Introduction

Money laundering is not a common issue in Kuwait. Nonetheless, Kuwait has undertaken great attempts to keep a solid Anti-Money Laundering (AML) framework in place.

Kuwait isn’t any anymore on the FATF list of nations with significant anti-money laundering shortcomings.

Money laundering is frequently regarded as a victimless offense. However, the fact is that it is a critical gear in the global financial wheel for organized criminality and terrorist acts. Bribery is frequently referred to as money laundering’s “twin.” The gravity and importance of these offenses are frequently misinterpreted and undervalued. Because of the important work done by numerous non-governmental organizations (NGOs) and Global organizations (such as the IMF), this topic has attracted major attention not just in Kuwait, but also throughout the Middle East area. While there have also been significant advances in Kuwaiti legislation against both fraud and financial laundering.

AML in Kuwait

The Emir of Kuwait enacted Law No. 35, which criminalizes money laundering, on March 10, 2002. Furthermore, the legislation forbids financial companies from maintaining or creating any secret accounts, as well as accounts with fictional or metaphorical identities. The rule also compels financial institutions to authenticate the identities of both frequent and infrequent customers. It also requires financial institutions to keep all transaction data and client identity details for a minimum of five years. In addition, training and the establishment of inner monitoring mechanisms are required. Any questionable transactions should also be reported.

The Central Bank of Kuwait (CBK) published Resolution No. 1/191/2003 on June 23, 2003. The Kuwaiti Financial Inquiries Unit is established (KFIU). Collecting and assessing complaints of potential money laundering is one of their tasks. It is also necessary to create a record of questionable transactions. In addition, anti-money laundering instruction will be provided, as will internal and worldwide data exchanges. The KFIU collaborates with the Office of the Public Prosecutor (OPP). This is for the purpose of processing and exchanging details concerning questionable money-laundering behavior.

The Anti-Corruption Authority was founded by Law No. 24/2012. They are in charge of all AML-related actions in Kuwait. Law No. 105/2013 went into force in May 2013. It superseded Law No. 35/2002. It also amended the statute to incorporate all current advancements in the field of anti-money laundering. This contains global conventions governing terrorist financing and similar actions.

FATF on Kuwait

The FATF applauds Kuwait’s strong progress in enhancing its anti-money laundering and counter-terrorist financing policy. It mentions that Kuwait has a legislative and administrative structure in place. This is in order to achieve its promises in its implementation strategy addressing the strategic inadequacies highlighted by the FATF.  As a result, Kuwait isn’t longer subject to the FATF’s surveillance procedure as part of its continuing worldwide AML/CFT adherence procedure. Kuwait will collaborate with the MENAFATF. As it manages to resolve the entire spectrum of AML/CFT problems mentioned in its annual assessment report, including completely enforcing UN Security Council Resolution 1373.

Sanctions

There are presently no global sanctions in place upon this nation.

The Arab League consisting of 22 Arab member countries of which this nation is a part, had agreed to impose sanctions on Syria. These are some examples: –

• Interrupting operations with Syria’s central bank.
• Arab states withdrew funding for all the projects in Syria.
• The prominent Syrian Authorities prohibited to visit other Arab Nations.
• Properties associated with President Bashar al-regime Assad’s were frozen.

US Department of State Money Laundering assessment (INCSR)

The United States Department of State’s 2016 International Narcotics Control Strategy Report designated Kuwait as a Jurisdiction of Concern (INCSR). The following are major conclusions from the document: –

Kuwait is not a financial hub in the area. The Supreme Bank of Kuwait estimated overall financial industry holdings of $388 billion as of 31 December 2020. At the time, Kuwait had 23 banks active. Financial laundering and other financial offenses continue to be a source of worry. Illegal revenues are typically associated with incidents of theft, trafficking particularly to/from Iraq, and bribery. Credit card scams, products infringement, financial fraud, and market tampering are examples of money-raised offenses. The existence of severe organized or multinational crimes is unknown to the officials.

Personal monetary assistance to terrorist organizations, especially by people acting beyond the government-approved charity structures, remains a source of worry. The Kuwaiti administration undertook a number of steps in 2015. To increase the control and supervision of various charities in nations its done.This involves keeping track of transactions to overseas recipients. Additionally, the Ministry of Social Affairs and Labor has made efforts to check social sites and control internet contributions.

AML and economy

Kuwait is geographically tiny yet economically prosperous. It has 102 billion barrels of crude oil reserves, making it a reasonably free country. It accounts for higher over 6% of global reserves. Authorities in Kuwait intend to expand oil output to 6 million barrels per day by 2022. Oil contributes to more than half of the total GDP. They account for 94% of export earnings and 90% of federal earnings.

After generations of strong oil rates, Kuwait had a budgetary shortfall for the first time in many years. Kuwaiti officials have attempted to lower the shortfall by reducing expenditure on regional people subsidies, but have had minimal results. Although Kuwait’s reliance on oil, the administration had prepared for the consequences of decreased oil rates. They accomplished this by putting at minimum 20% of federal money aside each year in the Financing for Coming Generations.

Kuwait has been unable to broaden its industry or strengthen its private sector. This is due to a bad economic environment. Also, due to the massive state sector, which pushes out private job opportunities for Kuwaiti people.The Kuwaiti administration has achieved modest headway at implementing its lengthy economic growth strategy. While the administration intended to invest up to $500 billion over a number of years. For broadening the industry, encouraging additional finance and to increase private sector engagement.  However, due to an unpredictable political scenario, most of the plans did not materialize.