Kuwait has advanced efforts to curb informal money transfer networks with Cabinet approval of a draft decree-law targeting alternative remittance systems such as hawala.

The Ministry of Commerce and Industry announced Wednesday that the amendment adds a new Article (12 bis) to Commercial Licensing Law No. 111 of 2013.

The ministry described the initiative as a critical move to protect Kuwait’s economic and financial stability. According to officials, alternative remittance systems operate outside regulated banking and exchange channels, posing significant risks due to their lack of transparency and potential for misuse.

Kuwait Enacts Stricter Oversight on Remittances

Hawala-type networks function through unlicensed brokers who accept money in Kuwait and pay an equivalent amount abroad without using any official financial institution. The ministry warned that these networks create an undocumented parallel economy, undermine licensed businesses, and facilitate money laundering or illicit transfers.

The prevalence of such practices “contradicts international compliance standards and weakens the state’s ability to monitor financial flows and ensure their legitimacy,” according to the ministry. Officials emphasized that legislative intervention was necessary.

The newly introduced article bans all unlicensed currency activities within or outside Kuwait, including buying, selling, exchanging, or transferring local or foreign currency. Violators could face up to six months in prison or fines reaching KD3,000.

If offenses are committed through commercial establishments, courts may impose harsher penalties such as business closure, confiscation of funds and equipment involved in violations, and publication of verdicts in the official gazette.

The Public Prosecution now holds authority to investigate and prosecute violations under this amendment.

The ministry stated that this legal change is part of a broader national strategy aimed at strengthening defenses against money laundering, terrorist financing, and other illicit financial activities. By eliminating unregulated transfer channels, authorities aim to improve compliance within the sector and boost confidence among investors and consumers.

The statement noted that no conduct threatening the integrity or security of Kuwait’s financial system would be tolerated. The amendment will be enforced across all sectors without exception in pursuit of a transparent and secure financial environment.