ARABIAN TIMES NEWS NETWORK
The Central Bank of Kuwait has instructed all supervised entities to strictly comply with the Business Risk Assessment (BRA) Guide by systematically assessing the money laundering and terrorist financing risks linked to their operations, client base, products, and services. Entities, including banks, finance companies, exchange houses, and electronic payment providers, are required to consider transaction complexity, frequency, and volume when evaluating potential risks.
The circular, the Al-Rai daily reported, highlights that service delivery channels, especially those involving digital platforms or indirect business relationships, may increase anonymity and reduce oversight, raising risk levels. Geographical factors also play a role, with areas lacking robust anti-money laundering frameworks or having high corruption levels presenting additional risks. Similarly, the use of emerging technologies, fintech solutions, and digital assets can create vulnerabilities that must be addressed.
Entities must implement systems and controls to identify, assess, and manage these risks, including current risks that may have intensified. Key measures include regular internal data reviews to detect emerging threats, continuous monitoring of external regulatory and intelligence sources, and thorough assessments of risks associated with new products and technologies. Assessment should consider annual business volume, net profit, number of employees and branches, market diversity, product complexity, and client profiles, including high-net-worth individuals and legal arrangements.
The guidance stresses that there is no one-size-fits-all approach. Each institution must demonstrate to the relevant anti-money laundering regulatory authority that its risk identification and mitigation measures are effective and tailored to its operations. Assessments must be based on accurate, well-documented information, and risk weighting should not be dominated by a single factor, influenced by profitability, or prevent classification of high-risk relationships.
For entities using externally purchased automated systems to assign risk scores, the Central Bank requires verification that the scores accurately reflect the institution’s risk understanding, that the methodology is understood and compliant with local AML/CFT requirements, and that scores can be overridden when necessary with documented justification. Overall, the Central Bank mandates that all supervised entities maintain comprehensive policies, procedures, and controls to identify, monitor, and mitigate money laundering and terrorist financing risks, ensuring effective compliance with Kuwait’s regulatory framework.
