Kuwait: FATF Report Exposes Weaknesses in Money Laundering Efforts

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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Kuwait: New Digital Platform to Streamline Real Estate Rental Disputes

Arab Times, 6 October 2024: The Justice Ministry is working on creating an electronic platform for real estate rental cases.

This platform will store contracts, rulings, and executive orders related to these cases.

Recent legislative amendments now allow for the development of such a platform, which aims to simplify the resolution of disputes and implementation issues, benefiting the ease of commercial activities related to real estate rentals.

In a related development, a recent legislative amendment to the Criminal Procedures and Trials Law extends the appeal period for misdemeanour and felony cases to 30 days, effective immediately.

Previously, the appeal period for these cases in the Courts of Appeal was 20 days.

Following the publication of the amendment in the Official Gazette, judicial investigation authorities, including the General Department of Investigations, the Public Prosecution, and criminal courts, can now electronically notify and summon parties involved in criminal cases to attend investigations and court sessions.

This will be done using methods approved by the Law of Litigation and Electronic Announcements, including the “MyIdentity” app.

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Kuwait: Issues Regulations for The Exchange of Information for Tax Purposes

Al-Jarida, 28 September 2024: The Finance Ministry has issued executive regulations for the decree-law on the exchange of information for tax purposes, in accordance with Kuwait Decree No. 75/2024 and Kuwait Decree-Law No. 6/2024.

The regulations outline the procedures and requirements for implementing agreements on the exchange of tax information between Kuwait and other countries.

Such as the agreement with the United States to implement the Foreign Account Tax Compliance Act (FATCA), the Convention on Mutual Administrative Assistance in Tax Matters, and the Multilateral Competent Authority Agreement on the Automatic Exchange of Financial Account Information.

The competent authority is empowered to determine reporting requirements, request additional information from financial institutions, and ensure compliance with the agreed standards for exchanging tax-related data.

This legal measure aims to improve transparency and facilitate the exchange of relevant financial information for tax purposes between Kuwait and its partner nations.

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Kuwait: Inspections Reveal Food Violations

Arab Times, 21 September 2024: The Public Authority for Food and Nutrition has revealed a recent inspection campaign has revealed 27 food safety violations.

These included selling food which was unfit for human consumption which included spoilt items with a different shape, colour or smell. Other violations included displaying food outside designated areas, operating as a food establishment with an expired license and transporting food without the necessary authorisation from the authority.

In addition, there were workers handling food without the necessary health certificates and staff who had been employed without the required documentation. Several premises also failed the necessary hygiene standards.

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Kuwait: Biometric Registration Suspends Civil and Bank Transactions

Al-Watan, 19 September 2024: The Interior Ministry has urged citizens to promptly complete the biometric fingerprint process before 30 September 2024.

Failure to do so will result in the suspension of civil cards and all government and banking transactions.
Starting 1 October 2024, fingerprint offices in mall centres will be closed. Citizens must visit designated centres at the Personality Investigation Departments of the General Department of Criminal Evidence, which operate from 8 am to 10 pm daily.

Advance appointments are required through the Sahl application.

For bedridden individuals and those with moderate to severe disabilities, mobile biometric fingerprint devices will be available starting 18 August 2024.

Citizens can send relevant documents to the WhatsApp number 94458124 to schedule an appointment for fingerprinting at their location.

The Ministry aims to enhance services, facilitate security procedures, and reduce hardship for people with special needs, ensuring their access to government services.

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Kuwait: New Decree Issued to Amend Real Estate ‘Rental Law’ in Kuwait

Arab Times, 14 September 2024: Kuwait Law No. 95/2024 has been issued to amend certain provisions of Kuwait Law No. 35/1978 related to real estate rental.

This amendment aims to streamline the legal process for rental disputes and enhance the enforceability of lease agreements.

The amendment requires all pending lawsuits before the Court of Appeal to be referred to the Court of First Instance, except for cases already reserved for judgment, which must be decided within one month.

