KUWAIT: Kuwait has moved to sharply tighten oversight of financial activity, with the Cabinet approving a new decree-law that criminalizes unlicensed money exchange operations and informal “alternative remittance systems” such as hawala, which authorities say pose a direct threat to the country’s financial stability.
During its meeting chaired by HH the Prime Minister Sheikh Ahmad Al-Abdullah Al-Ahmad Al-Sabah at Bayan Palace on Tuesday, the Cabinet endorsed a bill imposing penalties on anyone who buys, sells, exchanges or transfers local or foreign currency without an official license. Offenders face up to six months in jail, fines of up to KD 3,000, or both, Deputy Prime Minister and Minister of State for Cabinet Affairs Shareeda Maousherji said. He added that unlicensed shops or branches may also be shut down.
On Wednesday, the ministry of commerce and industry announced the approval of a draft decree-law introducing article (12 bis) into the commercial licensing law no. 111/2013, formally criminalizing unregulated remittance networks known as alternative remittance systems. The ministry described these systems as “one of the most dangerous illicit financial practices”, warning they create a parallel, undocumented economy that allows funds to move across borders without oversight, enabling money laundering, terrorism financing and other illegal activity.
According to the ministry, hawala networks rely on individual brokers who transfer money outside the official banking system, bypassing licensed exchange companies and operating without financial records. Their expansion, the ministry said, undermines competition, weakens trust in the national financial system and violates international compliance standards.
The newly introduced article strictly prohibits any currency exchange or transfer activity conducted without a license, whether inside or outside Kuwait. Violations may result in imprisonment, fines, closure of commercial establishments and confiscation of funds and tools used in the illegal activity. Court rulings may also be published in the official gazette, and the public prosecution has been granted full authority to investigate and prosecute related offenses.
The ministry stressed that the amendment is a key part of Kuwait’s national strategy to combat money laundering and protect economic security. The strengthened penalties and expanded oversight aim to boost market compliance, enhance investor and consumer confidence, and ensure that all financial transactions fall under proper regulation. Affirming that it will not tolerate any practice that threatens the integrity of the financial system, the ministry said the law will be enforced without exception, noting that safeguarding the national economy requires full adherence to the state’s regulatory framework. – Agencies
