Kuwait's measures to combat money laundering and terrorist financing

Publication details

Language

English

Country

Kuwait

Mutual Evaluation Report of Kuwait - 2024

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Mutual-Evaluation-Kuwait-2024.pdf
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Paris 8 October 2024 – Kuwait has an adequate legal and supervisory framework to address illicit finance, but has serious shortcomings in delivering effective outcomes, including its understanding, investigation and prosecution of money laundering and terrorist financing.

The FATF/MENAFATF mutual evaluation report of Kuwait assessed the effectiveness of Kuwait’s measures to combat money laundering, terrorist financing and proliferation financing, and their level of compliance with the FATF Recommendations. 

Kuwait is a high-income country with low levels of violent crime but that nevertheless faces money laundering risks from crimes that include fraud, corruption, forgery and offences committed abroad. The country is exposed to terrorist financing risks from terrorist acts and terrorist groups operating outside of the country.

Kuwait has a basic understanding of the money laundering risks it faces at a national level and only a low understanding of its terrorist financing risk. Authorities need to refine their understanding of these risks, including by carrying out comprehensive risk assessments of the non-profit organisation and virtual asset service provider sectors and of the misuse of legal persons for money laundering. 

Kuwait has increased the number of money laundering investigations, but authorities face challenges in securing money laundering convictions without proving the underlying predicate offence. Most of the prosecuted money laundering cases relate to simple cases of self-laundering.

Given Kuwait’s risk profile, the terrorist financing investigations and prosecutions appear limited, with cases often failing to reach conviction at trial. Kuwait has a legal framework to implement targeted financial sanctions for terrorist financing and the financing of proliferation of weapons of mass destruction.  However, the actions necessary to freeze assets with links to terror or proliferation are not reflected in the legal framework. Without this legal underpinning in domestic law, these actions are unenforceable.

Kuwait has conducted a risk assessment of its non-profit sector, but it needs to take a more risk-based approach to protect the non-profit sector from terrorist financing abuse and not disrupt and discourage legitimate non-profit activity.

Kuwait’s financial intelligence unit produces information to launch money laundering inquiries and investigations, but terrorist financing investigations are mostly the result of foreign intelligence. Kuwait has made it a policy objective to confiscate proceeds of crime and law enforcement have been able to confiscate valuable assets, including properties and assets located abroad.

Banks and larger financial institutions have a good understanding of their risk and obligations, but supervisors for both the financial and non-financial sectors (DNFBPs) need to focus more on beneficial ownership. A lack of understanding means Kuwait has no complete and reliable beneficial ownership information. 

 

Executive Summary - Mutual Evaluation of Kuwait - 2024

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Executive-Summary-MER-Kuwait-2024.pdf
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Ratings

Effectiveness

Ratings that reflect the extent to which a country's measures are effective. The assessment is conducted on the basis of 11 immediate outcomes, which represent key goals that an effective AML/CFT system should achieve.

Ratings that reflect the extent to which a country's measures are effective. The assessment is conducted on the basis of 11 immediate outcomes, which represent key goals that an effective AML/CFT system should achieve.

MER Oman 2024

IO1
ME
IO2
SE
IO3
ME
IO4
ME
IO5
ME
IO6
SE
IO7
ME
IO8
ME
IO9
SE
IO10
ME
IO11
SE

HE = high level of effectiveness   |   SE = substantial level of effectiveness    |   ME = moderate level of effectiveness   |   LE = low level of effectiveness

Technical Compliance

Ratings which reflect the extent to which a country has implemented the technical requirements of the FATF Recommendations.

MER Oman 2024

R.1 - Assessing risk & applying risk-based approach
LC
R.2 - National cooperation and coordination
LC
R.3 - Money laundering offence
LC
R.4 - Confiscation and provisional measures
C
R.5 - Terrorist financing offence
C
R.6 - Targeted financial sanctions related to terrorism & terrorist financing
LC
R.7 - Targeted financial sanctions related to proliferation
LC
R.8 - Non-profit organisations
PC
R.9 - Financial institution secrecy laws
C
R.10 - Customer due diligence
C
R.11 - Record keeping
C
R.12 - Politically exposed persons
C
R.13 - Correspondent banking
C
R.14 - Money or value transfer services
C
R.15 - New technologies
LC
R.16 - Wire transfers
C
R.17 - Reliance on third parties
C
R.18 - Internal controls and foreign branches and subsidiaries
LC
R.19 - Higher-risk countries
C
R.20 - Reporting of suspicious transactions
LC
R.21 - Tipping-off and confidentiality
C
R.22 - DNFBPs: Customer due diligence
C
R.23 - DNFBPs: Other measures
C
R.24 - Transparency and beneficial ownership of legal persons
LC
R.25 - Transparency and beneficial ownership of legal arrangements
LC
R.26 - Regulation and supervision of financial institutions
LC
R.27 - Powers of supervisors
C
R.28 - Regulation and supervision of DNFBPs
C
R.29 - Financial intelligence units
C
R.30 - Responsibilities of law enforcement and investigative authorities
C
R.31 - Powers of law enforcement and investigative authorities
LC
R.32 - Cash couriers
C
R.33 - Statistics
C
R.34 - Guidance and feedback
C
R.35- Sanctions
C
R.36 - International instruments
LC
R.37 - Mutual legal assistance
LC
R.38 - Mutual legal assistance: freezing and confiscation
C
R.39 - Extradition
LC
R.40 - Other forms of international cooperation
LC

C = compliant   |   LC = largely compliant     |   PC = partially compliant   |   NC = non-compliant

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