially linked to crime or terrorism financing.

The Central Bank emphasises the importance of effective procedures for reporting suspicious activities.

In cases of suspected illicit transactions, thorough investigations and documentation are required, identifying all parties involved and exploring any potential connections to money laundering or terrorism financing.

To ensure compliance, exchange companies must implement customer due diligence measures based on assessed risk levels.

This includes reviewing customer files and transactions, with additional scrutiny for high-risk customers.

Furthermore, exchange companies must engage an audit office, preferably linked to an international entity, to evaluate compliance with Kuwait Law No. 106/2013.

This audit focuses on unusual transactions lacking clear economic justification, with reports required semi-annually.

Ongoing due diligence requires exchange companies to implement an automated system to verify names against lists of individuals and entities subject to freezing orders, ensuring compliance with international sanctions related to terrorism and weapons proliferation.

Under the new framework, exchange companies are prohibited from providing financial services to individuals or entities listed in freezing decisions, reinforcing Kuwait’s commitment to global security efforts.

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