Kuwait Criminalises Informal Remittance Networks to Tighten Financial Oversight

Kuwait has taken a decisive step to dismantle unregulated money-transfer channels with the introduction of a new Article (12 bis) to the Commercial Licensing Law No. (111) of 2013. The Ministry of Commerce and Industry confirmed that the Cabinet has approved a draft decree-law criminalising the use of so-called “Alternative Remittance Systems” (ARS), commonly known as hawala -- an illicit practice viewed as a significant threat to the country’s financial and economic security.

According to the Ministry, the amendment forms part of Kuwait’s broader strategy to strengthen its national framework for combating money laundering and the financing of unlawful activities. It aims to close informal and unmonitored routes through which funds may be transferred outside the purview of competent authorities.

What Makes ARS a Risk to the Financial System?

The Alternative Remittance System is an informal method of moving funds outside the official financial sector. It depends on individual intermediaries who receive money locally and deliver its equivalent abroad through unlicensed networks -- without regulated banks, licensed exchange houses, or any supporting documentation.

Such practices create a parallel, opaque economy that evades regulatory supervision. This environment facilitates money laundering, enables the movement of funds for prohibited purposes, distorts fair competition with licensed exchange companies, and undermines public trust in the stability and integrity of the national financial system.

The Ministry noted that the expansion of these networks contradicts international compliance standards and limits the state’s ability to track and verify financial flows, necessitating firm legislative intervention.

Criminalisation and Tougher Penalties

Under the newly introduced Article (12 bis), engaging in any unlicensed activity related to currency exchange -- whether buying, selling, or transferring local or foreign currency inside or outside Kuwait -- is strictly prohibited.

Violators may face imprisonment for up to six months and fines of up to KD3,000. Repeat offences, or violations committed through commercial establishments, may attract significantly tougher measures, including closure of the establishment or its branches, confiscation of funds and tools used in the illegal activity, and publication of the court judgment in the official gazette.

The Public Prosecution will have full jurisdiction to investigate and prosecute offences arising under this article, enabling swift and effective enforcement.

Strengthening Confidence and Economic Stability

The Ministry emphasised that amending the Commercial Licensing Law is a critical step in safeguarding Kuwait’s economy from the risks associated with unregulated financial transfers. These new measures are expected to elevate market-wide compliance, reinforce investor and consumer confidence, and bolster national efforts to counter money laundering, terrorist financing, and other illicit financial activity.

Reaffirming its stance, the Ministry stated that it will not tolerate any conduct that endangers the integrity of Kuwait’s financial system or threatens market stability. The criminalisation of alternative remittance systems and the tightening of oversight over unlicensed currency-exchange practices reflect a wider national commitment to ensuring a transparent, secure, and compliant financial environment.

The Ministry concluded by stressing that the law will be applied without exception, noting that protecting the national economy requires full adherence to the legal and regulatory framework governing financial activities -- securing both the stability of the state and confidence across the marketplace.

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