Banks refuse to accept e-payments from home-based entrepreneurs
In order to prevent money laundering, local banks refuse to provide electronic payment links to home business owners, indicating approval to provide them with electronic payment services, and to transfer the proceeds of their operations to an account designated for that purpose, while other banks are strict in this regard, including the creation of a company or the request for deposits.
According to the banks, the required certificate allows individuals to receive means to accept open payments, similar to large companies with audited budgets, which makes them more sensitive to the possibility of money laundering, terrorist financing, or other acts that violate the law. Sources told Al-Rai daily that some may use these tools to commit crimes.
The sources indicated that payment agents complained to the Central Bank of Kuwait verbally about depriving their individual customers of obtaining the electronic payment gateway service and point-of-sale devices that enable them to settle their payments, arguing that the license they obtained from the Central Bank and the Ministry of Commerce and Industry gives them the right to activate this service to their individual clients, but the banks’ strict stances weaken their ability to expand their business and increase their market share in the home projects market, and from here the story begins.
In the recent period, some electronic payment agents have received growing complaints from their individual clients who work in small businesses such as selling swimming pools, T-shirts, handicrafts, and others, stating that they are unable to obtain electronic payment certificates from banks, as they are refused electronic payment gateway service and point-of-sale devices to complete their operations, and that they can obtain this service if they obtain a commercial license, meaning if they establish a company.
It was said that they had tried other banks to obtain the certificate, but faced difficulties such as obtaining credit cards and transferring their salaries or requesting a deposit that they were not able to make.
To deal with these claims, they turned to their agents who practice electronic payment services, who contacted the banks for further clarification. As a result of the risks of exposure to the violation of AML/CFT instructions associated with this activity, it is difficult from the bank's perspective to allow individuals to accept payments within the limits of corporate transfers.
They made it clear that they do not question the soundness of the business of this segment, and that the requirement of a commercial license to grant the certificate does not carry any complication, indicating that what confirms this is that banks accept to grant the certificate to the holders of commercial licenses, even for one-person companies without capital or founding partners, or microbusiness license holders.
According to the sources, the banks' position is consistent with what they are required to do regarding continuous due diligence in work relations. In order to ensure that these operations are consistent with what is known about the customer, his activity, and the degree of risk associated with him during the duration of this relationship, the operations must be checked during that period.
In their view, this procedure is not complicated as long as the bank guarantees that the payment tools available to the customer are not used to commit acts that violate the law, stating that the bank must comply with instructions regarding money laundering and terrorist financing, according to the "Central" circular.
Applicants of payment certificates are increasingly required to obtain a commercial banking license because it assures the existence of a supervisory regulator that oversees the business and financial accounts of this segment. Unlike individuals who work without regulatory cover, which makes their business more dangerous than companies, the Ministry of Commerce and Industry is the supervisory regulator.
Based on regulatory directives issued to all banks regarding the regulation of electronic payment services, it is clear that agents practicing electronic payments were not convinced by this proposition. The instructions for regulating electronic payment of funds and providing payment services for individuals emphasize the need for direct follow-up of agents to ensure that they comply fully with them.
Sources confirmed that 95 of the clients of bank agents practicing electronic payments are individuals, and that the banks' requirement of a commercial license for granting certificates of payments is illegal, along with an unspecified supervision procedure. She indicated that banks give their individual clients the service of receiving money through links, although they do not have commercial licenses, nor do they require payment certificates from them, while they do not allow clients of individual payment agents to use the links of payment and settlement companies licensed by the Central Bank and “commerce”.
Sources noted that the strictness of the banks threatens the survival of payment and settlement companies and prevents home business owners from collecting electronically, contrary to the government's and banks' efforts to transform Kuwait into a financial center and boost digitization locally and globally.
The sources said, “If individual micro-business owners obtain commercial licenses, why would they need the services of payment practitioners to collect their payments, after they are now able to open corporate accounts in banks that guarantee them the flow of their money electronically?”