KUWAIT Law and Practice Contributed by: Yousef Al Shereedah, Abdulrahman Al-Roumi and Bashayer Al-Tuwais, International Counsel Bureau – Lawyers and Legal Consultants
alerts for any suspicious activities, ensuring timely investigations. When there is sufficient evidence of potential money laundering or terrorism financing, banks are required to report their findings promptly to Kuwait’s
all Kuwaiti companies, with few exceptions, to identify and disclose their UBOs. Under this resolution, financial institutions, including banks, are expected to: • identify any individual or entity holding 25% or more of ownership or voting rights or hav - ing control over the company; • maintain accurate and up-to-date UBO records, with updates being reported within 15 days of any change; and • provide UBO information to MOCI upon incorporation, licensing, or renewal and ensure that this data is shared when required by MOCI authorities. Failure to comply with these UBO obligations under MOCI may result in penalties in accord - ance with Article 15 of the AML Law. Virtual assets ban – compliance with CBK Circular on the Prohibition of Virtual Assets On 17 July 2023, the CBK introduced a strict circular to strengthen its AML and CFT efforts. Under this circular, CBK-Regulated Entities are barred from engaging in any activities related to virtual assets, whether for their own accounts or on behalf of clients. The move follows FATF standards which aim to curb the risks associ - ated with virtual assets, which are considered unstable and speculative. Virtual assets, includ - ing cryptocurrencies, are no longer permitted as a means of payment or for any other financial services in Kuwait. The circular also prohibits CBK-Regulated Entities from offering any investment services related to virtual assets. Furthermore, the CBK has prohibited the granting to any person of licenses for the provision of services related to virtual assets (including cryptocurrencies, non- fungible tokens, and stablecoins). The CBK has
Financial Intelligence Unit (FIU). Penalties for Non-Compliance
Non-compliant banks can face severe penalties for failing to adhere to AML Regulations, with fines ranging from a minimum of KWD5,000 to a maximum of KWD500,000. These penalties can be imposed for various violations, including intentional non-compliance or serious breaches, such as failing to establish mandatory internal policies and procedures, failing to ensure that certain key employees meet a minimum level of qualifications, a lapse in implementing training programmes for employees, or neglecting to appoint a compliance officer, among other obli - gations outlined in the AML Regulations. Recent Reforms Over the past two years, Kuwait has introduced key regulations for banks aimed at improving financial transparency and reducing risks relat - ed to money laundering and terrorism financing. These updates include stricter rules for identify - ing the true owners of corporate clients, a ban on CBK-Regulated Entities engaging in any activi - ties relating to virtual assets like cryptocurren - cies, and new guidelines for sharing tax informa - tion with other countries. These reforms require banks to meet higher standards of transparency and accountability, ensuring compliance with both local and international laws. Ultimate beneficial owner (UBO) reporting – compliance with Resolution No 4 of 2023 (as amended) MOCI issued Resolution No 4 of 2023, amended as per Resolution No 41 of 2023, which requires
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