Arab Times, 9 October 2024: The Financial Action Task Force (FATF) has highlighted significant gaps and weaknesses in Kuwait’s system for combating money laundering and terrorist financing.

While Kuwait possesses a sufficient legal and supervisory framework, it faces serious shortcomings in delivering effective outcomes, particularly in understanding, investigating, and prosecuting these types of crimes.

Kuwait demonstrates a basic understanding of money laundering risks at the national level but has a limited grasp of terrorist financing risks.

Authorities need to enhance their understanding by conducting comprehensive assessments of various sectors and the misuse of legal entities.

Although Kuwait has increased money laundering investigations, securing convictions without proving the underlying predicate offense remains challenging.

Most prosecuted cases involve straightforward instances of self-laundering.

Investigations and prosecutions related to terrorist financing appear limited, with many cases failing to result in convictions at trial.

While Kuwait has a legal framework for implementing targeted financial sanctions, the necessary actions to freeze assets linked to terrorism or proliferation are not adequately reflected in domestic law.

Kuwait needs to adopt a more risk-based approach to protect its non-profit sector from potential terrorist financing abuse.

The financial intelligence unit generates information to initiate inquiries and investigations related to money laundering, but investigations into terrorist financing largely rely on foreign intelligence.

Kuwait has made confiscating proceeds of crime a policy objective, and law enforcement has successfully seized valuable assets, including properties and items located abroad.

Banks and larger financial institutions generally possess a solid understanding of their risks and obligations.

However, supervisors in both the financial and non-financial sectors need to concentrate more on beneficial ownership issues, as the lack of understanding in this area means that Kuwait lacks complete and reliable beneficial ownership information.

FATF has provided several recommendations for Kuwait to strengthen its anti-money laundering and terrorism financing framework.

These include updating the risk assessment to encompass a broader range of factors, conducting a comprehensive assessment of the risks of legal entity misuse, considering a wider array of money laundering and terrorist financing methods, investigating and prosecuting various types of terrorist financing activities, identifying potential terrorist financing activities associated with currency movements.

Additionally, ensuring the legal implementation of targeted financial sanctions without delay, proactively using financial sanctions to deprive terrorists of their assets, and publishing a complete list of individuals subject to financial sanctions.

Furthermore, conducting a thorough assessment of terrorist financing risks in non-profit organisations, reviewing and removing barriers that deter non-profit organisations, deepening the understanding of crimes that generate money laundering proceeds, and ensuring authorities have access to legal entity information.

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