Financial Crime World

Title: Kuwait Faces Scrutiny Over Money Laundering and Terrorist Financing Deficiencies

Subheading: Critical Assessment Report by FATF Reveals Gaps in Kuwait’s AML/CFT Frameworks

Introduction

The State of Kuwait has recently come under international scrutiny due to the growing potential for financial wrongdoings in its fast-growing financial sector. Although Kuwait has, so far, escaped significant money laundering activity and major terrorist attacks, the Financial Action Task Force (FATF) identified several deficiencies in the country’s Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) frameworks in their recent mutual evaluation report.

Key Findings

  • Lack of Criminalization of Terrorist Financing: Terrorist financing is not criminalized under Kuwait’s laws, leaving the system vulnerable to such activities.
  • Limited Definition of Money Laundering: The definition of money laundering in Kuwait does not cover all serious predicate offenses.
  • Dependent Financial Intelligence Unit: The independence of the Kuwaiti financial intelligence unit (KFIU) is not yet established, and it does not perform all core functions set out by the FATF standards.
  • Shortcomings in AML/CFT Supervisory Framework: There are shortcomings in the AML/CFT supervisory framework for certain financial institutions and Designated Non-Financial Businesses and Professions (DNFBPs).

Background

The FATF is an inter-governmental organization that leads the global fight against money laundering and terrorism financing. Regular evaluations of countries’ AML/CFT frameworks by the FATF ensure they comply with international standards. During the evaluation, Kuwait scored relatively well in many areas but needs to make improvements in several areas.

Conclusion

This critical assessment report by the FATF underscores the importance for Kuwait to adapt its regulations and strengthen its AML/CFT framework to counteract the increasing risks. The country is encouraged to closely collaborate with the FATF and make necessary reforms to address the identified weaknesses. The international community will continue to closely monitor Kuwait’s progress in this regard.