CBK Instructions for Exchange Companies

Introduction

Chapter One: The Central Bank of Kuwait (CBK) Supervision over Foreign Exchange Companies, and Rules and Regulations for Establishment of New Foreign Exchange Companies:

  1. Ministerial Resolution Regarding the Central Bank of Kuwait Supervision over Foreign Exchange Companies.
  2. Circular Concerning Issuance of a Set of Rules and Regulations Related to the Establishment of Exchange Companies and the Supervision over their Activities, which is Defining the Minimum Capital Requirements and Qualifying Key Executive Positions in these Companies.
  3. Regulations for the Establishment of Exchange Companies Approved by the Board of Directors of CBK in its Meeting held on 21/10/2014.
  4. Circular Concerning the Extension of the Deadline to Provide the Central Bank of Kuwait with the Timeframe for Regulating Conditions of Exchange Companies.

Chapter Two: Instructions for Registration in Exchange Companies Register:

  1. Instructions Concerning the Necessity of Providing the Central Bank of Kuwait with the Exchange Companies’ Amended Articles of Association and Companies’ Compliance with the Activities Recorded Therein.
  2. Application form for Registration in the Exchange Companies Register.
  3. Application form for Amending Details in the Exchange Companies Register.

Chapter Three: Supervisory and Regulatory Instructions and Controls, and Organization of Business in Exchange Companies.

