The Financial Action Task Force has added Kuwait to the grey list, placing the state alongside numerous other MENA jurisdictions, as the UAE exited the list in 2024.
Kuwait’s listing means increased monitoring for money-laundering and terrorist-financing risks.
The decision was taken at the global watchdog’s plenary meeting in Mexico last week.
2024 Concerns
The FATF outlined previous concerns in 2024.
Kuwait has “serious shortcomings” in delivering effective outcomes, including its understanding, investigation, and prosecution of money laundering and terrorist financing.
The report acknowledged the adequate legal and supervisory framework to address illicit finance although this formal listing will put an extra layer of scrutiny on the oil-rich state.
Following the report, FATF said that Kuwait has made “significant progress” on many recommended actions although listings will add pressure to accelerate ongoing reforms.
Possible Measures
The FATF listed two possible pathways to support Kuwait back in 2024.
Enforceable legal measures could help freeze assets, tied to terror or proliferation. Kuwait has a legal framework to implement targeted financial sanctions but lacks the actions necessary to put the law into action.
FATF also listed the need to focus on beneficial ownership, as “supervisors” of banks and other (non-)financial institutions need to “focus more on beneficial ownership.” Knowledge sharing of technical expertise and beneficial ownership information sharing would support this measure.
GCC Context
Kuwait’s listing comes as the UAE exited the grey list back in 2024.
The grey list comes as governance in Kuwait has faced legal delays owing to governance challenges. Kuwait is categorised as a semi-democracy in the GCC.
Kuwait amended property ownership rules to grant expatriates limited rights to own real estate whilst also introducing a 15-year residency track. GCC states are following the UAE on golden visas as a means of increasing FDI inflows.
Exit Plan
Stalled reforms are underway, following the parliamentary deadlock, but this listing will accelerate the impetus on the Kuwaiti authorities to increase enforcement and monitoring of AML and CTF across (non-)financial institutions operating in the country.
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