Kuwait's Central Bank Increases Vigilance Due to Money Laundering Cases
CBK orders tighter due diligence and potential account closures to protect financial sector integrity
- Publish date: since 15 hour Reading time: two min read
The Central Bank of Kuwait has stepped up its efforts to combat money laundering and related financial crimes by issuing new directives requiring local banks to intensify scrutiny of clients flagged for suspicious activity.
The move reflects heightened vigilance within Kuwait’s financial sector and aims to safeguard the country’s banking system from abuse and reputational risk.
Under the strengthened oversight measures, banks are instructed to apply enhanced due diligence procedures for customers who are under audit or heightened scrutiny, demanding additional documentation and supporting information to verify that transactions are legitimate and in line with regulatory standards.
According to informed sources, if a client fails to provide the necessary evidence substantiating the legitimacy of their funds or transactions within a reasonable period, banks are now required to terminate their banking relationship with that customer. However, the Central Bank has emphasized that customers should not be informed that the closure is linked to suspicions of money laundering or terrorist financing.
Instead, the reason for account closure must be justified using general clauses in the account agreement that grant banks discretion to end relationships without citing specific causes.
The directives form part of a broader anti-money laundering and counter-terrorist financing framework that draws on regulatory instructions issued in February 2023. These standards aim to enhance Kuwait’s compliance with international norms and strengthen the legal and supervisory tools available to the financial sector to address illicit financial flows.
Officials say the measures are designed not only to reduce the risks associated with maintaining ties to clients involved in potentially questionable financial activity but also to limit banks’ exposure to legal liability if suspicious transactions continue without further reporting to authorities.
By tightening due diligence requirements and enabling banks to exit high-risk relationships promptly, the Central Bank hopes to enhance transparency, protect the national financial system, and align with global efforts to deter money laundering and similar crimes.