Financial Crime World

The Banking and Financial Sector in Kuwait: An Overview

Regulatory Framework

The Central Bank of Kuwait (CBK) plays a crucial role in regulating the banking and financial sector in Kuwait. In 2001, the CBK implemented Law No. 2 of 2001, also known as the Ci-Net Law, to establish a system for collecting information and data related to consumer loans and credit facilities. This law defines the general framework for credit information and rating companies, including their operating environment, structure, and capital requirements.

  • Key Provisions:
    • Definition of the general framework for credit information and rating companies
    • Operating environment, structure, and capital requirements for these companies
    • Role and powers of the CBK in supervising these companies

Fintech Regulations

The CBK has extended its regulatory oversight to fintech activities through recently issued regulations governing electronic payments and settlement systems. These new regulations provide increased oversight over electronic infrastructure providers, such as banks and telecommunication companies, as well as electronic payment agents, like third-party e-payment applications.

  • Key Provisions:
    • Increased oversight over electronic infrastructure providers
    • Data protection and confidentiality for information related to e-payments
    • Risk management by e-payment infrastructure providers and agents

Positive Outlook

The CBK has predicted a continued positive outlook in the sector, backed by Standard & Poor’s recent affirmation of its respective AA/A-1+ and Aa2 rating for Kuwait. The CBK has maintained the discount rate at 3.0% to maintain a healthy margin in favor of the KD, boost returns on KD deposits, and allow for a conductive environment for economic growth.

Expert Insights

ASAR – Al Ruwayeh & Partners is a leading law firm in Kuwait that provides advice to banks and financial institutions regarding Kuwait’s banking regulatory framework. The firm has extensive experience in project finance and PPP projects, having advised on several major financing transactions in Kuwait, including the multi-billion financing of the Kuwait National Petroleum Company clean fuel project.

  • Authors:
    • Ibrahim Sattout, Partner at ASAR – Al Ruwayeh & Partners with over 26 years of experience in banking and finance
    • Brenda Ntambirweki, Associate at ASAR – Al Ruwayeh & Partners with over 10 years’ experience in banking, finance, commercial, corporate acquisition transactions, restructuring, and insolvency