Regulatory Alerts2004-10-19
Instructions to Banks on Notifying the Central Bank of Kuwait Before Communicating with Foreign Regulatory Authorities
The Central Bank of Kuwait requires all local banks to notify the regulator in advance before communicating with foreign financial or banking authorities for approvals. This obligation covers cross-border initiatives such as establishing subsidiaries, acquiring shares, opening branches, or expanding operations. Banks must also report any transactions violating hosting country regulations to maintain compliance with international supervisory standards and prevent adverse regulatory consequences.
27- INSTRUCTIONS TO BANKS ON THE NECESSITY OF NOTIFYING THE CENTRAL BANK OF KUWAIT BEFORE PROCEEDING WITH ANY COMMUNICATION WITH REGULATORY FINANCIAL OR BANKING AUTHORITIES IN OTHER COUNTRIES
CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls 27-INSTRUCTIONS TO BANKS ON THE NECESSITY OF NOTIFYING THE CENTRAL BANK OF KUWAIT BEFORE PROCEEDING WITH ANY COMMUNICATION WITH REGULATORY FINANCIAL OR BANKING AUTHORITIES IN OTHER COUNTRIES 1 GOVERNOR Safar 2, 1415 H July 11, 1994 THE CHAIRMAN Instructions to banks on the necessity of notifying the Central Bank of Kuwait before proceeding with any communication with regulatory financial or banking authorities in other countries* Whereas the supervision of international banking and financial groups requires periodic contacts, as well as reciprocal cooperation amongst competent regulatory authorities in countries hosting one of these groups, and the regulatory authorities in the mother country of such a group, in accordance with the concordat system and minimum standards set by the Basle Committee for control over international banking groups. And, since such contracts and reciprocal cooperation are no longer limited to the activities of groups’ branches or subsidiaries, but have expanded to encompass the activity of affiliates, investments and minority shares owned by such groups in the hosting country. Therefore, your bank should be aware of the above requirements, which oblige the competent regulatory authorities in the hosting country to consult and communicate, officially or unofficially, with the regulatory authorities in the mother country, whenever your bank discusses a certain subject with the regulatory authorities in the hosting countries to obtain their approval. Accordingly, in order to satisfy the above requirements and to avoid the potential adverse effects of not fulfilling these requirements, your bank must notify the Central Bank of Kuwait of any plans or activities intended to be performed abroad in the future and which need discussion or consultation with the regulatory authorities in the hosting countries. Worth noting is that these plans or activities include the acquisition or increase of a share in companies’ capital, the establishment of a subsidiary or an affiliate, amendment of a company’s capital, the opening of branches, expansion of activities or initiating new activities. Your bank must also advise the Central Bank of Kuwait of any transactions it conducted in breach of the laws and regulations prevailing in the hosting country.
- Circulated to all local banks .
CHAPTER TWO: The Law, Supervisory & Regulatory Instructions & Controls 27-INSTRUCTIONS TO BANKS ON THE NECESSITY OF NOTIFYING THE CENTRAL BANK OF KUWAIT BEFORE PROCEEDING WITH ANY COMMUNICATION WITH REGULATORY FINANCIAL OR BANKING AUTHORITIES IN OTHER COUNTRIES 2 We would like to stress once again the requirement that your bank should notify the Central Bank of Kuwait in advance before proceeding with any communications with regulatory financial or banking authorities in other countries to obtain their approval of any plans or activities your bank intends to perform. With my best regards, SALEM ABDUL-AZIZ AL-SABAH