FATF Report Highlights Kuwait’s Struggles in Combating Money Laundering and Terrorist Financing

The effectiveness of established rules and regulations in Kuwait to fight financial crimes such as“money laundering, terrorist financing, and proliferation financing” has been assessed by the “FATF/MENAFATF mutual evaluation report.”

This report also evaluates Kuwait’s compliance with AML/CFT regulations and identifies certain deficiencies in the legal framework. It also provides recommendations for improvement.

AML/CTF Enforcement Gaps

Kuwait has appropriate rules, regulations, laws, and a monitoring framework for detecting illegal activities such as money laundering (ML). Still, it has severe deficiencies in achieving productive results.

As it struggles to comprehend and investigate financial crimes and their operations, implementing laws on money laundering (ML) and terrorist financing (TF) in Kuwait fails to achieve the desired outcomes.

Limited Grasp of ML and TF Risks

Kuwait is familiar with money laundering risks and how much they can affect the transparency and integrity of the financial ecosystem as they experience this crime on a national level.

However, there seems to be limited attention towards “terrorist financing risk.”

Authorities must upgrade their awareness about these potential risks of financial crimes by conducting “Risk assessment procedures” in the following key areas.

• Non-profit organisation
• Virtual asset service provider sectors
• Misuse the legal companies for illicit activities such as money laundering

Challenges in Money Laundering Convictions

Kuwait has improved its money laundering investigation regime but faces challenges in proving charges against suspects in court.

The predicate offense needs strong evidence to be proved. Most money laundering cases presented in the court are linked to “Self-laundering.”

No Asset Seizure Laws for Countering Terrorist Financing

As per the report findings, reviewing “Kuwait’s risk assessment procedures, investigation, and prosecution related to terrorist financing” has limitations

• Cases related to TF often end in a court trial without proving true.
• Kuwait’s legal system to enforce particular financial sanctions based on the severity of “terrorist financing (TF) and financing of proliferation of weapons of mass destruction” is already established.
• Although there are laws to deter terrorist financing, no laws regarding “Asset Seizure” in response to TF or WMD have been announced.
• If laws don’t exist within a country to penalize criminal conduct, then measures to combat financial crimes can’t be legally enforced.

Read Also:

• Australia’s AML/CFT Law Tranche 2 Expanding Compliance Requirement
• IMC Strengthens Singapore AML Regime with Proactive Prevention, Timely Detection, and Effective Enforcement
• UK OPBAS Report Highlights Areas for Improvement in AML Supervision Among Legal and Accountancy Sector

Risk-Based Approach to Non-Profit Sector Needed

Kuwait has implemented “risk assessment” measures in the nonprofit sector. Still, its financial system lacks an adequate “Risk-based approach” to safeguard the nonprofit sector from getting used for illicit activities such as terrorist financing.

An applied risk-based approach needs to have such measures for non-profit organizations that do not disturb their routine operations.

Recommendations for Improved AML/CFT Regime