  1. Instructions Requiring Exchange Companies not to Make any Debt Repayments to Other Parties Using Foreign Exchange Operations with Third Parties.
  2. Instructions Urging Exchange Companies to Adhere only with Advertisement of Authorized Businesses Included in their Company’s Main Contract.
  3. Informing Exchange Companies with the Council of Ministers Resolution No. 40/1987, Regarding the Enforcement of Article (15) of the Civil Information Authority.
  4. Instructions on the accounting treatment of deposits of exchange companies’ clients for dealing in forward exchange and precious metals Contracts.
  5. Foreign Currency and Precious Metals Trading Contract Form.
  6. Instructions On Foreign Currency and Precious Metals Direct Transacting Between the Central Bank of Kuwait and Exchange Companies.
    a. Instructions.
    b. Ensuring Sufficient Securities for the Value of Intended Transactions before the Purchase Transaction is Carried Out.
    c. The Exchange Company who Wish to Buy Foreign Currency from the CBK, should place Sufficient Securities Equal to the Intended Transaction Value, no Later than Value Date.
    d. Requiring Exchange Companies to Abide by the Central Bank of Kuwait’s Instructions Concerning the Direct Transacting Between the CBK and Exchange Companies.
    e. Regulations on Dealing in Foreign Currency with Exchange Companies.
    f. Instructions Concerning Alternatives for Immediate Correspondence Payment of all Purchasing Transactions.
  7. Instructions Concerning the Arrangements for Buying and Selling GCC Currency Notes:
    1- Bahraini Dinar
    2- Omani Riyal.
    3- United Arab Emirates Dirham.
    4- Qatari Riyal
  8. Instructions Requiring Exchange Companies to Request the Central Bank of Kuwait Approval prior to Opening on Fridays.
  9. Instructions Concerning the Settlement of Partners’ Current Account Balances.
    a. Instructions Requiring the Settlement of Partners’ Current Receivables.
    b. Instructions Requiring Liquidation of Partners’ Current Payables.
    c. Circular Requiring Exchange Companies to Take into Account some Important Points when Classifying Items under Partners’ Equity.
    d. Circular Clarifying Notes Related to the Circular dated 28/10/2007.
  10. Instructions on how to Deal with Correspondence Sent by Foreign Entities Offering Commercial, Banking or Financial Offers Against Profitable Commissions and Profits.
  11. Monitoring the Size of Financial Transactions between Exchange Companies and International Financial Institutions Facing Severe Financial Crisis.
    a. Circular concerning monitoring the size of financial transactions between exchange companies and international financial institutions facing severe financial crisis.
    b. Informing CBK of any Financial Transactions between Exchange Companies and any International Financial Institutions Facing Severe Financial Crisis.
    c. Circular Requiring Exchange Companies to Discontinue Submitting Data on the Size of Financial Transactions between Exchange Companies and International Financial Institutions Facing a Severe Financial Crisis.
  12. The Importance of Maintaining an Internal Written Regulatory System, Approved by the Higher Management of the Company.
  13. Instructions Requiring Exchange Companies to Exclude the Amounts of Checks and Transfers, which were Uncollected y their Customers and of more than Five-Year-old (from date of issue), from their Revenues and Expenditures Statement, Unless after a Period of Fifteen Years.
  14. Exchange Companies are Required to Provide the Institute of Banking Studies with the Required data Regarding their Labor Force when Directly Requested by the Institute.
  15. Instructions Requiring Exchange Companies to Present the Letters sent by the Governor, Concerning the Final Results of the Inspection, to all Company’s Main Partners, Following the Receipt of such Letters.
  16. Circular Emphasizing the Content of Circular dated 13/08/1996 which Requires Exchange Companies to Present the Letters sent by the Central Bank of Kuwait, Concerning the Final Results of the Inspection, to all Company’s Main Partners, Following the Receipt of such Letters and Providing CBK with Evidence to that Effect.
  17. Instructions requiring exchange companies to provide the Central Bank of Kuwait with a copy of all agreements concluded with foreign banks/financial institutions.
  18. Project Management Plan for the Year 2000:
    a. Circular No. (2/ES/44/97) to exchange companies to provide the Central Bank of Kuwait with a quarterly report indicating the accomplishments made towards your company’s information systems readiness.
    b. Measures to be considered in achieving compatibility with the year 2000 requirements on the right time, on the emphasis of Circular No. (2/ES/44/97) dated 18/08/1997.
    c. Circular No. (2/ES/59/98) concerning the “Supervisory Guidance on the Independent Assessment of Financial Institution Year 2000 Preparations” issued by the Joint Year 2000 Council of the Bank of International Settlements..
  19. Circular requiring exchange companies to set out contingency plans to face the year 2000 issues.
    1- A paper on Testing for Year 2000 Readiness issued by the Joint Year 2000 Council of the Bank of International Settlements.
    2- Pilot General Framework of the Contingency Plan for the Year 2000, which should be set out by the end of the second quarter of 1999 and submitted to the Central Bank of Kuwait.
  20. Controls and measures for opening new branches for exchange companies.
  21. Circular concerning the amendment introduced to Item “Eighth” of the instructions for opening exchange companies’ branches, whereby such approval will be valid for one year.
