Kuwait Introduces Stricter Penalties for Illegal Currency Exchange

Kuwait has taken a significant step to combat unlicensed currency exchange by approving a draft decree-law that introduces criminal penalties for such activities. During a Cabinet session led by the Prime Minister at Bayan Palace, officials cleared this measure, which aims to address informal trading and hawala-style operations. The proposal will undergo further legal processes before it is enacted into law.

New regulations target unlicensed operators by adding Article (12-bis) to the Law Regulating Commercial Establishment Licenses. According to The Times of India, this new article criminalizes the buying, selling, exchanging, or transferring of local or foreign currency for the public without proper licensing. This restriction applies to transactions conducted in person, via shops, online platforms, or informal networks. Kuwaiti authorities believe that these measures will enhance financial oversight, mitigate money-laundering risks, and protect consumers.

Penalties for Violators and Enhanced Investigative Powers

Under the new guidelines, individuals operating without a license could face up to six months in prison and fines reaching as much as KD 3,000. Businesses found in violation may incur fines ranging from KD 5,000 to KD 20,000. In more severe cases, authorities have the power to shut down shops or branches involved in illegal currency exchange operations. Additional punitive measures being considered include confiscation of equipment and seized funds, as well as the publication of court rulings and administrative sanctions against offenders.

The urgency for these regulations stems from a rise in financial crime alerts. The Financial Intelligence Unit reported receiving 2,241 money-laundering suspicion reports in the latest reporting cycle, with approximately 29%, or around 640 cases, linked specifically to exchange companies. While not all of these involved illegal operators, they highlight the volume of transactions currently under scrutiny.

Government’s Ongoing Crackdown on Financial Crimes

The Ministry of Interior has recently dismantled three networks associated with forged visas, underground remittance channels, and hawala-style transfers, resulting in the arrest of over 20 individuals. This crackdown is part of a broader effort to regulate the financial landscape in Kuwait. Additionally, regulators have conducted inspections of licensed operators, leading to the closure or suspension of more than 130 exchange shops for compliance violations.

Although the informal nature of hawala networks complicates the assessment of the total volume of money flowing outside legal systems, the Kuwaiti government anticipates that the introduction of these new penalties will bolster ongoing efforts to bring currency transactions under more rigorous oversight. These measures reflect a commitment to enhancing the integrity of Kuwait’s financial systems and ensuring consumer protection in an increasingly complex economic environment.