Enhancing Legislative Framework for Combatting Money Laundering

Money laundering crimes, being among the most serious economic crimes, directly affect the reputation of companies and hinder their continuity, in addition to their greater impact on the stability of financial and commercial markets worldwide.

Therefore, protecting companies from falling into the trap of exploitation by being used as channels for money laundering is not limited to administrative or regulatory aspects. Rather, it fundamentally depends on adherence to the legal framework established by the State and strict compliance with the controls it contains.

The fact that banking and financial institutions are the primary targets of financial exploitation and money laundering, as they represent the gateway to the financial system, does not mean that commercial companies are immune to such exploitation. These companies may be used as fronts to legitimize funds entering the financial system.

For this reason, Law No. (106) of 2013 regarding Combating Money Laundering and Terrorism Financing and its Executive Regulations established a comprehensive system of controls and preventive measures to limit the commission of such crimes through deterrent penalties. It also defined the legal boundaries of corporate liability, whether for financial institutions, commercial entities, or others. Kuwait further strengthened the legislative framework of this law through the amendments introduced by Decree-Law No. 76 of 2025.

In light of these controls, the law grants companies several powers to protect themselves from exploitation or from being implicated in financial crimes. Chief among these are the right to verify clients’ identities, examine their official documents, and identify the ultimate beneficial owner of transactions, in addition to retaining client data and records of their transactions for a period of no less than five years. These records serve as legal evidence that protects the company in cases of legal disputes or accountability.

Among the organizational and legal safeguards is the necessity of prompt reporting of any suspicious transactions prior to their completion, as well as the establishment of an internal department specialized in risk monitoring and in supervising the implementation of anti-money laundering policies. Internal policies form part of the company’s legal protection framework; drafting an internal anti-money laundering regulation enables the company to clearly define responsibilities and facilitates proof of compliance with legal obligations. Moreover, training employees to recognize indicators of suspicion and documenting training programs are essential evidentiary elements before courts and regulatory bodies.

It is also necessary to emphasize cooperation with regulatory authorities. From a legal perspective, immediate compliance with the instructions and decisions issued by the Central Bank, the Ministry of Commerce, and other competent authorities—and refraining from delaying the provision of requested information—protects the company from suspicion of collusion or concealment.

With respect to legal liability arising from non-compliance with the obligations set forth in the law, failure to adhere fully exposes the company to a range of liabilities, starting with criminal liability, including heavy financial penalties that may reach millions of Kuwaiti dinars, in addition to imprisonment penalties for responsible officers in cases where collusion or negligence placing them within the scope of the law is established.

There is also civil liability, represented by claims for compensation brought by affected parties or business partners whose interests have been harmed due to the company’s involvement in suspicious operations, in addition to administrative liability, through the imposition of regulatory sanctions such as suspension or revocation of licenses, withdrawal of accreditation, or the imposition of restrictions on business activities.

In general, it can be stated that the legal protection of financial and commercial companies in Kuwait from the risks of being exploited in money laundering operations requires strict compliance with legislative controls, periodic risk assessments, and timely reporting of suspicions. When a company establishes an effective compliance system, it achieves multiple benefits that extend beyond legal protection — it also enhances corporate reputation and strengthens the confidence of partners and clients, thereby ensuring continuity within a clean and transparent commercial environment free from suspicions of money laundering and other financial irregularities.