Kuwait Takes Steps to Combat Money Laundering and Terrorism Financing
A New Law to Combat Financial Crimes
The Kuwaiti government has passed a new law aimed at combating money laundering and terrorism financing. This move follows recommendations from the Middle East & North Africa Financial Action Task Force (MENAFATF). The new law replaces the 2002 law, introducing stricter regulations to protect local financial institutions.
Key Provisions of the New Law
- Criminalization of Terrorist Financing: Article 3 of the new law makes it a crime to collect funds with the intention of using them for terrorist activities.
- Freezing of Terrorist Assets: Article 22 gives power to the public prosecutor or his authorized lawyers to freeze or confiscate funds if there is sufficient evidence that they were obtained or used for money laundering or terrorism financing.
- Customer Due Diligence: The Central Bank of Kuwait has issued instructions emphasizing the importance of customer due diligence practices. Article 5 details specific measures that should be undertaken by all banks and financial institutions to prevent accounts from being opened for terrorist financing or money laundering.
Strengthening Financial Integrity
The creation of a fully independent Financial Intelligence Unit (FIU) is another key provision under Article 16. The FIU will serve as the main investigative body, receiving, analyzing, and transferring information related to suspected proceeds of money laundering or monies used to finance terrorism.
New Penalties for Breaches
- Prison sentences not exceeding ten years
- Financial penalties not exceeding the funds laundered
- For terrorist financing, a prison sentence not exceeding 15 years and a fine of no less than the funds subject to the crime and no more than double their value.
Restrictive Provisions for Hawala Agents
The new law includes provisions covering Hawaladars or ‘Hawala’ agents, who provide a cross-border cash courier service. Any person wishing to leave Kuwait with currency or other negotiable financial instruments must disclose the value of these currencies or negotiable financial instruments to the Kuwaiti Customs Authority.
A Positive Step Forward
The implementation of the new law demonstrates the Kuwaiti government’s commitment to combating money laundering and terrorism financing. While its effectiveness cannot yet be evaluated, it is a positive step in the right direction. The recommendations made by MENAFATF have been acknowledged and taken on board by the Kuwaiti government, ensuring that the new law addresses key concerns.