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  • Writer's pictureWefaq Law Firm

Kuwait Implements Ultimate Beneficial Ownership Regulations for Enhanced Transparency and Compliance

As of April 1, 2023, the Ministry of Commerce and Industry (MOCI) in Kuwait has enforced Resolution No. 4 of 2023 (the "Resolution"), requiring the identification of ultimate beneficial owners (UBO) for all registered entities in Kuwait, with specific exemptions. This legislation aims to improve tax transparency, combat tax evasion, and address money laundering and terrorist financing concerns in compliance with international standards.

The Resolution obligates all legal persons registered or licensed in Kuwait, excluding wholly-owned government entities, to identify, maintain, and file information about their beneficial owners, shareholders, and nominee directors with MOCI and/or any other regulatory authority. Further guidance, including filing mechanisms, is expected to be issued soon.

Key provisions of the Resolution require entities to:

  1. Establish procedures for identifying beneficial owners, obtaining and maintaining accurate and up-to-date information on shareholders, UBOs, and nominee directors.

  2. Notify MOCI of an address to receive information, with foreign entities providing the name and address of their Kuwaiti representative.

  3. Prepare, maintain, and submit the following within 60 days from the Effective Date of the Resolution (by April 1st, 2023): a. Register of ultimate beneficial owners; b. Register of shareholders; c. Register of nominee board members, if applicable; d. Provide MOCI with specific information as required when incorporating an entity or renewing a license.

Entities listed on a recognized stock exchange with disclosure requirements regarding beneficial owners or wholly-owned by a listed company are exempt from collecting UBO information.

Non-compliant entities may face penalties under the Kuwait Anti-Money Laundering and Combating the Financing of Terrorism Law, including denial of license approval or renewal by MOCI. Public access to UBO information will be permitted, and relevant authorities will have access to the information upon request.

The Resolution defines a beneficial owner as a natural person who ultimately and effectively owns, controls, or conducts transactions on behalf of a customer, either directly or indirectly. The beneficial owner can also be a person who exercises ultimate effective control over a legal person or arrangement.

In summary, the implementation of the Ultimate Beneficial Ownership Regulations in Kuwait signifies a major step towards achieving international tax transparency standards, combating tax evasion, and addressing money laundering and terrorist financing concerns. Entities registered in Kuwait must comply with the Resolution's requirements, ensuring proper identification and reporting of UBOs, and updating relevant registers accordingly. As further guidance is anticipated from MOCI, it is crucial for entities to stay informed and collaborate with experienced advisors to ensure compliance with new regulations and avoid potential penalties. By adhering to these regulations, Kuwait will continue to bolster its reputation as a cooperative and transparent jurisdiction within the global financial community.

Wefaq Law Firm proficient in providing guidance on Corporate Commercial and Corporate Structuring matters, as well as assisting clients in fulfilling compliance and regulatory obligations in Kuwait. We are prepared to offer further information on this recent development and support your organization in adapting to the evolving regulatory environment.

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