Kuwait

Last updated: 28/04/2009

CENTRAL AUTHORITY FOR REPORTING

The KFIU operates under the auspices of the Central Bank of Kuwait.

The KFIU works in conjunction with the Office of the Public Prosecutor (OPP) to process and exchange information about suspicious money laundering activity. In particular the KFIU is responsible for the following:

Receiving reports of money laundering transactions from the OPP, analyzing the reports and providing technical opinions to the OPP;
Maintaining a database and statistics with regards to these reports;
Contributing to training and awareness programmes regarding combating money laundering transactions in coordination with the National Committee of Fighting Money- Laundering Transactions and Terrorism Finance and other relevant bodies;
Coordinating with the OPP on the exchange of information and data on both national and international levels.

OTHER ANTI-MONEY LAUNDERING REGULATOR(S)

Central Bank of Kuwait (CBK). CBK is the regulator for banks, investment companies, exchange companies and investment funds. CBK regularly issues instructions and circulars with regard to compliance with Anti Money Laundering (AML) legislation. For instance it has issued Instruction No. (2/BS/92/2002) regarding combating money laundering operations and financing of terrorism.

These instructions set out in reasonable detail specific measures to be taken in order to comply with AML legislation. In case a bank breaches the instructions issued by the CBK, such bank may be subject to various sanctions (under the Central Bank of Kuwait Law 32/1968) including financial penalties and exclusion from the register of banks.
Ministry of Justice - Office of the Public Prosecutor. This office is the implementing authority of the Law Regarding Combating Money Laundering Operations, Law No. 35 of 2002. In accordance with this law, the OPP is authorised to receive reports, freeze assets and prosecute offenders.
Director General of Customs. The DGC is mandated to implement Ministerial Resolution 9 of 2003 which requires travellers to notify customs authorities of any local or foreign currency, gold bullion and goods or precious objects with values that exceed Kuwaiti Dinars (KWD) 3,000.
National Committee For Fighting Money Laundering Transactions and Terrorism Finance. This committee is chaired by the Governor of the CBK and is an inter-ministerial, inter-departmental committee charged mainly with strategic and policy matters in relation to combating money laundering.

ARE LAWYERS COVERED BY ANTI-MONEY LAUNDERING LEGISLATION?

Ministerial Order No. 9 of 2005 sets out the individuals and entities that are subject to Article 2 of the AML legislation. Lawyers are expressly included and are thus subject to the principle legislation i.e. the Law Regarding Combating Money Laundering Operations, Law No. 35 of 2002 and its implementing procedures (set out in Ministerial Order No. 9 of 2005).

LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS.

Law No.35 of 2002. Law Regarding Combating Money Laundering Transactions.

This law sets out the definition of money laundering, criminalizes money laundering operations and enlists the different penalties. Money laundering is defined as:
1. Committing money laundering, knowing the money is derived from an act/ acts of participation in the same,
2. The conversion, transfer, possession, acquiring, using, keeping or receiving money, knowing that the money is derived from a crime or one of the acts of participation therein
3. The concealment or disguise of the true nature of the money, its origin, place, manner of disposition, movement or rights related to it or its possession, knowing that it is derived from a crime or any act of participation in the same.
  
  The OPP is named as the competent authority to receive reports under this law, and solely has the responsibility of investigating and taking action in respect to crimes set out in the law. Article 3 requires banks, investment companies and other financial institutions and individuals determined by a resolution of the Minister of Finance to abide by certain anti-money laundering measures. Ministerial Order No.9 of 2005 was issued in this regard.

Ministerial Order No. 9 of 2005 Regarding the Procedures and Controls of the Execution of Provisions of law No. 35 of 2002.

These are implementing regulations for Law No. 35 of 2002. The regulations provide a detailed list of entities and individuals that are subject to the law. which includes lawyers. The regulations provide a list of obligations including due diligence obligations that apply these entities and individuals. The regulations set out certain penalties for non-compliance and provides for the establishment of the Kuwait Financial Investigation Unit.
Ministerial Decision No. 10/2003

This decision empowers the Governor of the Central Bank of Kuwait to take necessary actions to establish the Kuwait Financial Investigation Unit.
Ministerial Decision No. 11/2004

This decision provides for the establishment of a National Committee for Combating Money Laundering Operations and Terrorism Finance. The committee is chaired by the Governor of the Central Bank, and is comprised of members from the Central Bank of Kuwait, the Ministry of Interior, Ministry of Foreign Affairs, Office of the Public Prosecutor, Ministry of Commerce and Industry, Ministry of Finance, Ministry of Social Affairs and Labour, Kuwait Stock Exchange, General Customs Directorate and Kuwait Banks Union.

The general function of the committee is to advise the state on the general strategy and policy for combating money laundering and terrorism finance, to coordinate with state ministries and institutions related to money laundering operations and terrorism finance, to monitor local, regional and international developments in the field of money laundering and to represent Kuwait in local, regional and international meetings.
Ministerial Resolution No. 9/2003

This resolution requires travellers arriving in Kuwait to notify customs authorities of any local or foreign currency, gold bullion and goods or precious objects that are valued at more than Kuwaiti Dinars (KWD) 3,000 or the equivalent.

ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?

The AML legislation does not distinguish between local lawyers and visiting lawyers. The rules and regulations are applicable in Kuwait and hence are addressed to entities and individuals in Kuwait. While there is no guidance from the relevant authorities, our view is that, as the AML legislation is intended to prevent any attempts of money laundering and terrorism financing in Kuwait, visiting lawyers should be subject to Kuwaiti AML law to the same extent as Kuwaiti lawyers.

Lawyers and other entities/individuals to whom the Law is applicable would be required:

When acting on behalf of their clients, not to open or keep any unidentified accounts, perform any transactions whatsoever, rent safes, keep (among others) bonds, financial or commercial bills, notes, precious jewels or metals in anonymous code or fake names;
When acting on behalf of their clients, not to open any account or perform any transaction that amounts to more than KD 3,000 except after verifying the identity and capacity of the client;
To record and register all financial and non-financial transactions in their official records in accordance with regular systems and maintain such records for at least 5 years;
To report any suspicious financial transaction that may come to their knowledge;
To train their respective staff and officers on a regular basis about new developments in the field of fighting money laundering transactions;
To establish and consolidate internal control regulations;
To observe ministerial orders and instructions related to fighting money laundering transactions.

LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE.

No information available.

IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?

No information available.

DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS.

As previously stated, the Law requires that the identification and capacity of clients be verified. In this regard the following may be reviewed:

Civil identity cards for Kuwait residents;
Passport or travel documents for non-residents;
Commercial licenses issued by the Kuwait Ministry of Commerce and Industry for firms and companies;
Papers, documents, instruments, court judgments evidencing authorization of representatives of companies, firms and individuals;
Official documents for other local authorities and documents issued or certified by the respective authorities of representatives of non-resident firms, corporations and companies.

DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?

No information available.

ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?

No.

ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?

No.

ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.

No informationa available.

WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?

Any suspicious financial transaction in relation to money laundering must be reported. It is also a criminal offence for obligated persons (e.g. Lawyers) to fail to report to the authorities any suspicious financial transactions that has come to their knowledge or who damage or conceal documents or instruments relevant to money laundering crimes.

Accordingly, lawyers are under the obligation to report as soon as they become aware of suspicious transactions. The penalty on conviction is imprisonment not exceeding more than 3 years and/or a fine of between Kuwaiti Dinars (KWD) 5,000 and Kuwaiti Dinars (KWD) 20,000. Additionally, the culprit will be dismissed from his job.

DOES ATTORNEY/CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS?

The law and regulations are silent in this regard. There are no precedents or guidance which would shed light on this issue.

DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?

Under Law 35 of 2002 the court may, at its own discretion, relieve any person from penalties prescribed by the law who, on his own initiative, informs the authorities of a crime and those committing it before the authorities have gotten hold of it.
Further, any person who in good faith reports information according to the provisions of the law is protected from any criminal, civil or administrative liability whether or not reported activities were lawful.

ONCE A SUSPICIOUS TRANSACTION REPORT HAS BEEN FILED, IS A LAWYER ALLOWED TO PROCEED WITH THE LEGAL ADVICE/TRANSACTION, AND, IF SO, MUST CONSENT FROM AUTHORITIES BE OBTAINED FIRST?

No information available.

IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE.

Article 11 of Law 35 of 2002 makes it an offence for someone to disclose information that came to his knowledge through his position regarding any crimes falling under the Law.

DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT.

Basic due diligence would be required before undertaking any transaction for a client that amounts to Kuwaiti Dinars (KWD) 3,000 or more. The lawyer must verify the identity and capacity of the client prior to commencing any actions.

ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE

No information available.

DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION.

No information available.

HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?

No information available.

HAS THE FINANCIAL ACTION TASK FORCE (FATF) CONDUCTED A MUTUAL EVALUATION OF THIS COUNTRY, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF 40+9 RECOMMENDATIONS?

Kuwait is not a member of the FATF. However, it is a member of MENAFATF (an FATF associate body for the Middle East and North Africa) but this body has not yet released a mutual evaluation report of Kuwait.

However, in 2004, the International Monetary Fund released an assessment on Kuwait which included an AML evaluation. The report highlighted the strengthening of AML systems in Kuwait through the enactment of Law 35 of 2002 combined with the implementation of subsidiary rules.

The IMF suggested that the FIU be given greater independence of operation and that lower thresholds for filing STR be incorporated. Yet the report is somewhat outdated, published before certain ministerial decisions, especially the one that expands AML obligations onto lawyers and other non-financial professions, were released. As such the report no longer fully reflects the AML position in Kuwait.

Information provided by:

Ibrahim Sattout

Al-Sarraf & Al-Ruwayeh
(In Association with Stephenson Harwood)
Salhiya Complex
Gate 1, 3rd Floor
Kuwait
isattout@asarlegal.com
www.asarlegal.com

Ezekiel Tuma

Al-Sarraf & Al-Ruwayeh
(In Association with Stephenson Harwood)
Salhiya Complex
Gate 1, 3rd Floor
Kuwait
etuma@asarlegal.com
www.asarlegal.com