The Disciplinary Board announced that it has issued a resolution imposing a fine against Al-Sharq Financial Brokerage Company, for violating provision of Item (3) of Article (3-8) of Module Sixteen of the Executive Bylaws of Law No. 7 of 2010 and their amendments. The resolution issued against the company included warning Al-Sharq Financial Brokerage Company to discontinue committing the first attributed violation and a fine of KWD 2,000 for each of the other violations.
It was proven to the Authority through reviewing the segment selected of the company’s clients that the Company did not verify the official documents of some of the beneficial owners of some of its clients. It was also proven to the Authority that the Company did not classify some of the clients of the category of Politically Exposed Persons (PEPs) as high-risk clients, which resulted in the Company’s failure to implement the procedures of due diligence towards these clients.
Moreover, it was proven to the Authority through examining the selected segment of clients the inefficiency of the followed system to identify whether a client, potential client or a beneficial owner is a high-risk PEP and that the Company did not ensure the adequacy of the executed transactions of some of its clients with the obtained information relevant to the nature of work and the source of funds.
The Company did not set adequate policies and procedures to ensure the implementation of all the obligations stipulated in the Article in this comment which was revealed through examining the verification mechanism, procedures, and system of the Company and through examining the selected segment of clients according to the following:
a.    The Company failed to verify the clients continuously, it only verifies upon the update of the client’s information, noting that such period may extend to five years.
b.    The Company failed to verify one of its clients before accepting him as its client.
c.    The Company verified some of its clients with false information.
d.    The Company failed to verify the beneficial owners within the primary client of some of its clients.
e.    The Company failed to verify the national lists properly, as it was revealed that the compliance officer did not circulate to the Company’s employees the letter received by the Company from the Authority on 2 August 2021 regarding the names included in the national and international list until 26 August 2021, which is after the inspection team’s examination of the Company’s systems and procedures in this regard.
Noting that these violations are procedural and not substantive.