Violations, penalties classified in money-wash and terror cases

Arab Times

25-03-2025

KUWAIT CITY, March 25: Minister of Commerce and Industry (MoCI) Khalifa Al-Ajeel has issued Ministerial Resolution No. 25/2025 on the rules and procedures for the matrix of violations, penalties, and corrective measures applicable to Designated Non-Financial Businesses and Professions (DNFBP) concerning combating money laundering and financing terrorism, reports Al-Anba daily. The resolution classifies violations into three risk categories -- low, medium and high with penalties ranging from a written warning to license suspension or revocation and a fine of KD 500 up to KD 10,000.
Resolution
Article One states that in implementing this resolution, the definitions provided in Article One of Law No. 106/2013 on Combating Money Laundering and Financing Terrorism will be adopted, along with additional definitions for the three risk levels as follows:
1. Low-risk violations: These are unintentional violations that do not harm an entity's reputation and are minor.
2. Medium-risk violations: These involve moderate reputational damage.
3. High-risk violations: These are serious violations that present a significant risk to reputation, both locally and internationally. Article Two of the resolution specifies that violations are categorized based on the provisions of Law No. 106/2013, its executive regulations and relevant ministerial decisions; depending on the type and severity of the violation.
Low-risk violations require the application of precautionary measures as stipulated in Article 15 of the law, including the following:
1. Failure to comply with due diligence procedures for invoices under KD 3,000 due to an unintentional error: the applicable measures and penalties are determined on a case-by-case basis. For fewer than 50 violating invoices, a written warning is issued. If more than 50 invoices are in violation; an order will be issued to enforce compliance with specific procedures, accompanied by a one-month license suspension.
2. Failure to implement an ongoing training program for facility employees on anti-money laundering and counter-terrorism financing requirements: the penalty for this violation starts with a written warning. If the violation is repeated, the penalty will escalate to include the requirement to comply with specific procedures and a one-month license suspension.
3. Failure to submit a transaction based on incomplete or inaccurate documents, without any strong indication of suspicious activity: for violations such as missing payment methods, missing electronic payment receipts or incomplete information on invoices; a written warning will be issued. For repeated violations, compliance with specific procedures will be required, and if the violation occurs a third time, the license will be suspended for three months.
4. Failure to comply with other obligations set by the Ministry of Commerce and Industry and the Kuwait Financial Intelligence Unit: the penalty for this type of violation begins with a written warning; and if repeated, the license will be suspended for three months.
For medium-level violations; a fine ranging from KD 500 to KD 3,000 will be imposed as follows:
1. Violation of handling cash exceeding KD 3,000:
If the total number of violating invoices is fewer than 50; a fine of KD 1,000 will be imposed on the total invoices.
If the total number of violating invoices exceeds 50; a fine of KD 3,000 will be imposed on the total number of violating invoices.
2. Failure to appoint a Kuwaiti compliance auditor:
If a Kuwaiti compliance auditor familiar with anti-money laundering (AML) and counterterrorism financing (CTF) laws is not appointed, or if the department is not informed of any updates regarding the auditor's appointment; the following measures will apply:
A commitment to appoint the auditor is required.
In case of recurrence, a fine of KD 500 will be imposed.
3. Failure to implement due diligence for invoices exceeding KD 3,000:
If the total number of invoices is fewer than 50; a fine of KD 1,000 will be imposed.
If the total number of invoices exceeds 50; a fine of KD 3,000 will be imposed.
4. Failure to maintain financial records for five years:
A fine of KD 1,000 will be imposed for failing to maintain financial records for the required five-year period.
5. Failure to terminate customer relationship when due diligence measures cannot be implemented:
If due diligence measures cannot be implemented, the relationship with the customer must be terminated. In case of repeat violation, a fine of KD500 will be imposed.
6. Failure to comply with AML/CTF policies, procedures, systems and internal controls:
Non-compliance with the relevant policies, procedures, systems and internal controls, or failure to disseminate them to local and foreign branches (if applicable), will result in:
A fine of KD 500.
In case of recurrence, the fine will increase to KD 1,000; and the license will be suspended until the violation is corrected.
7. Failure to circulate awareness brochures on AML/CTF to employees:
A fine of KD 500 will be imposed for failure to circulate awareness brochures on combating money laundering and terrorist financing to employees.
In the case of a repeat violation, the fine will be imposed again.
8. Failure to implement an electronic invoicing system:
Using manual invoices instead of implementing an electronic invoicing system will require corrective action.
In the case of a repeat violation, a fine of KD 500 will be imposed.
9. Failure to identify the beneficial owner of a purchase transaction:
A written warning will be issued for failure to identify the beneficial owner and maintain their ownership structure
Violation
In the event of a repeat violation, a fine of KD 500 will be imposed. The report identified grave violations, with fines ranging from KD 4,000 to a maximum of KD 10,000 as follows:
1. Failure to notify the Security Council Resolutions Implementation Committee at the Ministry of Foreign Affairs within three working days after refusing service to a customer due to their inclusion on sanctions lists. This violation results in a fine of KD 5,000 and mandatory adherence to specific procedures. In the case of a repeat offense, the offender will be banned from operating in the relevant sector for one year.
2. Failure to establish a system to inform employees about individuals listed on local and international sanctions lists, and non-compliance with directives issued by the Ministry of Foreign Affairs and the Ministry of Commerce and Industry. This breach results in a fine of KD 4,000 and the implementation of specific corrective actions. For repeat violations, a fine of KD 8,000 will be imposed.
3. Providing a service to a person on local and international sanctions lists constitutes a violation. This leads to a fine of KD 8,000 and requires adherence to specific procedures. In the event of a repeat offense, the business license will be revoked.
4. Failure to notify the Kuwait Financial Intelligence Unit within two business days regarding customer data if there is suspicion that funds are linked to money laundering activities; as well as failing to disclose this to the customer. This violation incurs a fine of KD 5,000. For repeat violations, the fine increases to KD 10,000.
5. Failure to implement enhanced due diligence measures on politically exposed persons: If fewer than 50 invoices are in violation; a fine of KD 4,000 will be applied. For more than 50 violating invoices; the fine increases to KD 8,000. 6. Failure to submit a facility risk assessment study results in a fine of KD 500. If the violation recurs; the fine is doubled to KD 1,000.