The lease agreement between the lessor and lessee is now ratified as an enforceable tool for collecting unpaid rent, provided notification is sent to the lessee and a certificate proving non-payment is submitted.

Lease agreements must be in writing, signed by both parties, and specify the full rent amount and designated payment date.

Lease contracts must be documented according to Kuwait Law No. 10/2020 and appended to the executive formula.

Appeals against rulings issued by rental departments must be filed with the Court of First Instance in its appellate capacity.

The decree is effective from the date of its publication in the official gazette, Kuwait Alyoum.

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Kuwait: New E-Sick Leave System Boosts Productivity

Arab Times, 9 September 2024: The implementation of a new electronic system for sick leave for government employees has proven to be a resounding success, leading to significant improvements in productivity and a substantial reduction in visits to primary healthcare centres.

This innovative initiative by the Health Ministry has yielded remarkable results since its launch, aligning seamlessly with the goals of Kuwait Decision No. 29/2023 which amended the rules and provisions of sick leave.

The new system, accessible through the Health Ministry app and the ‘Sahel’ app, has streamlined the process of obtaining sick leave electronically.

This has not only increased productivity within health facilities but also decreased the number of visits to primary care centres substantially.

By the end of March 2024, the system had demonstrated its effectiveness, and this positive trend continued into the second quarter of the year.

Compelling statistics reveal that from October 2023 to June 2024, the total number of visits to primary care centres dropped by an astonishing 2,095,797 compared to the same period in the previous year.

This reduction translates to an average of 232,644 fewer visits per month, marking a significant shift in the management of health resources.

Furthermore, the average number of visits to each primary care centre saw a remarkable decrease of over 2,000 visits per month, reflecting a positive change in the efficiency of medical services.

In the second quarter of 2024 alone, the number of visits to primary care centres dropped by an impressive 17.7% compared to the same period in 2023.

Between April and June 2024, a total of 2,802,755 visits were recorded, compared to 3,404,451 visits during the same period in the previous year.

The data has also highlighted a decline in the number of unnecessary prescriptions and medications dispensed, further contributing to enhanced productivity and reduced costs.

This decline can be attributed to fewer unnecessary visits to healthcare facilities, thanks to the electronic system’s convenience.

The electronic system, which currently issues one-day sick leaves, has been widely embraced by users for its convenience and efficiency.

Employees can now request and receive approval for sick leave via the app, eliminating the need to visit health centres for short-term leave, saving both time and effort.

Evaluations have confirmed that medical staff are highly satisfied with the new system, as it has saved over 50,000 working hours per month.

These hours, which were previously spent processing sick leave requests, are now being redirected to provide higher-quality care to patients, thereby improving the overall quality of health services.

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Kuwait: Commercial Licence Linked to Disclosure of Real Beneficiary

Arab Times, 2 September 2024: The Commerce and Industry Ministry has announced a new legal requirement for companies to disclose their “actual beneficiary” through the commercial registry portal on the ministry’s website.

This measure aims to identify the natural person who holds actual and final control over the company, enhancing transparency and combating money laundering and terrorism financing.

The ministry’s spokesperson has explained that failure to comply with this requirement will result in financial penalties as outlined in Article 15 of Kuwait Law No. 106/2013 on Combating Money Laundering and Terrorism Financing.

All commercial companies registered in the country, except for state-owned and listed companies under the Capital Markets Authority’s supervision, must disclose the actual beneficiary.

The spokesperson has emphasised the importance of this disclosure in improving the country’s business environment, international ranking, and attractiveness for business and investment.

It ensures transparency in economic and financial transactions and provides necessary information to law enforcement, judicial authorities, and regulatory bodies.

To register the actual beneficiary, companies need to provide information such as the name, civil number, email, phone number, address, and passport number for non-Kuwaitis.

The registration process can be completed by visiting the ministry’s website, selecting “Corporate User,” authenticating through the “My Identity” application, and following the steps to finalise the process.

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