  22. Circular No. (2/ES/70/1999) prohibiting exchange companies from practicing any operation, which may result in gaining positions in foreign currencies, or speculation in the currency, commodity and precious metals markets, whether for the company or for others, and providing the Central Bank of Kuwait with quarterly statements of the company’s accounts with financial and banking institutions, as per the form attached.
  23. Circular No. (2/ES/261/2010) requiring exchange companies to provide the Central Bank of Kuwait with a monthly statement approved by the company’s external auditor on the positions of company’s correspondents’ accounts.
  24. Circular No. (2/ES/72/99) on the General Guidelines of Internal Supervision Systems of Exchange Companies.
  25. Circular concerning steps to be taken to facilitate purchase, sale of the Euro currency as of 1/1/2002.
  26. Circular concerning national labor force ratio in exchange companies.
    a. Circular No. (2/ES/160/2004) on the time-frame for compliance with national labor force ratios in exchange companies as stated in article (71 bis) of Law No. 32/1968 concerning Currency, the Central Bank of Kuwait, and the Organization of Banking Business.
    b. Circular concerning follow up on national labor force ratio in exchange companies, which must be at least 50% of total labor force or the percentage the Council of Ministers specifies in implementation of provisions of Article (9) of law No. 19/2000, whichever is higher.
    c. Circular concerning the requirement to notify the CBK with periodical employees list, as on 15/3/2007.
    d. Law No.64/2007 concerning amendment to the first paragraph of Article (71 bis) of Law No. (32/1968) concerning Currency, the Central Bank of Kuwait, and the Organization of Banking Business, as amended.
    e. Council of Ministers Resolution No. 1104/Fifth for the year 2008, dated 3/11/2008 and published 9/11/2008 concerning the ratio of national labor in non-government entities.
    f. Correction concerning Council of Ministers Resolution No. 1104/Fifth for the year 2008, published 7/12/2008 concerning the ratio of national labor in non-government entities.
    g. Circular concerning instruction that exchange companies continue to provide the CBK with bi-annual statement indicating company staff information.
    h. Council of Ministers Resolution No. 1028 for the Year 2014 Concerning Amendment to Council of Ministers Resolution No. 1104/Fifth for the Year 2008, published 24/8/2014 concerning specification of ratio of national labor in non-government entities.
    i. Resolution No. 1868 for the year 2018 published 20/1/2019 concerning amendment of some provisions of Council of Ministers Resolution No. 904 for the Year 2002 Specifying Ratio of National Labor Force in non-Government Entities.
    j. Circular to exchange companies with instruction to provide CBK with national labor ratio statement as on 20/7/2019, with due consideration to the issuance of Council of Ministers resolution No. 1868 for the year 2018, which increased the national labor ratio to be observed by exchange companies to 15%.
    k. Correction on Council of Ministers Resolution No. 1868 for the year 2018, published 31/3/2019, specifying national labor ratio to be observed by non-government entities.
    l. Circular to exchange companies concerning compliance with the requirement of submission of the statement indicating development of national labor ratio on bi-annual basis.
  27. Circular with attached letter from Governor of the Central Bank of Syria concerning issue of a circular to all banks operating in the Syrian Arab Republic with instructions not to execute any incoming foreign money transfers from an exchange company except under specific conditions.
  28. Circular indicating Central Bank of Kuwait’s objection to exchange companies offering money transfer services to customers through the internet using K-NET bank cards without obtaining prior CBK approval.
  29. Circular concerning the technical requirements to be satisfied by exchange companies when providing money transfer service to customers through the internet using bankcards.
  30. Circular concerning the technical requirements to be satisfied by exchange companies when providing a mobile vehicle banking unit service.
  31. Circular (2/BS/IBS/IS/IIS/FS/IFS/ES/280/2012) urging caution and verification of the identity of any callers before engaging in any interaction with or processing a transaction for them.
  32. Circular concerning regulating the opening of accounts by exchange companies with local banks.
  33. Circular No. (2/ES/293/2012) concerning the requirement to notify the CBK of any embezzlements of company funds.
  34. Circular No. (2/ES/294/2012) instructing exchange companies to obtain prior CBK approval before initiating any communication with financial or banking supervisory bodies in other countries.
  35. Instructions (2/BS/IBS/FS/IFS/ES/340/2014) to all shareholding companies listed with Kuwait Stock Exchange and subject to CBK supervision concerning the regulating of buying, sale, and disposal of own shares.
  36. Circular (2/ES/420/2018) to all exchange companies concerning the provision of exchange services through mobile vehicles.
  37. Instructions for Regulation of the Electronic Payment of Funds.:
    a. Circular No. (2/BS, BS, IBS/415/2018) to All Local Banks, Exchange Companies and Financing/Investment Companies Regarding Instructions for Regulation of the Electronic Payment of Funds.
    - More Instructions available under “Regulatory Instructions for EPIPs and EPAs”.
  38. Circular to exchange companies regarding controls and measures for opening new branches for exchange companies.

