CMA, IRU mandate compliance with UN sanctions on arms funding

The Capital Markets Authority (CMA) and the Insurance Regulatory Unit have jointly issued circulars requiring all entities under their supervision to comply with new guidelines aimed at combating the financing of weapons proliferation.

These directives were released in accordance with guidance issued by the Secretariat of the National Committee for Combating Money Laundering and the Financing of Terrorism.

The move aligns with Recommendation No. 7 of the Financial Action Task Force (FATF), which calls for the implementation of targeted financial sanctions pursuant to United Nations Security Council resolutions. The FATF’s recommendation focuses on disrupting the financial networks that enable the proliferation of weapons of mass destruction, reports Al-Rai daily.

The guidelines set forth three main obligations for all legal and natural persons, including financial institutions and designated non-financial businesses and professions.

These obligations include:

• Immediate freezing of all funds and economic resources related to individuals or entities designated under the relevant UN resolutions.
• Absolute prohibition on providing funds or economic resources to such entities.
• Mandatory notification to the Special Committee handling sanctions implementation upon detection of any designated person or transaction.

Failure to comply with these measures may result in severe regulatory penalties. According to the circulars, possible consequences for violations include written warnings of non-compliance; orders requiring adherence to specific corrective procedures; obligations to submit periodic reports on rectifying actions taken; financial fines of up to 500,000 dinars per violation and temporary or permanent suspension from working in the relevant financial or insurance sector.

This is in addition to restrictions on the powers of key personnel including board members and senior management; the appointment of temporary auditors or the removal of executive officials; suspension or full withdrawal of the business license and prohibition from engaging in regulated activities or professions.

The circulars reflect Kuwait’s continued efforts to strengthen its financial system against abuse, in line with international standards. Entities are urged to treat the requirements with urgency and ensure full compliance to avoid regulatory action and reputational harm.