Financial Crime World

Kuwait Takes a Stronger Stance Against Financial Crime

Combating Money Laundering and Terrorism Financing

In an effort to combat the growing menace of financial crime, Kuwait has passed a new law aimed at reducing money laundering and terrorism financing. The “New Law” supersedes the previous 2002 legislation and introduces improved governing principles and standards to protect local financial institutions.

Key Provisions of the New Law

  • Criminalizes terrorist financing, making it illegal for individuals or organizations to collect funds with the intention of using them for committing a terrorist act (Article 3)
  • Enables the freezing of terrorist assets (Article 22), giving authorities the power to freeze or confiscate funds or instruments if sufficient evidence suggests they were obtained or used for money laundering or terrorism financing
  • Introduces new sanctions and penalties, including prison sentences not exceeding ten years and fines up to twice the value of the laundered funds (Articles 28-29)
  • Restricts Hawaladars or “Hawala” agents, requiring disclosure and review by the Financial Intelligence Unit (FIU)

Strengthening Anti-Money Laundering Efforts

  • The Central Bank of Kuwait has issued circulars and instructions to local financial institutions, emphasizing the importance of customer due diligence practices
  • Measures have been put in place to prevent accounts from being opened for terrorist financing or money laundering purposes
  • Staff at local financial institutions are trained to identify suspicious behavior and transactions

Financial Intelligence Unit (FIU)

  • A fully independent FIU has been established to receive, analyze, and transfer information related to suspected proceeds of money laundering or terrorism financing
  • The FIU demonstrates Kuwait’s commitment to combating financial crime and sends a strong message to criminal and terrorist organizations that prey on Middle Eastern banking systems

Conclusion

While it is too early to evaluate the effectiveness of the New Law, its implementation marks a significant step forward in Kuwait’s fight against financial crime. The government has demonstrated its willingness to address recommendations from the Middle East & North Africa Financial Action Task Force (MENAFATF) and implement robust measures to protect the country’s financial system. As the law continues to be applied, it will be important to monitor its effectiveness and report on any related developments.