Kuwait targets illegal activity in precious metals trade with new guide
The report guides professionals in complying with laws, warning that criminals exploit the sector for money laundering, moving and integrating illicit funds via weak oversight and complex supply chains.
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The guide stresses that the high value and liquidity of precious metals and gemstones make them particularly attractive for concealing and transferring illicit funds, reinforcing the need for stringent compliance and monitoring measures in the sector.
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The precious metals and gemstones sector is deemed medium to high risk. While cash transactions over KD 3,000 were banned in 2016, a 2025 law prohibits all cash dealings, regardless of value.
The Financial Action Task Force (FATF) has identified the precious metals and gemstones trading sector as high-risk for money laundering, terrorist financing, and proliferation financing, Al Jarida newspaper reported. The sector’s appeal stems from the high value of its products, their ease of transport, and their convertibility into cash.
A report by the Ministry of Commerce and Industry, The Anti-Money Laundering and Counter-Terrorism Financing Guide for the Gold and Precious Metals Trading Sector 2025, aims to help professionals understand and comply with relevant laws and guidelines. It highlights that criminals often exploit the sector to store, move, and integrate illicit funds within legitimate frameworks, taking advantage of weak oversight, informal practices, and complex global supply chains.
The guide stresses that the high value and liquidity of precious metals and gemstones make them particularly attractive for concealing and transferring illicit funds, reinforcing the need for stringent compliance and monitoring measures in the sector.
According to Kuwait’s National Risk Assessment, the precious metals and gemstones trading sector is classified as medium to high risk. Although cash transactions exceeding KD 3,000 have been prohibited in Kuwait since 2016, the legal framework was further strengthened in 2025 with a comprehensive ban on all cash transactions in this sector, regardless of value.
Cash-related risks
This prohibition has significantly reduced cash-related risks. However, professionals in the sector must remain vigilant and comply fully by refusing any transaction involving cash, irrespective of its amount. This full prohibition should be incorporated into the sector’s internal controls and procedures.
Risk-based approach
The Financial Action Task Force (FATF) emphasizes risk assessment and the adoption of a risk-based approach (RBA). Implementing an RBA is a dynamic process that involves identifying, assessing, and mitigating money laundering and terrorist financing risks. Procedures must be proportional to the assessed risk, with high-risk areas subjected to enhanced measures, including customer due diligence and transaction monitoring.
High-risk categories
Specific high-risk categories, such as politically exposed persons, high-net-worth individuals, or particular transaction types, require heightened scrutiny to ensure the level of control aligns with the risk identified. The approach is flexible, adapting to the size, type, and complexity of trading activities, aiming to manage rather than eliminate risk.
Traders must consider multiple risk categories to identify and assess money laundering and terrorist financing threats. The guide outlines AML/CFT controls, covering payment and transaction risks, such as unconventional or large cash payments, advance payments from unrelated third parties, and funds routed through high-risk sectors like real estate, automotive, construction, or tourism.
Assessing risks
Dealers are required to evaluate inherent risks—those naturally present in their activities—before implementing internal controls. This includes assessing risks associated with products, services, customers, transactions, delivery channels, and geographical exposure to ensure effective risk management.
Precious metals and gemstone traders must establish and document a clear, justified methodology for identifying both inherent and residual risks. Residual risk refers to the level of risk that remains after internal controls and mitigating measures have been applied.
Consulting reliable and relevant sources
The guide emphasizes that traders should consult reliable and relevant sources when conducting risk assessments to better understand threats and vulnerabilities related to money laundering, terrorist financing, and proliferation financing. A systematic and documented process must be in place when incorporating external sources, and the information used must be current, relevant, and periodically reviewed.
When conducting business risk assessments, dealers should evaluate specific risks associated with their products, services, customers, transactions, and geographic areas. A risk-based approach requires identifying, assessing, and managing these risks, applying enhanced measures for high-risk cases, such as dealing with high-net-worth clients, unusually large or complex transactions, or cash and anonymous methods.
Verifying the identity of the customer and beneficial owner
Customer due diligence (CDD) must be carried out before establishing any business relationship or conducting occasional transactions worth KD 3,000 or more. This includes verifying the identity of the customer and beneficial owner, understanding the business relationship, and confirming the source of funds and wealth, particularly for high-value transactions. If CDD cannot be completed, the transaction must not proceed, and a suspicious transaction report (STR) should be considered.
Continuous monitoring of business relationships is essential to detect changes in customer behavior or transactions inconsistent with known profiles. Merchants must report any suspicious activity immediately and confidentially, without alerting the customer.
The guide also highlights the need to appoint a compliance officer, establish approved internal policies, and comply with targeted financial sanctions. Sector employees bear significant responsibility in detecting and reporting suspicious transactions, ensuring vigilant implementation of CDD, verification of funds, and assessment of unusual transaction patterns. STRs must be promptly submitted to Kuwait’s Financial Investigation Unit, maintaining strict confidentiality.
Product and service risks
Some products and services may pose higher risks due to their value, portability, or lack of traceability, including:
High-value, easily transportable products such as gold bullion or polished diamonds, which can be easily moved and concealed. Gold, in particular, is a concern due to its global liquidity, uniform pricing, and use as an alternative currency. Scrap gold, gold dust, or riverine gold is often produced informally and poses high risks because of the difficulty in assessing and monitoring it.
Counterfeit or stolen goods, including synthetic diamonds marketed as natural or gold with falsified purity.
Used jewelry sold in bulk, which can be difficult to trace, especially when transacted through pawn shops or informal dealers.
Metal accounts, where metals such as gold are stored and traded similarly to cash or banking services, may be less risky when conducted in controlled environments. However, there remains potential for misuse, and these risks must be assessed on a case-by-case basis.
