Financial Crime World

Title: Kuwait Tightens Financial Crimes Laws: New Measures to Counter Money Laundering and Terrorist Financing

September 2023

The Kuwaiti Government has taken significant strides to strengthen its regulatory framework against money laundering (ML) and terrorist financing (TF) with the passage of Law No. 106 of 2023. This legislation addresses criticisms raised by the Middle East & North Africa Financial Action Task Force (MENAFATF) during their 2021 mutual evaluation of Kuwait’s anti-money laundering and counter-terrorist financing (AML/CFT) regime.

New Criminalization and Asset Freezing Measures

  • Criminalization of Terrorist Financing: Article 3 of the new law identifies anyone who willfully and illicitly collects funds for terrorist activities as a terrorist financing offender, per Art. 3.
  • Asset Freezing: Art. 22 empowers the public prosecutor or authorized lawyers to freeze or confiscate funds and instruments suspected of ML or TF.

Enhanced Customer Due Diligence and Independent Financial Intelligence Unit

  • Customer Due Diligence: The Central Bank of Kuwait mandates financial institutions to identify and report suspicious transactions to authorities, per Art. 5.
  • Independent Financial Intelligence Unit: A fully independent FIU, as per Art. 16, serves as the primary body investigating ML and TF activities.

Strict Sanctions and Penalties

  • Penalties for Non-compliance: Art. 28 imposes a ten-year prison sentence and a fine equivalent to laundered funds for ML breaches.
  • Terrorist Financing Penalties: Art. 29 prescribes up to fifteen years’ imprisonment and a fine equivalent or double the funds subject to the crime for TF offenses.

Addressing the Role of Hawala Agents

  • Hawala Agents: Art. 20 requires individuals leaving Kuwait with currency or negotiable instruments to declare their values to the Customs Authority. FIU may review this data as needed.

These new regulations represent a considerable advancement in Kuwait’s efforts to counter financial crimes and set a high standard for AML/CFT compliance in the region. Updates on the measures’ effectiveness will be reported in the coming months.

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