CMA requires Boursa Kuwait investors to update their data
Investment, brokerage firms face challenge of suspending several clients accounts
KUWAIT CITY, Aug 8: Many investment and financial brokerage companies are facing the challenge of suspending the accounts of several of their clients who are trading in shares listed on Boursa Kuwait; especially those who are politically exposed, due to the inability to update their data in accordance with the directives of the regulatory authorities and the inspection teams of the Capital Markets Authority (CMA), reports Al-Rai daily quoting sources from the investment sector.
Sources confirmed to the daily that this procedure leads to the freezing of hundreds of accounts belonging to investors until their data is updated, while the required update varies between personal data or the source of funds which are traded in shares.
Sources pointed out that the companies are working to update the data of the politically exposed clients; including ministers, officials and employees in various government institutions within a period of one to two years, while the data of the average trader among individuals is updated every three to four years. This has prompted the inspection teams to request for reduction of this period, considering that the data of average individual traders from Prohibited or High-Risk Countries or Individuals Classified as High-Risk must be updated annually, sources disclosed.
Sources said that at the end of each period, companies are required to update the data of their clients; otherwise, buying and selling transactions are suspended. Therefore, some officials of investment and brokerage companies suggested to “prevent withdrawals from non-updated accounts, provided the account remains active in trading until all information is submitted.”
Justified
They justified this suggestion by pointing out that many investors are late in updating their data because they are abroad, while some of them have settled in another country due to the nature of their work, sources added.
Sources explained that modernization in itself requires the completion of procedures which sometimes take days; as the process includes legal reviews to ensure compliance and others.
Sources affirmed the companies understand the supervisory role of CMA and its inspection teams, but the special circumstances of clients should sometimes be taken into consideration. Sources said this is in addition to preventing usage of the account or cash therein to trade in other markets.
Sources stated that the fund increase in the accounts of some traders; especially those who are politically exposed, hinders the regulatory authorities represented by the CMA from clarifying the source of funds transferred from banks to the investors’ accounts with Kuwait Clearing Company and financial brokerage firms. For example, some accounts witness an increase in their monetary components during a period of a year or more. In the event that this increase is due to inheritance, real estate activities or retirement; the inspection teams require supporting documents like contracts, invoices, receipts and others, sources added.
Sources confirmed that transfers are made through the network of banks subject to the supervision of the Central Bank of Kuwait (CBK). Sources stressed the need for more flexibility on the part of responsible authorities in this aspect, since there is a memorandum of understanding between CMA and CBK.