State of Kuwait

  • Having perused the Constitution
  • The law No. 15/1960 for issuing the commercial companies law and its amendments.
  • The Penal Law delivered by the law No. 16/1960 and its amendments.
  • The Penal Law of Procedures issued by the Law No. 17/1960 and its amendments.
  • The Law No. 32/1968 in respect of currency, Central Bank of Kuwait and banking profession and the amendments thereof.
  • The Decree Law No. 13/1980 concerning the Customs.
  • The Decree Law No. 23/1990 in respect of organizing the judiciary and its amending laws,

The Parliament adopted the following law provisions and we have ratified and promulgated it.

CHAPTER ONE
Definition of money laundry operations and incriminating it
ARTICLE (1)

Money laundry operations are an operation or a group of financial and non-financial operations aiming to hide or camouflage the illegal source of money or gains of any crime and introducing them in the form of money or gains collected from a legal source. Every act contributes in an operation for employing or transfer of money or gains directly or indirectly resulting from a crime, concealing or camouflaging its source, shall be considered as among such operations.

ARTICLE (2)

Whoever committed any of the following acts or proceeded to commit them shall be considered as committed money laundry crime:

  • Conducting money laundry operation while knowing that it is collected from a crime or through any of the acts contributing thereto.
  • Transport, transfer, possess, acquire, use, keep or receive money while knowing that it is collected from a crime or through any of the acts contributing thereto.
  • Hiding or camouflaging the fact of money, its source, place, the manner of disposal, its movement, the rights related thereto or its ownership while knowing that it is collected from a crime or through any of the acts contributing thereto.

CHAPTER TWO
Obligations of the banking and financial
institutions and government authorities
ARTICLE (3)

Banks, investment companies, exchange organization and companies, insurance companies and other financial institutions and persons who are defined under a decision from Minister of Finance, must comply with the following:

  • Not to keep any accounts of unknown identity or accounts in fictitious or symbolic names or opening such accounts.
  • Verifying the identity of its customers in accordance with official documents issued from the competent authorities in the country.
  • Keeping all documents and instruments pertinent to the dealing it conducted whether local or foreign including copies of ID card of its customers for five years period at least from the date of completing the dealing.
  • Reporting about any suspicious financial dealing came to its knowledge.
  • Adopting a training policy for its officers and workers that secures keeping them informed continuously about developments in the field of money combating money laundry operations.
  • Adopting suitable work procedures and internal control regulations that enable it to detect any of these operations upon its happening and to prevent its exploitation for the purpose of passing suspicious operations.

These financial institutions and persons should fully comply with the ministerial instructions and decisions issued from the Government authorities supervising them concerning the aforesaid provisions and also any other ministerial instructions and decisions connected with combating money laundry operation.

ARTICLE (4)

Every person upon his entry into the country should inform the custom authorities about the national or foreign currencies, gold bullion or any other valuable articles under his possession in accordance with the rules and procedures for which a decision is delivered by the Minister of Finance.

ARTICLE (5)

Attorney General shall specify the competent body in the Public Prosecution to receive notifications about money laundry operations stated under this law.

CHAPTER THREE
Penalties
ARTICLE (6)

Without prejudice to any severe punishment provided for under any other law, whoever commits any of the crimes stated under Article (2) hereof shall be punished by imprisonment for a period not exceeding seven years and a fine not less than one half of the value of money under the crime and shall exceed the whole value of such money and forfeiting the money, property, gains and tools utilized for committing the crime without prejudice to rights of third parties with good faith.

The expiry of the penalties for any reason whatsoever shall not prevent the delivery of a judgment for confiscating the money collected from money laundry operations. In all events in which it is adjudicated for confiscation in accordance with the provisions of this article, the confiscated money shall be disposed of according to the rules and procedures issued by a decision from Minister of Finance.

