KUWAIT CITY, Dec 3: The Ministry of Commerce and Industry announced in a press release that the Cabinet has approved a draft decree-law introducing a new Article (12 bis) to the Commercial Licensing Law No. (111) of 2013. This legal amendment represents a decisive step toward criminalizing what is commonly known as “Alternative Remittance Systems” (ARS) or hawala, one of the most dangerous illicit financial practices that poses a direct threat to the country’s financial and economic security. The Ministry explained that this amendment falls within Kuwait’s broader efforts to strengthen its national framework for combating money laundering and the financing of illicit activities, and to close unregulated channels through which funds may be transferred beyond the reach of competent authorities.
What is the Alternative Remittance System, and why is it a Threat?
The Alternative Remittance System is an informal method of transferring funds outside the official financial system. It relies on individual brokers who receive money in Kuwait and deliver its equivalent abroad through unlicensed networks, without passing through regulated banks or licensed exchange companies, and without any formal documentation or financial records. This method establishes a parallel and opaque economy that operates outside regulatory oversight.
It creates fertile ground for money laundering, enables the movement of funds for prohibited purposes, undermines fair competition with licensed exchange companies, and erodes confidence in the stability and integrity of the national financial system. The Ministry stressed that the proliferation of such practices contradicts international compliance standards and weakens the state’s ability to monitor financial flows and ensure their legitimacy—necessitating firm legislative action.
Criminalization and Strengthened Penalties Under the newly introduced
Article (12 bis), engaging in any activity related to currency exchange, whether buying, selling, or transferring local or foreign currencies inside or outside Kuwait, without an official license, is now strictly prohibited. Violations are subject to penalties that may include imprisonment of up to six months and fines of up to 3,000 Kuwaiti dinars. Repeated violations or offenses committed through commercial establishments may result in significantly harsher consequences, including the 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 has been granted full jurisdiction to investigate and prosecute all offenses arising under this article, ensuring swift and effective handling of related cases.
A Core Step Toward Protecting the National Economy
The criminalization of alternative remittance systems and the tightening of oversight over unlicensed currency exchange activities form part of a broader national commitment to building a transparent, secure, and law-abiding financial environment. The Ministry concluded by underscoring that the law will be enforced without exception, and that safeguarding the national economy requires full compliance with the legal and regulatory framework governing these activities— ensuring the stability of the state and the confidence of all market participants.
