Understanding Kuwait’s Anti-Money Laundering Framework in 2025

Wefaq Law Firm
Nov 26
3 min read

Money laundering remains one of the most serious threats to financial systems worldwide, and Kuwait is no exception. Over the past decade, Kuwait has strengthened its legal and regulatory tools to combat the movement of illicit funds and align with international standards. The current framework, anchored by Kuwait Law No. 106/2013 Concerning the Fight Against Money Laundering and Financing of Terrorism, is broad, strict, and designed to ensure that all sectors of the economy play an active role in preventing abuse of the financial system.

This article outlines the key elements of Kuwait’s AML regime as of 2025.

1. The Core Legislation

Kuwait’s primary AML law is Law No. 106/2013, which replaced the earlier 2002 law. It establishes the offences, penalties, reporting duties, and institutional structure responsible for combating financial crime. The law is supported by:

Ministerial Decision No. 37/2013 (Implementing Regulations)
Central Bank of Kuwait AML/CFT Instructions
Sector-specific rules issued by the Capital Markets Authority, Insurance Regulatory Unit, and Ministry of Commerce & Industry

Together, these instruments cover financial institutions, designated non-financial businesses and professions (DNFBPs), and individuals.

2. Definition of Money Laundering

Under Article 2, a person commits a money-laundering offence if they knowingly deal with funds derived from a crime and intentionally:

transfer, convert, or move the funds to conceal or disguise their origin;
hide the true nature, location, ownership, or movement of the funds; or
acquire, possess, or use funds originating from criminal activity.

The law explicitly applies to both natural and legal persons, and liability attaches even when the predicate offence is separately prosecuted.

3. How Kuwait Differs From Other Jurisdictions

Kuwait adopts a broad definition of criminal proceeds, consistent with trends in GCC and international regulations. The law covers all types of criminally derived funds, not only those linked to narcotics or organized crime.

This approach follows the Arab Convention on Combating Money Laundering and Terrorist Financing, which has influenced legislation across the region.

4. Supervisory Authorities and Sector Obligations

Different industries fall under different regulators:

Banks, exchange companies, finance companies, e-payment institutions → Central Bank of Kuwait
Investment companies, brokers, asset managers, funds → Capital Markets Authority
Insurance sector → Insurance Regulatory Unit
Real-estate brokers, precious metals dealers, auditors → Ministry of Commerce & Industry
Lawyers → Kuwait Bar Association

All must comply with due diligence, reporting, and record-keeping obligations, including reporting suspicious activity to the Kuwait Financial Intelligence Unit (KWFIU).

5. Penalties

Kuwaiti AML penalties are intentionally severe:

Imprisonment up to 10 years
Fine from 50% to 100% of the laundered funds
Legal persons may be fined up to KWD 1,000,000 and face restrictions or closure
Enhanced penalties for terrorism-related cases

The law also allows exemptions when individuals voluntarily provide information that prevents or disrupts a crime.

6. Specific Offences and Criminal Property

Concealing, converting, or transferring criminal property forms the core element of the offence. “Proceeds of crime” include funds directly or indirectly obtained from any predicate crime, as well as profits, interest, or any resulting gains.

7. Defences and Good-Faith Protections

A common defence is lack of knowledge. If the accused had no awareness that the funds originated from criminal activity and followed documented due diligence procedures, they may argue the absence of the required intent. Attorneys, accountants, and independent legal professionals are exempt from reporting information obtained under professional confidentiality.

Self-laundering, however, is criminalised.

8. Practical Compliance Requirements

Businesses must maintain:

Written risk assessments
Ongoing customer due diligence (CDD)
Enhanced due diligence for high-risk situations
Periodic updating of AML procedures
Immediate reporting of suspicions to the KWFIU

The supervisory authorities have broad inspection and enforcement powers, including imposing administrative penalties.

9. Amount Involved Does Not Change the Offence

Unlike some jurisdictions that adopt tiered penalties based on value, Kuwait does not differentiate by amount. The same penalty framework applies regardless of whether the case involves small or large sums.

10. Cross-Border and Jurisdiction-Specific Obligations

Kuwait requires financial institutions to ensure that their foreign branches follow Kuwait’s AML rules as much as local laws permit. Regulators also cooperate with foreign authorities to exchange information and coordinate investigations.

Conclusion

Kuwait’s AML framework is comprehensive, strict, and aligned with regional and international standards. The system places significant responsibility on regulated entities and professionals to identify risks, conduct due diligence, and report suspicious activity. As Kuwait continues to develop its financial and commercial landscape, compliance with AML laws is not optional; it's a structural requirement for doing business responsibly in the country.