Compliance Guidelines:

Regulatory Bodies in Kuwait

In Kuwait, several regulatory bodies and authorities oversee and enforce anti-money laundering (AML) and counter-terrorist financing (CTF) compliance regulations. The major regulatory bodies involved in AML compliance in Kuwait include:

Central Bank of Kuwait (CBK)

• The Central Bank of Kuwait plays a significant role in regulating the banking and financial sector in the country.
• It issues AML/CFT regulations, guidelines, and directives for banks and financial institutions.
• CBK conducts regular inspections to ensure compliance with AML/CFT requirements.
• It supervises and licenses financial institutions and monitors their adherence to AML/CFT regulations.

Capital Markets Authority (CMA)

• CMA oversees and regulates Kuwait’s securities and capital markets.
• It enforces AML/CFT regulations for entities under its jurisdiction, including investment companies and brokerages.

Financial Intelligence Unit (FIU)

• The FIU is responsible for receiving, analyzing, and disseminating suspicious transaction reports (STRs) and other financial intelligence related to AML/CFT.
• It operates independently and collaborates with law enforcement agencies.

Kuwait Anti-Corruption Authority (Nazaha)

• While primarily focused on combating corruption, Nazaha may also have a role in AML efforts, especially in cases where corruption is linked to money laundering.

Compliance Regulations in Kuwait

Law No. 106 of 2013 on Combating Money Laundering and Financing of Terrorism

This is the primary legislation in Kuwait that sets out the framework for AML and CTF. It provides for the establishment of a financial intelligence unit, imposes obligations on financial institutions and non-financial businesses and professions, and sets out the penalties for non-compliance.

Article 2 – Money Laundering Offenses:

• Any person who knowingly deals with funds that are the proceeds of a crime and engages in the following actions voluntarily commits a money laundering offense:
  • Converts, transfers, or substitutes such funds to hide their illegal origin, aid someone involved in the underlying crime to avoid legal consequences, or conceal the funds.
  • Disguises or conceals the true nature, source, location, disposition, movement, or ownership of these funds or associated rights.
  • Acquires, possesses, or uses such funds.
• Legal entities can also be held responsible for money laundering offenses if committed in their name or for their benefit.
• Conviction for a predicate offense (the underlying crime) does not prevent prosecution for a money laundering offense.
• It is not necessary to have a conviction for the predicate offense to establish that the funds are proceeds of crime.

Article 3 – Terrorism Financing Offenses:

• Any person who knowingly and willfully, directly or indirectly, collects or provides funds, with the knowledge or intent that they will be used, in whole or in part, for the purpose of carrying out a terrorist act or benefiting a terrorist organization or a terrorist, commits a terrorism financing offense.
• Any of the acts mentioned in paragraph 1 constitutes a terrorism financing offense, even if the actual terrorist act does not occur, if the funds are not used for the act, or if the funds are not specifically linked to a particular terrorist act.

Article 16 – Establishment of Kuwait Financial Intelligence Unit (FIU)

• The Kuwait Financial Intelligence Unit (FIU) is established as an independent legal entity.
• Its primary responsibility is to receive, request, analyze, and share information related to suspected proceeds of crime, money laundering, or terrorism financing, as outlined in the law.
• The Council of Ministers, upon the recommendation of the Minister of Finance, will issue a Resolution to form the FIU and define its structure, affiliation, organization, and resources.

Article 17 – Identification of High-Risk Countries

• The FIU has the authority to identify high-risk countries and prescribe measures to be taken concerning these countries.
• Supervisory authorities are responsible for ensuring that financial institutions and designated non-financial businesses and professions comply with the prescribed measures.

Article 19 – Reporting and Notifications

• Whenever the FIU has reasonable grounds to suspect that funds are proceeds of a crime, or are related to money laundering or terrorism financing, it must notify the public prosecutor’s office and provide relevant information to competent authorities.
• The FIU will inform the relevant supervisory authority if a financial institution, designated non-financial business and profession, or their employees fail to comply with the requirements of the law.
• The FIU can, upon reciprocity or mutual agreement and based on cooperation arrangements, share its information with foreign authorities, either spontaneously or upon request.

Article 27 – Imposition of Sanctions

• The offenses outlined in this law are subject to specific sanctions as defined in the subsequent articles, without prejudice to more severe sanctions specified in the penal code or other laws.

Article 28 – Money Laundering Offense

• Individuals who commit a money laundering offense under Article 2 of this law may face:
• Imprisonment for up to ten years.
• A fine ranging from no less than half to the full value of the funds involved, provided that the offender knew these funds were proceeds of crime.
• Confiscation of the detained funds and instrumentalities is mandatory in all cases.

Article 29 – Terrorism Financing Offense

• Individuals who commit a terrorism financing offense under Article 3 of this law may face:
• Imprisonment for up to fifteen years.
• A fine ranging from no less than the full value of the funds involved to twice that amount.
• Confiscation of seized funds and instrumentalities is mandatory.

Article 30 – Increased Penalties

• The penalties defined in Articles 28 and 29 may be enhanced to:
• Imprisonment for up to twenty years.
• A fine of up to twice the specified amounts.

References

1. Anti-Money Laundering And Combating The Financing Of Terrorism Law