Kuwait: Some Thoughts on Money Laundering
| Pages | 186-190 |
| Date | 01 April 1998 |
| DOI | https://doi.org/10.1108/eb027186 |
| Published date | 01 April 1998 |
| Author | Ahmed Al‐Melhem |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control —
Vol.
2 No. 2
Kuwait: Some Thoughts on Money Laundering
Ahmed Al-Melhem
INTRODUCTION
Money laundering is not considered a novelty on
the international or local arena, nor has it become
known only recently. What is new in this matter is
the criminalisation of money laundering opera-
tions.
The volume of money laundering operations
through banks as recently as 1996 was estimated to
be $500bn.1 Accordingly, the rules of banking
transactions have transformed or developed from
an almost total prohibition on the disclosure of
banking transactions, ie banking secrecy from not
knowing the customer or the existence of a suspi-
cion of illegality, to revealing suspected hidden
operations and prohibiting the opening of anony-
mous accounts.
There are two ways of defining money launder-
ing crime, the narrow and the wide. The first
stipulates that the laundering is carried out
through a financial institution and that the money
is derived from committing a serious crime, and
that the person handling the laundering is aware of
it. Meanwhile, the second method does not
require the laundering to be carried out through a
financial institution or that the money be derived
from committing a serious crime, and is satisfied
with the doubt on the probability that the money
is derived from a crime. This article will examine
first the problem of the place of occurrence of
crime from which the illegal funds are derived and
secondly, the obligation of informing the con-
cerned authorities where there is suspicion in a
certain operation and thirdly, the extent to which
the provisions of the Money Laundering Control
Act of Privacy Rights is breached.
The problem of the location
Money laundering crime occurs in the event of
concealing the source of the proceeds of a crime,
or where there is a suspicion of the same. The
problem arising here is in the case of commission
in a country which considers the act as a crime,
and then transferring the proceeds from this crime
to another country for laundering where the other
country does not consider the act as a crime under
its legislation. Is it possible to say that the money
laundering crime occurred in the other country?
An example of this situation is an American citi-
zen's tax evasion where money transferred to
Kuwait for laundering is not considered as a crime
in Kuwaiti legislation, or vice versa. If the act
occurs in the USA, and it was legal gambling, for
example, and then the money is transferred to
Kuwait, is banking the money considered an illegal
process because gambling is illegal in Kuwait?
It is of extreme significance, therefore, when a
legislative solution is found through an inter-
national agreement or where the same has been
stipulated in national legislation, as in Swiss law
where the crime from which the illegitimate
money proceeds must be one of the acts con-
sidered as crime from the principles established
internationally, such as drug trafficking; or con-
sidered as crime in the country where it occurred
as well as in Switzerland where the money laun-
dering was carried out.
A problem arises, however, if the crime is con-
sidered serious in the country where it occurred,
but only as a misdemeanour in the laundering
country. This could require the regulation of this
matter by international agreement.
The legal position in Kuwait
The Kuwait Central Bank issued instructions No.
2-RB-50-1997, dated 10th November, 1997, con-
cerning the enforcement of some of the 40 recom-
mendations for controlling money laundering and
other questionable operations, pursuant to the pro-
vision of Article 71 of the Law No. 32 of 1968.3
DUTY OF INFORMING
Any financial institution is under an obligation to
report to the concerned authorities (Central Bank)
without delay the existence of the suspicion of
illegitimacy surrounding an act intended for trans-
action with it, such as opening an account or
depositing cash. Most legislation requires the con-
cerned authority to verify the report and it may
postpone completion of the operation for a speci-
fied period, for example 12 hours. This period may
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