Law No. 9 of 2019 on the Regulation of Credit Information Exchange

Law No. 9 of 2019
on the Regulation of Credit Information Exchange

Definitions

Article 1

In applying the provisions of this Law, the following words and expressions shall have the meanings set out opposite each of them:
The Ministry: the Ministry of Commerce and Industry.
The Central Bank: the Central Bank of Kuwait.
The Client: any natural or legal person about whom Credit Information is provided.
Credit Information: information relating to the credit status and to the obligations and credit facilities of Clients.
Credit Information Company (the Company): the companies established in accordance with the provisions of this Law to carry on the business of requesting, collecting, keeping, analysing, classifying, using and circulating Credit Information, preparing the Credit Record and Credit Rating of Clients, issuing the Credit Information Report and Credit Rating of Clients, and preparing and developing risk tools and standards and matters relating thereto.
Data and Information Providers: banks, investment companies, finance companies, and commercial companies and establishments subject to the Ministry of Commerce and Industry that grant credit facilities through sale by any form of transfer of ownership by instalments of goods and services, and that supply the Credit Information Company with the credit and personal information of Clients, as well as any entity that has Credit Information or data relating to the manner in which Clients meet their obligations.
Data and Information Users (Inquirers): natural and legal persons authorised to inquire into and obtain the information and credit reports provided by the Company, the Clients to whom the information and data relate and who have Credit Records with the Company, and any other local or foreign entities approved by the Central Bank.
Positive Information: information relating to the Client’s conduct in meeting its obligations on their due dates.
Negative Information: information relating to the Client’s default and failure to meet its obligations, including delay or irregularity, the return of commercial paper unpaid, cessation of payment, default, the issuance of court judgments of seizure, insolvency or bankruptcy, and repeated refusal to grant it credit.
Credit Record: a record containing all the Credit Information of Clients, which is obtained from the Data and Information Providers and arranged in chronological order, and on the basis of which the Credit Information Report is prepared.
Credit Information Report: an electronic or digital report issued by the Company at the request of Inquirers, which contains correct, factual, accurate and up-to-date information, and which sets out a description and the status of the Client’s creditworthiness and credit capacity.
Credit Rating: a numerical assessment according to statistical bases applied to all Clients for the purpose of determining the degree of risk associated with the Client’s repayment of its future obligations, using such credit information and data of the Client held by the Company.

Scope of Application of the Law

Article 2

This Law shall apply to the Company, the Data and Information Providers, the licensed users, the Clients and every person connected with the systems for reporting on credit and Credit Information, in accordance with the procedures specified by the Executive Regulations and the controls and rules laid down by the Central Bank.

Establishment of a System for the Exchange of Credit Information

Article 3

Subject to the provisions of Article (83) of the aforementioned Law No. 32 of 1968, a licence to provide credit reporting and Credit Rating services in the State of Kuwait may be granted, by resolution of the Board of Directors of the Central Bank, to Kuwaiti public shareholding companies incorporated for this purpose.
None of these companies may carry on its activity except after registration with the Central Bank.
Any party other than these companies is prohibited from carrying on Credit Information exchange activities, or from using in its name, publications or advertisements anything that misleads the public into believing that it carries on this activity.
The Executive Regulations of this Law shall regulate the rules, procedures and conditions of licensing these companies and the prescribed fees.

Rules for the Exchange of Credit Information

Article 4

An authorisation shall be obtained from the Client consenting to inquiry into the data and information relating to it, in accordance with the procedures and rules specified by the Executive Regulations.

Article 5

Data and Information Providers shall supply the Company with the credit data and information of Clients, in accordance with the procedures specified by the Executive Regulations and the controls and rules laid down by the Central Bank.

Article 6

The collection or circulation of information and data relating to the private life of a natural person, or to that person’s opinions, beliefs or health condition, is prohibited.

