KUWAIT CITY, April 6: The decision of the Central Bank of Kuwait to supervise all exchange companies in the country and require them to have a paid-up capital of KD2 million has led to an unusual state of activity and congestion at major exchange companies, which are not covered by the decision, as they are affiliated with the Central Bank. The staff of the newspaper visited the foreign exchange market, during which several exchange company owners and officials expressed their view on the March 31 deadline for adjusting the status of about 134 money exchange companies, under the new Central Bank decision, which aims primarily to cleanse the exchange market of money laundering and eliminate all illegal practices. Mahdi Al-Rahmani, an official at an exchange company, said the decision to transfer the affiliation of all local exchange companies dealing with currency exchange from the Ministry of Commerce and Industry to the Central Bank is an excellent step towards bringing all exchange offices under one umbrella.

Requirements
 Al-Rahmani told the newspaper that the Central Bank’s requirements stipulate that the capital of an exchange company must be KD2 million, which confirms the State is serious in its bid to combat any negative phenomenon in the exchange market in general. “Companies that do not rely on strong capital distort the operations of strong exchange companies, especially since the Central Bank’s oversight of its approved exchange offices and companies is strict and continuous,” he asserted. He explained that the Central Bank’s decision to bring all exchange companies and offices under its umbrella led to the closure of some exchange offices that were unable to secure strong capital of up to KD2 million, despite the Central Bank giving these companies a grace period to settle their situation before the decision is implemented.

Asim Hussein, an official at another exchange company, revealed that the Central Bank conducts oversight every three months to monitor all exchange company transactions in the country. He said the goal of bringing all exchange companies under the umbrella of the Central Bank is to eliminate money laundering operations carried out surreptitiously by small companies. He pointed out that subjecting exchange offices ( which were only engaged in currency exchange within Kuwait, without conducting foreign remittances ) to oversight and transferring their supervision to the Central Bank, similar to official exchange companies and offices; regulates the exchange business in Kuwait's general. “Requiring such a company to have a capital of KD2 million will inevitably shut down companies that lack significant influence in the exchange market,” he added. He revealed that implementing the decision to transfer money exchange offices to the Central Bank already led to increased activity among strong exchange offices and companies that conduct remittances outside Kuwait. Ibrahim Hamed, head of an exchange office, disclosed that many exchange offices have closed due to the Central Bank’s decision requiring centers that exchange local currencies to maintain strong capital.

Transfers
 He stated that a number of these centers were conducting foreign transfers illegally, receiving the money from the customer and then corresponding with their representatives in other countries to transfer the money to the account illegally. “This happened although such companies are not authorized to transfer money abroad. It has negatively impacted the profits of major companies that handle both foreign transfers and currency exchange. Therefore, the decision to transfer all exchange offices to the Central Bank will ensure that only the fittest survive. We met with the head of the exchange office, Mahmoud Ziad, who said that the exchange market in Kuwait is one of the best in the world, subject to constant and strict State oversight. The transfer of currency exchange offices to the Central Bank’s oversight is welcomed,” he added. He pointed out that this move will inevitably lead to purifying the local exchange market of any suspicious transactions. “Therefore, the recent decision to transfer all exchange offices to the Central Bank contributed to the closure of many currency exchange offices, which has contributed to the activity of major exchange companies,” he stressed. Adnan Al-Hamoud, head of an exchange office, asserted that most exchange institutions have complied with the law to ensure they do not violate the State’s instructions to regularize their operations following the requirements of the Central Bank. He added the inspection teams from the Ministry of Commerce have been deployed in recent days to pursue, hold accountable and close companies that fail to comply with the law; especially since the State is serious about combating money laundering by all means.

By Najeh Bilal
Al-Seyassah/Arab Times Staff