Kuwait Imposes Fines of Up to 10,000 Dinars for Money Laundering Violations

Arab Times

24-03-2025

KUWAIT CITY, March 24: The Minister of Commerce and Industry, Khalifa Al-Ajeel, issued Ministerial Resolution No. 25 of 2025, outlining rules and procedures for violations, penalties, and measures related to designated non-financial businesses and professions (DNFBPs) concerning the fight against money laundering and terrorist financing. The resolution introduces a framework with three levels of violations: low, medium, and high risk. Penalties for violations include written warnings, license suspensions or withdrawals, and fines ranging from 500 to 10,000 Kuwaiti dinars.
Article 1 of the resolution incorporates the definitions set out in Article 1 of Law No. 106 of 2013 on Combating Money Laundering and Terrorist Financing, with additional definitions for the three levels of violations: low-risk violations, which are unintentional, pose no reputational harm, and are limited in nature; medium-risk violations, which cause moderate reputational damage; and high-risk violations, which cause significant reputational harm both locally and internationally.
Low-risk violations are detailed under Article 2 of the resolution, based on Law No. 106 of 2013, its Executive Regulations, and related ministerial decisions. Common low-risk violations include failure to comply with due diligence for invoices under 3,000 dinars. This violation, often due to unintentional errors, is addressed on a case-by-case basis. If fewer than 50 invoices are involved, a written warning is issued, and for more than 50, the license is suspended for one month. Other low-risk violations include failure to implement an ongoing training program for employees, failure to submit accurate transaction documents, and failure to comply with other obligations. Penalties range from written warnings to license suspension for up to three months in the case of repeated violations.
For medium-risk violations, penalties range from 500 to 3,000 dinars, depending on the severity of the offense. These violations include handling cash amounts exceeding 3,000 dinars. For fewer than 50 violating invoices, a fine of 1,000 dinars is applied, and for more than 50 invoices, the fine is 3,000 dinars. Other medium-risk violations include failure to appoint a Kuwaiti compliance auditor, failure to implement due diligence procedures for invoices exceeding 3,000 dinars, failure to maintain financial records for five years, and failure to terminate relationships with customers when due diligence measures cannot be applied. Repeated violations lead to increased penalties.
High-risk violations, the most severe category, carry penalties ranging from 4,000 to 10,000 dinars. Key high-risk violations include failure to notify the Security Council Resolutions Implementation Committee about customers included on sanctions lists. The penalty for this violation is a fine of 5,000 dinars, with repeat offenders potentially being banned from operating in the relevant sector for up to one year. Other high-risk violations include failure to establish a mechanism for notifying employees of sanctioned individuals, providing services to individuals included on sanctions lists, and failure to notify the Kuwait Financial Intelligence Unit about transactions involving potentially illicit funds. Penalties for these violations range from fines of 4,000 to 10,000 dinars, depending on the severity and recurrence of the offense.
Additionally, violations for failure to submit a facility risk assessment study will incur a fine of 500 dinars, with the penalty increasing to 1,000 dinars for repeated offenses.
This Ministerial Resolution establishes a comprehensive framework for penalizing violations related to money laundering and terrorist financing, reinforcing Kuwait's commitment to strengthening its financial and regulatory systems.