US embassy cable - 02KUWAIT5465

UNCLAS KUWAIT 005465 
 
SIPDIS 
 
STATE FOR INL AND NEA/ARP 
JUSTICE FOR OIA, AFMLS AND NDDS 
TREASURY FOR FINCEN 
 
E.O. 12958: N/A 
TAGS: SNAR, EFIN, KU 
SUBJECT: KUWAIT: 2002-03 INCSR REPORT (FINANCIAL CRIMES AND 
MONEY LAUNDERING) 
 
REF: STATE 240035 
 
1.(U) Following is Embassy Kuwait's submission for the 
2002-2003 INCSR report.  Text is keyed not to specific 
questions but to subject headings in reftel. 
 
2. (U) General Questions:  Despite its relative wealth, 
Kuwait is not considered a major financial center nor a 'hot 
spot' for money laundering.  Nevertheless, as a matter of 
policy and practice, and as a member in the Financial Action 
Task Force (through the Gulf Cooperation Council) the State 
of Kuwait is taking active measures to combat money 
laundering and terrorist finance. 
 
3. (U) Laws and Regulations to Prevent Money Laundering: 
Money Laundering related to any criminal activity was 
specifically criminalized in February 2002.  Even before the 
passage of the law, bank regulators had strengthened 
'know-your-customer' requirements and other rules designed to 
prevent and detect money laundering, such as mandatory 
suspicious transaction reporting, mandatory training for bank 
officers, and so forth.  Such rules apply to all financial 
institutions as defined by the Minister of Finance, to 
include insurance firms and money exchangers.  The new law 
imposes reporting requirements for cross-border currency 
movements, but the implementing regulations for this are 
still being finalized.  The new law also envisions the 
creation of an interagency Financial Intelligence Unit.  To 
our knowledge, there have been no arrests or prosecutions 
specifically on money laundering or terrorist finance charges 
in 2002.  However, two terrorist suspects were charged in 
late 2002 with "gathering funds for, and financing the 
establishment of, military training camps abroad." 
 
4. (U)  Terrorist Finance Section:  The money laundering law 
of 2002 does not specifically cite terrorist financing as a 
crime; however, the definition of criminal activity is 
sufficiently broad so as to allow such interpretation. 
Kuwaiti authorities have complied with their obligations 
under UN resolutions to search for and seize terrorist assets 
(although none have yet been identified in Kuwait).  As 
regards the possible misuse of charity funds, the Kuwaiti 
government did order the freeze of assets of two overseas 
branches of a Kuwaiti charity in January 2002, and is 
developing new regulatory and oversight mechanisms to ensure 
the transparency and accountability of charity operations. 
This includes the creation of a new charity oversight 
department in the Ministry of Social Affairs and Labor. 
Kuwait is not a party to the 1999 International Convention 
for the Suppression of the Financing of Terrorism. 
 
5. (U) Offshore Financial Centers:  Kuwait is not considered 
an offshore financial center, nor are offshore banks or 
financial institutions permitted. 
 
6. (U) International Cooperation:  There is no formal 
bilateral agreement on record exchanges with U.S. 
authorities, although Kuwaiti law permits such cooperation in 
response to specific requests on the basis of reciprocity. 
 
7. (U) Asset Forfeiture and Seizure Legislation: The 2002 
Money Laundering Law allows the broad seizure of assets 
("funds, properties, proceeds and means") as a penalty for 
money laundering crimes.  The law does not stipulate how 
seized assets are to be disposed of. 
 
8. (U) Asset Seizure Enforcement:  As the implementing 
regulations for the 2002 Money Laundering Law remain 
unfinished, there have been no asset seizures under it. 
However, the Kuwaiti government is working to develop 
effective procedures for tracing and seizing assets within 
the banking sector and beyond. 
JONES