Financial Crime World

Financial Crime Prevention Measures in Kuwait Take a Step Forward

In a significant move to protect local financial institutions from money laundering and terrorism financing, the Kuwaiti Government has passed Law No. 106 of 2013 Regarding the Combating of Money Laundering and Financing of Terrorism.

Improved Governance and Standards

The new law supersedes the previous Law No. 35 of 2002 and establishes improved governing principles and standards to prevent the misuse of financial institutions for illicit activities. This is in response to concerns raised by the Middle East & North Africa Financial Action Task Force (MENAFATF) in their 2011 Mutual Evaluation of the 2002 Kuwaiti Anti Money Laundering Law.

Key Provisions of the New Law

  • Criminalisation of Terrorist Financing: The new law introduces provisions to enable the freezing of terrorist assets under Article 22.
  • Customer Due Diligence Practices: The Central Bank of Kuwait has issued circulars and instructions to local financial institutions, instructing them on customer due diligence practices to prevent money laundering and terrorism financing.
  • Financial Intelligence Unit (FIU): A fully independent FIU will serve as the main investigative body and be responsible for receiving, applying for, analysing and transferring information related to suspected money laundering or terrorism financing.

Sanctions and Penalties

New sanctions and penalties have been introduced under the new law, including:

  • Prison sentences not exceeding 15 years
  • Financial penalties not exceeding double the value of the funds laundered

Restrictive Provisions for Hawaladars

The new law includes restrictive provisions covering Hawaladars or ‘Hawala’ agents, requiring them to disclose the value of currencies or negotiable financial instruments when leaving the country. The FIU may review this information whenever required.

Conclusion

The Kuwaiti Government’s efforts to combat money laundering and terrorism financing are a positive step forward in preventing illicit activities in the region. While an evaluation of its effectiveness cannot yet be given, it is clear that the recommendations made by MENAFATF have been acknowledged and taken on board by the Kuwaiti Government.