ARTICLE (7)

The imprisonment penalty stipulated under Article (6) hereof shall be duplicated and the fine punishment shall also be duplicated to not less than the value of the money under crime and shall not exceed the double value of such money and confiscating the money, property, gains and tools utilized in commissioning the crime without violating the rights of good faith third parties if the crime is committed through organized group or committed by the offender exploiting the Authority of his job or influence.

ARTICLE (8)

The Attorney General may order to prevent the indictee from disposing of his money wholly or partially until the penal case is determined. Every concerned party may apply to the competent court contesting the disposal prevention order following the elapse of three months from the date of issuing such order. The court should determine the objection at the earliest either by rejecting, canceling or amending the order and shall specify the necessary guarantees, if required. Objection may not be resumed except after the elapse of six months from the date of determining the objection.

The Attorney General may withdraw or amend the order in accordance with the requirements of investigations.

ARTICLE (9)

The penal case shall not elapse by time limitation – prescription – at any of the crimes stated in Article (2) of this law which shall happen after applying it. The adjudicated punishment shall not elapse by time limitation – prescription – after applying this law in the crimes stated in Article (2) thereof.

The provisions of articles 81, 82 of the penal law may not apply in respect of these crimes.

ARTICLE (10)

The court may exempted from the punishment determined in Articles 6, 7 any of the offenders who took initiative and reported the crime, its doers to the competent authorities before their knowledge thereof.

ARTICLE (11)

Without prejudice to any severe punishment provided for any other law whoever is required to report in accordance with the provisions of Item 4, Article 3 of this law and did not report a suspicious financial dealing came to his knowledge or he disclose information he received due to his position in relation to a crime among those crimes provided for in Article (2) hereof, destroyed or concealed documents or tools related to such crimes shall be punished by imprisonment for a period not exceeding three years and a fine not less than five thousand Dinars and not exceeding twenty thousand Dinars or both punishments with his dismissal from the position.
Without prejudice to the provisions stated in the preceding paragraph, whoever is proved to have failed in carrying out any of the obligations stated in Article (3) of this law, shall be punished a fine not exceeding one million Dinar

ARTICLE (12)

Without prejudice to the penal responsibility of the natural person stated in this law, the individual companies shall bear the penal responsibility for the crimes stated in Article (2) thereof. The Company shall be punished with a fine not exceeding one million Dinar if the crime is committed for its account or in its name by any of its staff, managers, representatives or workers and the court shall adjudicate for canceling the license for practicing the activity if the Company is established for the purpose of committing any of the crimes stated in Article (2) of this law.

In all events, it shall be adjudicated for confiscating the money, property, gains and tools utilized in committing the crime without prejudice to the rights of third parties with good faith and the judgment shall be published in the Official Gazette as well as two daily newspapers.

The penal case shall be commenced against the Company in front of its legal representative in the time of taking the procedures. The Company may be represented by any person holding authorization in this matter as per the law or the Company articles of association. The said representative may not sustain any compulsory procedures other than the procedures taken against the witness.

ARTICLE (13)

Violating the provisions of Article (4) hereof shall be punishable by imprisonment for a term not exceeding one year and with a fine not exceeding one thousand Dinar or either of these two penalties.

ARTICLE (14)

The natural or juridical persons who are in good faith reporting information in accordance with this law shall be exempted from the criminal, civil or administrative responsibility even if appeared that the operations connected with these notifications are sound and not convicted.

ARTICLE (15)

It is shall be fixed under a decision from Minister of Finance the amount of remuneration to be paid to whoever guided, contributed, facilitated or participated in arresting any of money laundry crimes stated under Article (3) hereof.

ARTICLE (16)

The Public Prosecution alone shall undertake investigation, action and prosecution in the reports received by them concerning the crimes provided for herein. Criminal Court in the Court of First Instance shall be competent to hear the said crimes.