Article 7

Credit Information, the Credit Record and the Credit Information Report shall be deemed confidential by nature and shall not be used except for the purposes of the Company’s activities and between the parties provided for in this Law and in accordance with its provisions, and they may not be accessed or disclosed, directly or indirectly, except with the consent of the Client, its heirs, its legal representative or the agent authorised to do so, or at the request of the competent judicial authorities.

Credit Information Companies

Article 8

Credit Information Companies shall take the form of a shareholding company with a capital of not less than (25) million Kuwaiti Dinars.
The Central Bank shall issue the rules regulating the work of the companies and the relationship between them and those dealing with them, being the information and data providers, the Inquirers, the Clients and other Credit Information Companies, and the charges for the services they provide.

Article 9

Any person who is a member of the Board of Directors of a Credit Information Company, or the head of its executive body or his deputies or assistants, shall, in order to hold and continue to hold any of these positions, meet the following conditions:
1- He has not previously been sentenced to a felony penalty or for a crime involving dishonour or breach of trust.
2- He has not been declared bankrupt.
3- He is of good conduct and reputation.
4- He has sufficient experience in the Company’s field of activity, in accordance with the rules and controls issued by resolution of the Board of Directors of the Central Bank.
The Chairman of the Board of Directors of the Company shall notify the Central Bank of the names of the candidates for membership of the Company’s Board of Directors at least thirty days before the date set for the General Meeting to elect the members of the Board of Directors, and the Central Bank shall likewise be notified of the names of the candidates for the aforementioned positions.
The Board of Directors of the Central Bank may, within twenty-one days of being notified, object by a reasoned resolution to any of these candidates for failing to meet the required conditions.
Such objection shall result in the exclusion of the candidate for membership of the Board of Directors or for holding one of these positions, as the case may be, and a candidate of whom the Central Bank has not been notified, or a candidate to whom an objection has been made in accordance with the provisions of this Article, may not be presented to the General Meeting of the Company.
The Board of Directors of the Central Bank may request the Board of Directors of the Company to remove any of the persons referred to in the first paragraph if, while holding office, he ceases to meet any of the conditions provided for in this Article; if the removal is not effected, the Board of Directors of the Central Bank may issue a reasoned resolution excluding him from work.

Article 10

Credit Information Companies shall:
1 – Provide the data and information to their users authorised to make inquiries and to the Clients themselves.
2 – Not disclose or reveal to third parties the Credit Information in their possession.
3 – Establish modern systems and create a database in which everything relating to Credit Information, the Credit Record and Credit Information Reports is kept, and update it periodically.
4 – Protect the security of information against loss, damage, or unlawful or unsafe access, use or modification, including by maintaining means supporting data recovery in emergencies.
5 – Prepare documented and accurate Credit Records and process them in a timely, correct and secure manner.
6 – Keep a regular record of Clients’ consents to inquiries into Credit Information.

Supervision of the Credit Information Company

Article 11

The activities of Credit Information Companies shall be subject to the supervision of the Central Bank for the purpose of monitoring their compliance with the Law, its Executive Regulations and the rules, controls and instructions issued by the Central Bank; to this end, the Bank may review and inspect the business of the companies and their information systems to verify the soundness of their performance and the efficiency of their operational risk management.

Article 12

The Central Bank shall have the right to obtain all the credit data and information and Credit Information Reports in the Company’s database, and the Company may obtain the data and information available to the Central Bank in the risk centralisation system, in accordance with the rules set by the Central Bank in this regard.
The credit data, information, records and reports held by the Company shall, upon its dissolution, devolve to the Central Bank.

Complaints

Article 13

The Central Bank shall issue the rules regulating the submission of complaints relating to credit reporting services and the mechanism for deciding them.
The Credit Information Company shall respond in writing to the Client’s complaint and give reasons for its decision within a period not exceeding fifteen days, and the Central Bank shall decide the complaint within fifteen days.

