Interview: Financial fraud, development of Islamic capital market are priority areas: CMA head of Kuwait

Financial fraud in Kuwait and the region is a priority issue for the country’s Capital Markets Authority (CMA), according to Chairman of the Board of Commissioners and Managing Director Prof. Ahmed Abdulrahman Al-Melhem.

“Our efforts have been focused on removing unlicensed companies and bogus investments from the market,” he told Zawya, “and we continue to alert the public to the financial fraud that has taken place in the country and region.”

The issue is so prominent that the CMA put a financial fraud proposal on the agenda of a GCC meeting last month and also called for collective action in the region. “Financial fraud is a challenging issue for all of us and something we face on a daily basis,” said Melhem.

“Currently, the health of the market is satisfactory and we are moving in the right direction,” he added. “For our part, we are presenting our claims to the Attorney General in Kuwait and spreading awareness of the types of financial fraud that are taking place in the market. Our actions have been successful so far and we are now seeing a decrease in such activity.”

The agency has launched many campaigns to educate the public about financial fraud, covering topics such as unlicensed securities brokerage, fake trading accounts on social media channels, and fake project announcements.

Emerging Market for Islamic Capital

Melhem also spoke to Zawya about the growing demand for an Islamic capital market in Kuwait and the need to develop this sector as part of the country’s effort to diversify its financial interests.

A 2021 IFSB Capital Markets Report shows a 21.2% CAGR post-COVID-19 in the global sukuk market, primarily driven by increases in government and corporate issuance from Malaysia and the GCC region, with Kuwait emerging as one of the main contributors in Q1 2021.

“Kuwait has plenty of scope to become an important hub for the Islamic capital market in the region. We have outlined steps in our new strategy to achieve this goal and a committee is in place to advise the Commissioner on possible steps,” said Melhem.

Earlier this year, the CMA also initiated a scoping meeting with the Saudi Islamic Development Bank Institute (IsDBI) to assess Kuwait’s potential to provide technical assistance and examine the challenges associated with the development of an Islamic capital market in Kuwait .

Strategic plans and market surveillance

Meanwhile, the CMA has announced the launch of its third strategic plan, continuing its efforts to develop Kuwait’s financial markets and in line with the investment plans outlined in Kuwait’s Vision 2035.

According to the CMA, the strategic roadmap outlined for the next four years aims to develop a legislative structure to oversee the market and includes plans to develop the country into a potential investment hub.

Melhem also noted that the new plan would reflect changing geopolitical influences around the world. “The Ukraine war, oil price volatility and the recent rise in global interest rates have impacted the investment climate in general. These are challenges for the capital market, so we try to include them in our planning.”

(Writing by Jethu Abraham; Editing by Seban Scaria)

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