Central Bank of Kuwait Tightens Accounting and Fraud-Reporting Rules for Payment Firms

The Central Bank of Kuwait (CBK) has introduced stringent new directives designed to bolster transparency in the financial reporting of companies operating in the electronic payment and exchange sectors. The regulations specifically target electronic payment service providers, electronic contract service providers, electronic payment system operators, and exchange companies.

A key focus of the new measures is the accurate classification and disclosure of partners' funds, capital, liabilities, and withdrawals. The CBK mandates that partners' current accounts should no longer be aggregated under total partners' equity. This change aims to prevent the commingling of assets, liabilities, and equity, ensuring a clearer presentation of an entity's financial standing. Paid-in capital, reserves, and retained earnings will now be presented distinctly under partners' equity.

Furthermore, the directives introduce specific accounting treatments for funds provided by partners. Funds with a defined repayment date must be classified as a separate liability, with detailed disclosures on their terms. Funds provided without a specified repayment date will be presented separately under partners' equity, requiring similar disclosures. Short-term partner withdrawals must also be itemized, providing greater clarity on the entities' financial obligations.

In addition to accounting reforms, the CBK has established new procedures for handling judicial requests related to the freezing of customer funds. Companies are now required to maintain dedicated institutional email channels for official communications from judicial authorities. A specific email address must be allocated for receiving notifications concerning the freezing or seizure of customer funds and requests for account balance disclosures, with the notification function on these accounts required to remain active.