CHAPTER FOUR
International Cooperation
ARTICLE (17)

Public Prosecution may, if it received a request from the competent judicial authority at other country, order to trace or detain the properties, gains or tools connected with crimes provided for herein if such crimes are committed in other countries and against their respective laws if there is a bilateral agreement ratified with such country in this connection or according to the reciprocity principle.

ARTICLE (18)

Criminal court may order the execution of any final enforceable judgment issued by a competent court in other country which states the confiscation of money, gains or tools connected with money laundry crime if there is bilateral agreement ratified with such company in this connection or according to the reciprocity principle provided the money confiscated under the foreign judgment shall fall within those permissible to be confiscated in the same conditions according to Kuwait law and without harming the rights of third parties in good faith however, if the foreign judgment contained provisions related to rights of third parties, it shall be binding on the court if such third party has not claimed his rights before the foreign courts.

The criminal court whenever it deems necessary may hear through rogatory letters if needed, the convicted person and all the persons whose rights are related to the confiscated money by virtue of the foreign judgment and these persons may seek the assistance of a lawyer before Kuwait courts. The rules of the procedural law shall be followed before the criminal court hearing the order for executing the foreign judgment.

ARTICLE (19)

Minister of Finance shall issue a decision for the procedures and restrictions required for executing the provisions of this law.

ARTICLE (20)

The Prime Minister and the Ministers – each within his respective field of competence – are to execute this law.


Amir of Kuwait
Jaber Al Ahmed Al Sabah
Issued at Seif Palace dated 26th Zul Hijja 1422 AH
Corresponding to 10th March 2002
Central Bank of Kuwait
Deputy Governor
Date: 17/4/2002
Ref. : 2/105/305
Circular to all local banks, Kuwait Finance House, investment companies, exchange companies and investment funds
Chairman,

Dear Sir,

With reference to law No. 35 of 2002 regarding the fighting of money laundry transactions and its explanatory memo issued 10th March 2002 whereby you should take your internal procedures you deem necessary in the field of execution of the said law provisions.
We refer in particular to the provisions of Article (3) of the said law providing for the banking and financial corporation compliance with a set of stipulation and controls. Any party breaching the same shall be subject to the maximum penalty of Kuwaiti Dinar one million.
Consideration that some of the said law articles are related to the duties and responsibilities of some staff of your bank / company and provide for certain penalties imposed on the said staff if they breach the provisions hereof. It is important that your bank / company should notify all your staff with respect to their job duties and obligations as related to the execution of the said law provisions, for avoidance of any legal accountability of such staff.


With Best Wishes,
Sgd.
Dr. Nabil Ahmed Al Manai
EXPLANATORY MEMO
OF
BILL NO. _______/2002

REGARDING MONEY Laundry fighting

Money laundry operations have become deep rooted in the modern international community and have much exuberated. Therefore, the executive and legislative instructions have become seriously worried in view of such operations harmful effects on economy and morals and breach of equal opportunities rule in view of the accumulation of large and easy fortunes without legal ground or source. In addition, such operations result in the coverage of other crimes in particular drug trade, public security crimes, both local as well as international.

The bill is based on the achievement of the maximum protection of Kuwait society through the completion of existing legislations which lack provisions controlling many such criminal activities, and tracking the funds collected or used in such type of crimes in any form and attachment thereof until the prospective adjudged confiscation of such funds as well as all other penalties and implications.

The bill contains four chapters: The first chapter deals with the definition of money laundry operations and criminalization thereof, the second chapter deals with the determination of banking and financial institutions and government authorities obligations, the third deals with penalties and the fourth deals with international cooperation in the field of fighting these crimes and execution the judgments made in this respect. The provisions contained in these four chapters are as follows:

Article (1) of the bill deals with a general definition of money laundering as financial transaction(s) aiming finally to hide or cover the illegal source of funds and attempting to present them as funds arising from legal source as contrary to the truth.

