The Ministry of Commerce and Industry announced that the Cabinet has approved a draft decree-law introducing a new Article 12 bis to the Commercial Licensing Law No. 111 of 2013. The amendment aims to criminalize "Alternative Remittance Systems" ARS, commonly known as hawala, which are considered one of the most dangerous illicit financial practices posing a direct threat to Kuwait's financial and economic security. This move aligns with the country's broader efforts to strengthen its national framework for combating money laundering, terrorist financing, and other illicit activities, while closing unregulated channels for transferring funds beyond the reach of authorities.
Alternative Remittance Systems operate as informal methods of transferring money outside the official financial system. These networks rely on individual brokers who send funds abroad without using licensed banks or exchange companies, often without any formal documentation or financial records. Such practices create a parallel, opaque economy that facilitates money laundering, enables the funding of prohibited activities, undermines licensed exchange companies, and erodes confidence in the national financial system. The proliferation of these systems contradicts international compliance standards and hampers the state's ability to monitor financial flows effectively.
Under the newly introduced Article 12 bis, any activity involving the exchange, purchase, sale, or transfer of local or foreign currency without an official license is strictly prohibited. Violations may result in imprisonment of up to six months and fines of up to 3,000 Kuwaiti dinars. Repeated offenses or violations committed through commercial establishments carry harsher penalties, including closure of the business, confiscation of funds and tools, and publication of the court judgment in the official gazette. The Public Prosecution has full authority to investigate and prosecute violations to ensure swift and effective enforcement.