Chapter Four: Instructions on Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT):

  1. Instructions (2/SE/310/2013) concerning Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT).
  2. Circular to all Local Banks, Financing Companies and Exchange Companies attaching a copy of the Ministerial Resolution No. (5) of 2014 Concerning the Executive Bylaws for Implementation of Security Council Resolutions Issued Virtue of Chapter VII of the United Nations Charter Concerning Terrorism and Financing of Terrorism.
  3. Circular to all Local Banks, Financing Companies and Exchange Companies attaching a copy of the Guidelines issued to Entities addressed and required to implement the Requirements of the Ministerial Resolution No. (5) of 2014 Concerning the Executive Bylaws for Implementation of Security Council Resolutions Issued by Virtue of Chapter VII of the United Nations Charter Concerning Terrorism and Financing of Terrorism.
  4. Circular to all Local Banks, Financing Companies, and Exchange Companies on the Forms designated for reporting suspicious Transactions to the KFIU, the Guidelines for filling out the Form, and the paper listing Indicators to help detect suspicious Transactions.
  5. Circular to all Local Banks, Financing Companies and Exchange Companies concerning the Kuwait Financial Intelligence Unit’s posting of all its circulars on its website.
  6. Circular to all Local Banks, Financing Companies and Exchange Companies concerning the Foreign Ministry Committee formed for Implementation of Security Council Resolutions issued by virtue of Chapter VII of the UN Charter concerning the Countering of Terrorism and the Financing of Terrorism designating an email address for all official correspondence.
  7. Circular to all Local Banks, Financing Companies and Exchange Companies concerning high-risk and non-cooperative countries, which the FATF designates, provides any updated information on, and specifies how they are to be dealt with.
  8. Circular to all Local Banks, Financing Companies and Exchange Companies correcting a typographical error in the address of the Kuwait Financial Intelligence Unit (KFIU) webpage as in the circular dated 4/10/2015.
  9. Circular to all Local Banks, Financing Companies and Exchange Companies accompanying the Resolution No. (35) of 2019 regarding the Executive Bylaws of the Implementation of the Security Council Resolutions issued pursuant to Chapter VII of the United Nations Charter on Combating Terrorism and Financing of Proliferation of Weapons of Mass Destruction, replacing the Resolution No. (5) issued on April 08, 2014.
  10. Circular to all Local Banks, Financing Companies and Exchange Companies issued 28/10/2019 attaching the mechanism to be followed for follow up on resolutions issued by sanctions committees in line with provisions of resolutions, issued as No (35) of 2019 on the executive bylaws for implementation of UNSC resolutions pursuant to Chapter VII of the UN Charter concerning Combating Terrorism and Financing of Proliferation of Weapons of Mass Destruction (WMD).
  11. Instructions No. (2/ES/457/2020) concerning AML/CFT requirements.
  12. Circular to all exchange companies dated 9/11/2020 concerning Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) due to the confusion over the interpretation of item (20/4).
  13. Circular No. (2/ES/491/2021) to all Exchange Companies concerning the Protection of Rights of Exchange Companies’ Customers’, in particular Remittance Transactions issued to those Customers.
  14. Instructions No. (2/ES/507/2023) Concerning Anti-Money Laundering & Combating the Financing of Terrorism.
  15. Circular to all Local Banks, Financing Companies and Exchange Companies” issued 17/7/2023 concerning Virtual-Assets Transactions Procedures.

Chapter Five: Data and Statistics the Exchange Companies should provide to the Central Bank of Kuwait:

