Financial Crime World

Combating Money Laundering and Terrorist Financing in Kuwait

Executive Summary

The Anti-Money Laundering (AML) Law in Kuwait has been in place since 2002, but it remains unchanged. Despite the law’s existence, there have been few prosecutions for money laundering and asset confiscations. Several indicators suggest that money laundering and terrorist financing operations do not pose a significant threat to the Kuwaiti economy.

Shortcomings of the AML/CFT Framework

Insufficient Criminalization

  • The ML offense does not cover all serious predicate offenses.
  • Terrorism financing is not criminalized.

Inadequate Preventive Measures

  • Preventive measures for Financial Institutions (FIs) and Designated Non-Financial Businesses and Professions (DNFBPs) are not comprehensive.
  • There is a lack of an independent national center responsible for receiving, analyzing, and disseminating Suspicious Transaction Reports (STRs) and other information regarding potential ML or TF.

Inadequate Supervisory Powers

  • Some supervisors do not have adequate powers to monitor and ensure AML/CFT compliance by FIs and DNFBPs.
  • There is a lack of sufficient sanctioning powers.

Licensing Requirements

  • Licensing requirements for FIs are not comprehensive.
  • There are no laws or regulations that impose controls on the ownership structure of FIs.

Statistics and Guidance

  • Statistics are not collected.
  • Guidance and feedback are not adequately provided to FIs and DNFBPs.

ML Criminalization

  • ML is criminalized under the AML Law, which was complemented by Resolution 9 of 2005 containing detailed regulations relating to its implementation.
  • Self-laundering is also criminalized in Kuwait.

Predicate Offenses

  • The list of predicate offenses for ML covers most of the designated categories of offenses listed in the FATF Glossary to the 40 Recommendations.

Recommendations

  1. Improve the criminalization of ML and TF by covering all serious predicate offenses and making TF a specific crime.
  2. Enhance preventive measures for FIs and DNFBPs to ensure comprehensive coverage.
  3. Establish an independent national center (KFIU) responsible for receiving, analyzing, and disseminating STRs and other information regarding potential ML or FT.
  4. Provide supervisors with adequate powers to monitor and ensure AML/CFT compliance by FIs and DNFBPs, including sufficient sanctioning powers.
  5. Implement comprehensive licensing requirements for FIs and impose controls on the ownership structure of FIs.
  6. Collect statistics and provide guidance and feedback to FIs and DNFBPs.