Kuwait moves to criminalise informal money transfer networks

Kuwait has taken a major step toward shutting down informal money transfer channels, with the Cabinet approving a draft decree-law that criminalises alternative remittance systems such as hawala. The amendment introduces a new Article (12 bis) to the Commercial Licensing Law No. 111 of 2013, the Ministry of Commerce and Industry said on Wednesday.

The ministry described the move as a decisive measure to protect the country’s economic and financial stability. Alternative remittance systems, it said, operate outside regulated banking and exchange channels and therefore present “one of the most dangerous illicit financial practices” due to their opacity and vulnerability to misuse.

Kuwait tightens control on remittances

Hawala-style networks rely on unlicensed brokers who accept money in Kuwait and pay out the equivalent abroad, bypassing any official financial institution. The ministry warned that this creates a parallel economy with no documentation or regulatory oversight, undermines licensed exchange businesses, and provides a conduit for money laundering or the movement of funds for prohibited purposes.

The spread of such practices “contradicts international compliance standards and weakens the state’s ability to monitor financial flows and ensure their legitimacy,” the ministry said, adding that legislative action was essential.

Under the new article, any unlicensed currency activity, including buying, selling, exchanging or transferring local or foreign currency within or outside Kuwait, is prohibited. Violators face up to six months in prison or fines of up to KD3,000.

Offences committed through commercial establishments may attract tougher penalties, such as closure of the business or any branch involved, confiscation of funds and equipment, and publication of the court ruling in the official gazette.

The Public Prosecution has been granted full authority to investigate and prosecute offences arising from the amendment.

The ministry said the legal change forms a core part of Kuwait’s broader strategy to strengthen its defences against money laundering, terrorist financing and other illicit financial activity. By eliminating unregulated channels, authorities hope to increase compliance across the sector and reinforce confidence among investors and consumers.

It added that it would “not tolerate any conduct” that threatens the safety or integrity of the national financial system. The amendment, it said, will be applied without exception in support of creating a transparent and secure financial environment in Kuwait.