Thus, article (2) numerated some illegal acts on the basis that each separate act is deemed a component of money laundry crime. Criminal liability includes the commitment, attempted commitment of and participation in such crime. complicity includes agreement, instigation and assistance in committing the crime underlying act as stipulated in Article (48) of the penal code.

As money laundry is usually carried out through financial institutions such as banks, investment companies, exchange firms and insurance companies, Article (3) imposed many obligations on the said institutions, helping in the prevention or elimination of such crimes and contribution to the discovery thereof upon attempted commitment or completion thereof.

Article (4) of this bill provides that the persons entering the country through customs points should notify the customs authorities about the national or foreign banknotes or gold alloys or any other precious items in their possession in accordance with the provisions and procedures issued under the Minister of Finance’s order.

Article (5) provides that the public prosecutor shall nominate the competent body of the public prosecution to receive notifications and reports, on money laundry transactions stipulated herein as the public prosecution is basically competent to receive such notifications and investigate related crimes. This is also for the maintenance of the privacies of information and data received by the public prosecution during the investigation of these crimes, being data related to the bank accounts of natural and corporate persons.

Article (6 & 7) stated the penalties stipulated in Article (2) hereof. The bill emphasized the severity of penalties against the crimes in view of the seriousness thereof.

Article (8) provides that the public prosecution may, order the prohibition of an accused from disposal of his funds in whole or in part until deciding the penal case. It regulates the method of grievance in this regard.

Article (9) provides for three provisions necessary for the serious nature of money laundry crime i.e. non-prescription of penal action in case of any of the crimes stated in the second article hereof or non-prescription of adjudged penalty or the impossible application of the provision of article (81) and (82) of the penal code in respect thereof.

Article (10) contained a provision that the court may exempt any criminal who took the initiative to notify the competent authority about a crime and criminals before such authorities get to know all about it from the penalties stipulated under article 6 and 7 as an incentive to the culprits to make up their mind and notify the competent public authorities and in view of the wish to arrest and penalize the culprits.

Article (11) contains two paragraphs. The first paragraph sets forth the penalty for omission of the notification stipulated in item No. (4) of article 3 and for the disclosure of information and destruction and hiding of documents. The second paragraph sets forth penalty for the breach of other obligations stated in Article (3) (except for the obligation stipulated in item 4). This is a financial punitive penalty (fine of maximum one million Dinar) to be applied to any natural or corporate persons stipulated in Article 3.

Article (12) sets the penal liability of partnerships for commitment of the crimes stated in the second article thereof. In application of this law, partnerships mean all types of trading companies except for public closed joint stock companies. Penalty applicable in this case is a financial penalty i.e. a fine not exceeding one million Kuwaiti Dinar as well as a judgment to cancel the license of respective business if the respective company is founded for the purpose of committing one of the crimes stated in the second article hereof.

Article (13) specifies penalty for violation of the provisions of Article (4) i.e. omission of notifying the customs authorities about banknotes, gold alloys or precious items upon entry into the country.

Article (14) aims to encourage natural and corporate persons to report the suspected financial transactions, by exempting them from any liability (penal, civil or administrative) if his report is made in good faith even if the related transactions prove to be correct and valid thereafter.

Article (15) authorized the Minister of Finance to determine the amount of remuneration to be paid to any one who guided or contributed or facilitated or participated in the discovery of a crime stipulated in Article (2) hereof.

As per Article (6) the public prosecution and penal court shall have exclusive jurisdiction with respect to all crimes stated herein in view of the important and serious nature thereof.

Article (17) permits the public prosecution in Kuwait upon the request of the competent judicial authority of another country having a bilateral agreement with Kuwait in this regard or on the basis of equal treatment rule, to order the perusal or attachment of the properties, proceeds or media related to a crime set hereunder and committed at that country.

Article (18) also provides for the execution method of foreign confiscation judgment made by a competent court at another country in respect of the said crimes if there is a bilateral agreement attested by the said country or on the basis of equal treatment rule.