In a coordinated move to strengthen the integrity of Kuwait’s financial system, the Central Bank of Kuwait, the Capital Markets Authority, and the Insurance Regulatory Unit have issued a comprehensive guide requiring all supervised financial and banking institutions to conduct systematic assessments of business risks related to money laundering, terrorist financing, and the financing of weapons proliferation.
The guide, divided into eight core sections, mandates that entities under regulatory oversight evaluate the risks associated with their operations, clients, services, and geographic exposure. The objective is to help institutions adopt robust strategies for mitigating financial crime and complying with anti-money laundering (AML) standards, reports Al-Rai daily.
Regulators emphasized that implementation of the guidelines will be monitored through inspections, and that institutions must align with international standards, particularly those issued by the Financial Action Task Force (FATF).
The guidance is also meant to help entities detect complex schemes involving concealment of beneficial ownership, corruption, tax fraud, sanctions evasion, and other illicit activities.
Institutions are expected to conduct periodic reviews of their Business Risk Assessment (BRA), especially when there are significant changes to their operations, customer profiles, or exposure to risks.
Risk levels should be classified as high, medium, or on a sliding scale, and should inform key decisions on resource allocation and risk mitigation strategies.
Key risk areas outlined in the guidance include:
- Structural risks related to ownership, governance, and operational complexity.
- Customer risks involving client types, sectors, transaction behaviors, and exposure to high-risk individuals or entities.
- Product and service risks, particularly those with complex or high-volume transaction profiles.
- Delivery channel risks, including the use of digital platforms and third-party intermediaries.
- Geographic risks, especially in jurisdictions with weak AML controls.
- Technology-related risks, such as digital assets and emerging fintech tools.
Risk mitigation measures highlighted include rigorous customer due diligence, transaction monitoring, customer screening, employee training, and maintaining strong internal controls.
Institutions are also required to develop clear customer acceptance policies and frameworks for evaluating high-risk engagements.
The regulators noted that effective use of the BRA tool will allow institutions to make informed decisions, maintain regulatory compliance, and play a stronger role in protecting Kuwait’s financial sector from abuse.