Violations and Penalties

Article 14

Where the Company violates the provisions of this Law, its Executive Regulations or the resolutions and instructions issued in implementation thereof, or submits untrue data to the Central Bank or to the users of information, the Central Bank may, after reviewing the Company’s explanations, impose one of the following sanctions commensurate with the gravity of the violation:
1 – A warning.
2 – The imposition of financial sanctions on the Company up to a maximum of two hundred and fifty thousand Kuwaiti Dinars.
3 – A request to dismiss or replace the employee responsible for the violation.
4 – The exclusion of the member of the Board of Directors responsible for the violation.
5 – The appointment of a temporary monitor to monitor the conduct of business in the Company, whose powers and competences shall be determined by the Board of Directors of the Central Bank.
6 – The dissolution of the Company’s Board of Directors and the appointment of a commissioner to manage it until a new Board of Directors is elected.
7 – The revocation of the licence granted to the Company.
The sanctions provided for in Clause (1) shall be imposed by decision of the Governor of the Central Bank, and the sanctions provided for in Clauses (2, 3, 4, 5, 6, 7) shall be imposed by resolution of the Board of Directors of the Central Bank.

Article 15

Where a Data and Information Provider or a Data and Information User violates the provisions of this Law, its Executive Regulations or the resolutions and instructions issued in implementation thereof, or fails to provide the data and information it is required to provide, or provides untrue data, the Central Bank may, after reviewing the explanations of the persons concerned, impose any of the sanctions provided for in Clauses (1, 2, 3, 4) of the preceding Article.
The sanctions provided for in Clause (1) of the preceding Article shall be imposed on the violating entities subject to the supervision of the Central Bank by decision of the Governor of the Central Bank, and the sanctions provided for in the other Clauses (2, 3, 4) shall be imposed by resolution of the Board of Directors of the Central Bank.
Where companies and establishments subject to the supervision of the Ministry of Commerce and Industry violate the provisions of this Law, its Executive Regulations or the resolutions and instructions issued in implementation thereof, the Minister of Commerce and Industry shall, at the request of the Central Bank and after reviewing the explanations of the persons concerned, impose one of the following sanctions commensurate with the gravity of the violation:
1 – A prohibition on carrying on the activity of instalment sale of goods and services for a limited period.
2 – The revocation of the licence issued to the company or establishment by the Ministry of Commerce and Industry to carry on the activity of instalment sale of goods and services, in the event of a repeated violation.

Article 16

Without prejudice to any more severe penalty provided for by another law, a penalty of imprisonment for a term not exceeding one year and a fine not exceeding five thousand Dinars, or either of these two penalties, together with dismissal as the case may be, shall be imposed on any person who:
1 – Violates the provision of Article (7) of this Law.
2 – Obtains credit data and information or gains access to the Credit Record of Clients without obtaining the consents prescribed in accordance with the provisions of this Law and its Executive Regulations.
3 – In bad faith falsifies data and information or submits incorrect credit data and information to the Company.

General Provisions

Article 17

The Ministry shall, after obtaining the opinion of the Central Bank, lay down the rules and controls relating to credit facilities arising from the instalment sale of goods and services, in line with the instructions issued by the Central Bank on the rules for granting loans and consumer finance operations.

Article 18

Credit Information Companies existing on the date this Law comes into force shall regularise their status by registering with the Central Bank in accordance with the provisions of this Law and its Executive Regulations, within a period not exceeding six months from the date of issuance of the Executive Regulations of this Law.

Article 19

This Law shall be published in the Official Gazette, and its Executive Regulations shall be issued by resolution of the Minister of Finance upon the proposal of the Central Bank within six months from the date of its publication.

Article 20

The aforementioned Law No. (2) of 2001 is repealed with effect from the date this Law comes into force.

Article 21

The Prime Minister and the Ministers, each within his competence, shall implement this Law, which shall come into force from the date of publication of the Executive Regulations.

Issued on 30 January 2019 and published in the Official Gazette Kuwait Al-Youm on 10 February 2019.