  1. Financial Positions of the Exchange Companies:
    a. General Instructions on the Financial Positions of the Exchange Companies, and the related Definitions and Explanatory Notes.
    b. Conditions to be considered in Classification of Partners’ Equity. 
    c. Classification of proposed Dividends and Funds provided for the Partners for supporting Capital.
    d. Including Profits (Losses) for the Period under “Other Liabilities” instead of “Partners’ Equity”.
    e. Circular requesting Exchange Companies to ensure Compatibility of their Systems in order to provide the CBK with the Financial Position Statement (EXC) through a Direct Communication line.
    f. Circular concerning Completion of Testing Process of EXC System and providing us with Data in the Testing Environment as of December 2017, along with the related Explanatory Notes and Definitions.
    g. Circular No. (2/ES/443/2019) to all Exchange Companies concerning the full Set of the Explanatory Notes and Definitions for the Exchange Companies System.
    h. Circular No. (2/ES/436/2019) to all Exchange Companies for uploading Exchange Companies’ Data in the Production Environment of EXC System in line with Oracle as of May 2019.
  2. Providing CBK with the Foreign Currency Report Forms on the first Business Day subsequent to the Weekend, as per the attached Explanatory Notes and Definitions.
  3. Instructions requiring the Exchange Companies to adopt the International Accounting Standards in Preparation of their Financial Statements.
  4. Providing us with the Monthly Forms of the Foreign Currency Report, starting from the period ending 30/04/1990.
  5. Instructions to provide the Central Bank of Kuwait with the Company's Foreign Currency Sales:
    a. Providing us with a daily Statement of the Company's Foreign Currency Sales of USD 35,000 and above for each Transaction.
    b. Confirmation on providing us with the daily Statements of the Company's Foreign Currency Sales as per the attached Forms.
    c. Providing us with the daily Statements of Foreign Currency Sales of USD 35,000 and above on personal Discs on a monthly Basis, monthly cumulative Statistics for Amounts less than USD 35,000 per a single Customer, and the total Foreign Currency Purchases from the Central Bank of Kuwait equivalent in Kuwaiti Dinars.
    d. The Circular issued for ceasing Submission of the Details of the daily USD Purchase and Sale Movement to the Foreign Operations Department, effective from January 2001, provided the Statement of Foreign Currency Sales and Purchases provided to the Supervision Sector on a monthly Basis should include an attached Statement of the Sales and Purchases above USD 100,000.
    e. Circular No. (2/ES/290/2012) amending Forms of Exchange Companies’ Foreign Currency Sales and Purchases.
  6. Providing us with a combined Statement of Kuwaiti Customers, who have purchased Foreign Currencies exceeding the Equivalent of USD 10,000 from the Beginning of the Company's Activity until 30/04/1993, provided such Statement should be provided on a monthly Basis, effective from the end of May 1993.
  7. Confirmation on the Requirement that the Exchange Companies should provide us with the quarterly periodic Statements no later than the tenth day of the month subsequent to the Reporting Month.
  8. Providing us with brief Profit & Loss Statements at the End of each Quarter, effective from 31/03/1995.
  9. Instructions regarding the Details of Foreign Currency Purchases and Sales:
    a. Providing the Foreign Operations Department with the detailed daily Purchases and Sales in USD with Customers.
    b. Providing us with the detailed daily Foreign Currency Purchases and Sales with Customers as per the attached designated Form, taking into account the Regulations stated in this letter.
  10. Confirmation on the Requirement that the Exchange Companies should provide us with the Balance Sheet and Profit & Loss Account within 3 months from the end of the fiscal year.
  11. Ceasing Submission of a Statement of USD Sales exceeding USD 35,000 and above to the Foreign Operations Department as of the Date hereof, and providing us with only a Diskette on a quarterly Basis, including a Statement of the mentioned daily Sales.
  12. Circular to all Exchange Companies amending the two Statements of Foreign Currency Purchases and Sales provided to the Central Bank of Kuwait on a monthly Basis to include the new Currency (EURO).
  13. Instructions No. (2/ES/158/2004) to all Exchange Companies for setting the Deadline for Submission of the Periodic Statements.

Chapter Six: Instructions Concerning External Auditor:

  1. Decree Law No. (5) Of 1981, Concerning the Practice of Auditing and its Explanatory Note.
  2. Instructions Concerning the Necessity of Providing the External Auditor with any Regulations Issued by the Central Bank of Kuwait (CBK).
  3. The Central Bank of Kuwait Must be Notified of the Company’s External Auditor’s Name Before Presenting the Name to the General Assembly of Partners (GAP).
  4. Instructions Regarding the Procedures to be Taken by the Central Bank of Kuwait in Case of Discrepancy Between the Company’s Audited Financial Statements and Data in its Financial Records, or if there are Violations Without Disclosure or Reservations.

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