Banking sources suggest two scenarios for request

KUWAIT CITY, Dec 6: Official sources revealed that the Central Bank of Kuwait has requested the banks to provide report showing all cash fl ows from foreign currencies originating from abroad, adding the report must include the list of names of clients and destinations of transfers that sum up to $100,000 and above, reports Al-Rai daily. They indicated that banks from now onwards must prepare report on foreign flows on an ongoing basis, noting “these statements do not include flows coming in the local currency, but limited to the remitter in foreign currencies only. It also include the flows of companies and individuals.”

Sources did not explain the main reason behind the Central Bank’s request for the banks to provide report on foreign flows and details of their owners in the event that the transfer amount to $100,000 or more, as the supervisory regulator did not give any reason. However, there are some banking explanations emerging in this regard that only remains analytical jurisprudence. In principle, it should be noted that the movement of foreign cash flows through Kuwait carried wide momentum in the years of economic prosperity when most local companies had foreign investment extensions, whether in the form of contributions to foreign companies or various projects.

It is natural that remittances to those entities in foreign and local currencies are from their investments and contributions to foreign projects, which include returns from investments, as well as the value of proceeds recorded in the event of property liquidation. However, this activity declined over the years, especially in 2020, due to the negative economic situation locally, in the Gulf, and internationally.

Exception
Of course, the only exception here was a few days ago when Kuwait Stock Exchange was promoted under the MSCI indexes for emerging markets, which attracted about one billion dinars, the majority of which are foreign. Of course, the money transfers came from foreign investors who increased their investments in local market shares and foreign currency.

This raises the question about whether the banks are obligated, according to the Central Bank circular, to provide the Central Bank with the names of foreign investors who joined the promotion of Kuwait Stock Exchange, given that the least investor had pumped millions in foreign currency into the Kuwaiti Stock Exchange. Despite the analytical complexities that may arise in this regard, banking sources suggested two scenarios for the request.

First of all, this supervisory move comes within broader efforts to predict money laundering operations and combat them sooner rather than later. Sources pointed out that the second scenario relates to the possibility that the required report could be one of the tools for measuring the level of liquidity of foreign currencies in the local market in a way that would help in rearranging the situation in Kuwait.

They stated that since the beginning of 2020, specifically the beginning of the Corona crisis, the Central Bank has requested banks to provide many new instructions and data, indicating global and local changes that emerged in the markets due to Corona required more governance and transparency in the financial sectors. This is to increase the supervisory assurance of the safety of the movement of funds, especially across the country.