Title: Announcement Regarding Issuance of Disciplinary Board Resolution No. (61/2021 Disciplinary Board) (48 and 58/2021 Authority) and imposition of a fine of four thousand Dinars against The Securities House Company for violating Disclosure and Transparency – Anti-Money Laundering and Combating Financing of Terrorism – Corporate Governance.
Announcement Regarding Issuance of Disciplinary Board Resolution No. (61/2021 Disciplinary Board) (48 and 58/2021 Authority) and imposition of a fine of four thousand Dinars against The Securities House Company for violating Disclosure and Transparency – Anti-Money Laundering and Combating Financing of Terrorism – Corporate Governance.
For the following reasons:
1. Provision of Article (4-7-1) of Module Ten (Disclosure and Transparency) of the Executive Bylaws of Law No. 7 of 2010 and their amendments, for the lack of some disclosures on the Company's website.
2. Provision Item (1) of Article (2-3) of Module Sixteen (Anti-Money Laundering and Combating Financing of Terrorism) of the Executive Bylaws of Law No. 7 of 2010 and their amendments. The Company failed to specify in its Manual of Policies and Procedures of Anti-Money Laundering and Terrorist Financing the procedure to be followed to deal with one of the regulatory requirements of being careful and scrutinizing all complex and huge transactions and all unusual patterns of operations.
3. Provision of Article (3-20) of the mentioned Module. The Company failed to verify the potential client or the beneficiary of a group of corporate clients. The Company also failed to identify the natural client as being from the politically exposed category, although some of them held a political position, and others are first-degree relatives to politically exposed person, and stating the same.
4. Provision of the Capital Markets Authority Circular No. (13) of 2019 issued on September 15, 2019 which includes the provision of Article (23) of Ministerial Resolution No. (35) of 2019 regarding the executive bylaws of the Special Committee for the Implementation of Security Council Resolutions issued under Chapter Seven of the United Nations Charter related to combating terrorism and financing the proliferation of weapons of mass destruction, due to the inefficiency of the procedures taken by the Company to verify the national lists of terrorism for fund clients outside the State of Kuwait. The Company also performs the verification process by comparing the names received from the Ministry of Foreign Affairs, which are received by the Company in Arabic, with the Company’s clients database who were registered in a table in English that was filled out manually and contains an error in the name of a client, which may lead to a reduction in the efficiency of the verification process and increasing the possibility of errors.
5. Provision of Item (2) of Article (4-4) of Module Fifteen (Corporate Governance) of the Executive Bylaws of Law No. 7 of 2010 and their amendments, where it was conclusively proven to the Authority that the Company did not comply with the model contained in Annex No. (1) and not mentioning a detail of the remuneration granted to all members of the Board of Directors in the remuneration report for the financial year ending on 31/12/2019, as only the remunerations of the Chairman and his deputy were mentioned without detailing the remunerations of the rest of the members and only mentioning the total of their remunerations.
The Resolution included the infliction of the following penalty: -
“First: The Securities House Company is fined an amount of one thousand Dinars for each of the first four violations attributed to it.
Second: With no right for the Company to submit a violation for the fifth violation”.
In this regard, the CMA emphasizes the implementation of CMA Law and its Executive Bylaws on all persons dealing in securities activities, and urges them to comply with these rules in order to promote investors' confidence, create a sound investment environment, and implement the Law according to the principles of fairness, transparency, and integrity in line with the best international practice.