As global efforts intensify to fight money laundering and terrorist financing, the State of Kuwait has issued a directive grounded on a study by the National Committee for Anti-Money Laundering and Combating the Financing of Terrorism. This directive is Kuwait's vision of enforcing compliance with Recommendation (15) of the Financial Action Task Force (FATF), an international norm setter in virtual assets transactions.
Virtual assets, as per FATF's delineation, are digital representations of value that can be traded, transferred, and utilized for payment or investment purposes. The State of Kuwait emphasizes the following prohibitions:
The total ban on using virtual assets as a mode of payment or as a decentralized currency within its jurisdiction. All transactions utilizing virtual currencies as a payment instrument are under this embargo.
Disallowing the use of virtual assets as an investment medium. Consequently, service providers are instructed to refrain from offering this service to clients.
The prohibition of issuing or conferring any license to any individual or legal entity within Kuwait for providing virtual asset services for commercial gains or in the interest of others.
Exceptions to these prohibitions are securities governed by the Central Bank of Kuwait and other financial instruments overseen by the Capital Markets Authority (CMA).
Additionally, all activities linked to mining virtual assets or currencies are banned.
In line with safeguarding the interests of clients, the directive necessitates consistent communication regarding the risks associated with virtual assets dealings executed outside Kuwait, particularly cryptocurrencies. These virtual currencies, devoid of any legal status, government issuance, or endorsement and unanchored to any underlying asset or issuer, are susceptible to speculative price fluctuations leading to potential substantial losses.
Violators of the directive will be subject to the measures or penalties defined in Article (15) of Law No. 106 of 2013 on Anti-Money Laundering and Combating the Financing of Terrorism, alongside penalties as per each regulatory authority.
This directive came into effect on 17/07/2023. Link to the primary source.
The information provided is not legal, tax, investment, or accounting advice and should not be used as such. It is for discussion purposes only. Seek guidance from your own legal counsel and advisors on any matters. The views presented are those of the author and not any other individual or organization. Some parts of the text may be automatically generated. The author of this material makes no guarantees or warranties about the accuracy or completeness of the information.
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