now loading...
Wealth Asia Connect Middle East Treasury & Capital Markets Europe ESG Forum TechTalk
Asset Management / Wealth Management
Kuwait urged to do more to fight terrorist financing
Global watchdog finds ‘serious shortcomings’ in understanding, investigating and prosecuting crimes
Peter Starr 10 Oct 2024

Kuwait has an “adequate” framework to address illicit finance but faces “serious shortcomings” in areas such as understanding, investigating and prosecuting crimes, the world’s money-laundering and terrorist-financing watchdog says.

In a statement released in Paris on October 8, the Financial Action Task Force (FATF) says a mutual evaluation report found that the Gulf state is “exposed to terrorist financing risks from terrorist acts and terrorist groups operating outside of the country”.

Kuwait has only a “basic” understanding of domestic money laundering risks a “low” grasp of its terrorist financing risk, the FATF says.

Beneficial ownership

Banks and larger financial institutions have a “good” understanding of their risk and obligations in Kuwait.

But supervisors for both the financial and non-financial sectors “need to focus more on beneficial ownership”.

“A lack of understanding means Kuwait has no complete and reliable beneficial ownership information,” the FATF explains.

The task force urges authorities to refine their understanding of risks, including through comprehensive assessments of the non-profit sector, virtual asset service providers and the misuse of legal persons for money laundering. 

“Authorities face challenges in securing money laundering convictions without proving the underlying predicate offence,” it says. “Most of the prosecuted money laundering cases relate to simple cases of self-laundering.”

As for terrorist financing, “investigations and prosecutions appear limited, with cases often failing to reach conviction at trial”.

No power to freeze assets

“Kuwait has a legal framework to implement targeted financial sanctions for terrorist financing and the financing of proliferation of weapons of mass destruction,” the FATF says.

“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.”

The task force says Kuwait’s assessment of non-profit risks needs to take a more risk-based approach to protect the sector from terrorist financing while not adversely affecting legitimate activities.

It recognizes money laundering inquiries and investigations by Kuwait’s financial intelligence unit. But “terrorist financing investigations are mostly the result of foreign intelligence”, FATF adds.