Kuwait Central Bank Issues Guidelines On Banking Transparency

As reported by Al-Rai daily, banks have sought the opinion of the Central Bank of Kuwait regarding the required control mechanism for banking operations between bank employees and customers.

As a result, the banks requested the supervisory regulator to assess the adequacy of the procedures they followed to monitor the accounts of their employees, and whether any directives of the Central Bank must be taken into account.

Kuwait Central Bank stated that banks must comply with due diligence requirements to ensure that funds and information available to them are accurate, whether they are related to customer or employee accounts. The financial data recorded on the “Know Your Customer” form should be compared to the transactions executed on their accounts to ensure its consistency.

According to the Central Bank, banks should rely on the instructions it previously issued and amended in February, which laid out the frameworks and concepts they must consider when setting policies and work procedures in order to verify compliance with the instructions for monitoring employee and customer accounts.

Banks implement oversight instructions on employees' and customers' accounts based on instructions from the Central Bank of Kuwait and their internal control systems, especially when unusual money flows to clients' accounts, regardless of whether they are employees or clients external to the bank.

In accordance with Central Bank instructions, banks follow a more careful policy when it comes to employee accounts. If suspiciously high amounts enter an employee's account, the bank immediately inquires about the source of these funds and seeks evidence to prove their legality, particularly if the employee's account has a high level of liquidity compared to his salary and traditional incomes.

According to the sources, banks generally review customers' account opening papers and review negative lists before opening new accounts or conducting banking transactions with them.

They said the banks audit the payments of funds received into the accounts, during which the equivalent of the usual income is taken into account, or proof of its legality is provided in case the level exceeds the traditional financial rates that enter the client's accounts, especially those that enter his accounts on a regular basis.

According to the sources, banks follow all procedures when auditing the flow of funds into employee and customer accounts, including ensuring that the official identification documents match the customer's ID when opening the account, and following the requirements of the law and instructions for combating money laundering and terrorism financing.

They reaffirmed their commitment to following closely the developments in internal control trends at all levels of the Central Bank of Kuwait.

 

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