2,500 Kuwaiti Dinars as the maximum limit for online money transfer services
- The cap on app-based transfers applies to both residents and citizens, with the submission of a bank statement required.
- The measure enhances the capabilities of both customers and regulators in combating illegal financial transactions.
- It mitigates the risk of financial fraud associated with large-sum transfers.
- Fintech apps have transformed how customers handle money, thereby increasing hackers’ focus on these products.
- Bank branches provide direct verification that the transaction initiator is the legitimate account holder, not someone who has compromised the app.
- Lowering the cash limit to 1,000 dinars, requiring a bank statement in some cases for amounts exceeding 1,500 dinars, and mandating “Huwiyat” authentication serve as additional protective safeguards.
In a regulatory move aimed at strengthening financial oversight and combating the illicit use of funds, exchange companies have reduced the maximum transfer limit they must accept for customers’ personal transactions via modern technology apps from 10,000 dinars per day to 3,000 dinars, while requiring customers to declare the source of their income. Other companies have lowered their online transfer caps to 2,500 dinars.
Notably, the new online transfer cap at exchange companies was not available to all customers, nor was it in the past; this privilege was restricted to “preferred” clients who submit bank statements or documents explaining the source of funds, which demonstrate that their income levels are high or consistent with their transfer values. Under this framework, customers may be allowed to use the maximum limit once per day or multiple times per month, depending on whether the transferred amounts align with the salary specified in their “Know Your Customer” (KYC) records, or if they provide a bank statement justifying additional income sources, such as loans, savings, or acceptable cash deposits.
Modern technology and the resulting competition among exchange companies have recently driven customer acquisition efforts, as offering easy, secure, and fast transfer products through these apps has proven effective in attracting customers and increasing market share.
However, amid growing concerns over the risks associated with such expansion, exchange companies have begun restricting the value of transfers conducted by their customers via online apps, implementing cuts of up to 75% compared to previous daily limits per customer. This has been accompanied by stricter regulatory and operational verification of transfer purposes and supporting documents. It should be noted that the new rules apply to all online transfers, whether conducted by residents or citizens.
The Central Bank of Kuwait approves the activation of new products by banks, exchange companies, or any other entities under its supervision, subject to governing controls that regulate operations and ensure the protection of customers’ funds and data. In this context, there was a pressing regulatory and practical need to lower the maximum limits for online financial transfers, as the measure serves multiple strategic objectives.
From both a regulatory and operational standpoint, implementing this measure is expected to provide additional safeguards for customers and the financial system against illegal transactions that could exploit electronic apps to execute financial transfers without the owners’ knowledge, prior to the receipt of banking messages confirming withdrawals from their balances. This, in turn, enhances discipline in financial transfers.
By lowering the maximum limit for outbound transfers executed outside exchange company branches, the Central Bank has succeeded in reducing the risk of financial fraud that customers might face, taking into account the widespread adoption of financial technologies and modern digital tools in transfer processes.
During this period, applications have become one of the most important tools that have changed the way customers handle money, having provided a convenient and fast solution accessible at any time and from anywhere. In response, hackers have shifted their focus to this sphere of financial transactions, developing modern and confusing fraud tools for customers, which necessitates increased oversight and precautionary measures in executing online transfers.
In an effort to mitigate the risks of falling into the “hackers’ trap,” the importance of limiting the maximum daily transfer limit for a customer via online channels is growing. It is no secret that the risk of fraud in low-value transactions is significantly lower compared to high-value transfers.
On the other hand, this measure is driven by regulatory initiatives aimed at closing loopholes exploited through digital channels for money laundering. Online platforms raise concerns about the unauthorized use of these channels in cases of theft or the manipulation of customers’ banking data. Financial transfers can also be directed to unintended recipients or executed without the knowledge of the actual fund owners, thereby imposing regulatory pressure to monitor the flow of funds and identify the ultimate beneficiary of the transfers or receipts.
Naturally, these concerns are not present in exchange company branches, where it is directly verified that the person initiating the transaction is indeed the account holder, rather than a hacker who has compromised the application and impersonated the user to transfer funds to third parties. This allows officials to directly verify the purpose of the transfer and the customer’s supporting documents through a 100% guaranteed direct mechanism.
In practice, the reduction by exchange companies of the maximum limit for outbound transfers via modern technology applications to approximately 2500 dinars is not the first regulatory measure. Previously, the Central Bank reduced the maximum limit for cash payments that exchange companies must accept in their transactions to 1000 dinars, down from 3000 dinars per customer per day, covering both currency buying and selling operations.
Furthermore, exchange companies require their customers at branches to provide a bank statement if a single transfer exceeds 3000 dinars, while others implement this requirement if the amount reaches 1500 dinars. Simultaneously, they are mandated to authenticate customers via “Hudoodi” for transfers executed through their applications, in line with directives to provide additional protective measures for customers and the financial system against fraud that could exploit electronic applications to execute transfers without the owners’ knowledge, prior to the receipt of the banking message indicating a balance withdrawal.
All these regulatory measures come within the framework of broader supervisory efforts to combat risks associated with practices that harm the national economy, thereby contributing to enhancing economic security and combating illegal activities.
