FATF says there are ‘serious money laundering shortcomings in Kuwait’

The latest news from the Financial Action Task Force (FATF) highlights several issues in Kuwait's efforts to combat money laundering and terrorist financing. According to a recent report, while Kuwait has a solid legal and supervisory framework, it needs to work on effectively implementing these measures.

The FATF report points out that Kuwait adequately understands money laundering risks but lacks a comprehensive understanding of terrorist financing risks. The country has increased the number of money laundering investigations, but securing convictions remains difficult without proving the underlying predicate offence.

Additionally, Kuwait's efforts to freeze assets linked to terrorism or proliferation are not fully supported by its legal framework, making enforcement challenging.

Despite these shortcomings, Kuwait is not currently on the FATF's grey or black lists, but it has been warned to address these deficiencies to avoid potential future listing.

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The world anti-money laundering watchdog has warned that Kuwait faces “serious shortcomings” in implementing effective measures to combat money laundering and terrorist financing.

The Paris-based Financial Action Taskforce (FATF) is a global body that sets standards to prevent money laundering and terrorist financing.

On Tuesday, it said:

• “Kuwait has an adequate legal and supervisory framework to address illicit finance, but has serious shortcomings in delivering effective outcomes, including its understanding, investigation, and prosecution of money laundering and terrorist financing.”
• “Kuwait is a high-income country with low levels of violent crime but faces money laundering risks from crimes that include fraud, corruption, forgery, and offences committed abroad.
• “The country is exposed to terrorist financing risks from terrorist acts and groups operating outside of the country.”

Two FATF public documents are issued three times a year, the “black” and “grey” lists, which identify jurisdictions with weak measures to combat money laundering and terrorist financing. Kuwait does not feature on either list.

As of June 2024, FATF had reviewed 133 countries and jurisdictions and publicly identified 108.

Of these, 84 have since made the necessary reforms to address their anti-money laundering and counter-terrorism financing weaknesses and have been removed from the process.

The UAE and Turkey, which are no longer listed, were among the jurisdictions featured on FATF’s lists in the past.

Syria and Yemen are both on the grey list, which means they are under increased monitoring and working with FATF to remedy their deficiencies.

Iran is one of just three countries on the black list, which means the jurisdiction has “serious strategic deficiencies to counter money laundering, terrorist financing, and financing of proliferation.”

Inclusion or removal from FATF’s lists can change a country's economic fate by encouraging or preventing investment.

Turkey revised its estimates for FDI after its removal from the “grey” list. https://www.agbi.com/economy/2024/08/turkey-ups-fdi-forecast-to-14bn-after-fatf-removal/

The country expects to reach $12 to 14 billion in FDI in 2024, up from $10 billion in 2023.

Banks have been known to close the accounts of their overseas citizens if they live in a “grey list” country. https://www.agbi.com/banking-finance/2023/09/uae-grey-list-uk-banks-close-expat-accounts/

Source:  

(1) Kuwait's measures to combat money laundering and terrorist financing. https://www.fatf-gafi.org/en/publications/Mutualevaluations/MER-Kuwait-2024.html.

(2) Kuwait faces 'serious anti-money laundering shortcomings' | AGBI. https://www.agbi.com/finance/2024/10/kuwait-anti-money-laundering-shortcomings-fatf/.