Kuwait warns firms to disclose beneficiary data or face hefty fines
The Ministry of Trade, Commerce, and Industry warned that 15,000 to 20,000 companies could face fines up to 500,000 dinars if they do not comply within two weeks with the obligation to disclose beneficiary information.
• The procedure for identifying the actual beneficiary must be implemented in all unlisted closed joint-stock companies and individual institutions, regardless of whether they are known and previously recorded in the records of the Ministry of Trade, Commerce, and Industry or not previously authorized.
• The ministry will scrutinize the statements regarding the actual beneficiary until a complete, accurate, and reliable database on this matter is established and legal measures will be taken if the data is found to be incorrect.
• According to the ‘Trade’ notice posted on the portal of the Anti-Money Laundering and Terrorist Financing Department, a unified message was sent to all violating companies through a user-friendly application.
Similar to a regulatory oversight, the Ministry of Trade, Commerce, and Industry has warned companies that fail to disclose the actual beneficiary’s data. They hinted at the possibility of more severe punitive measures if these companies do not comply within two weeks. These measures could include imposing a financial penalty, which could reach up to 500,000 dinars, as stipulated by Law No. 106 on combating money laundering and terrorist financing, according to Al Rai newspaper.
Responsible sources revealed to Al Rai newspaper that between 15,000 and 20,000 companies of various types received the ‘Trade’ alert on Wednesday, out of approximately 314,000 companies obligated to disclose their information. They noted that the addressed companies do not include entities listed on the stock exchange, as their owners’ data is registered with the Kuwait Clearing Company, which contains “Know Your Customer” information.
The sources stated that, according to the decision driven by the instructions and recommendations of the Financial Action Task Force (FATF), the procedure for identifying the actual beneficiary must be implemented in all unlisted closed joint-stock companies and individual institutions, regardless of whether they are known and previously recorded in the ministry’s records or not previously authorized.
According to the ‘Trade’ notice posted on the portal of the Anti-Money Laundering and Terrorist Financing Department, a unified message was sent to all violating companies through a user-friendly application.
The message stated that “a penalty has been issued—an order that includes compliance with specific procedures—for failing to disclose the actual beneficiary’s data. If the violation continues, a fine will be imposed within two weeks from the date of this notice.”
The actual beneficiary refers to any natural person who possesses or exercises direct or indirect final control over the client, the person on whose behalf the transaction is carried out, or the natural person who exercises ultimate effective control over a legal entity or legal arrangement specified in the decision.
The sources pointed out that implementing this measure assists state regulatory bodies, financial institutions, and certain non-financial businesses and professions in verifying, identifying, and obtaining accurate data and information about the legal entity conducting financial or commercial operations, whether directly or indirectly.
The sources added that the ministry will later scrutinize the statements regarding the actual beneficiary until a complete, accurate, and reliable database on this matter is established. Legal measures will be taken if the data is found to be incorrect, which will strengthen the ‘Trade’systems in combating money laundering and terrorist financing and enhance control over suspicious practices.
Penalties and sanctions
According to Article 15 of Law 106 on Combating Money Laundering and Terrorist Financing, if a financial institution or specified non-financial businesses and professions, or any members of the Board of Directors or executive or supervisory management, violate the provisions stipulated in this Law, its executive regulations, ministerial decisions, and instructions, the regulatory authorities may impose one or more of the following measures and sanctions:
- Written warnings of violation.
- Issuance of an order that includes a commitment to specific procedures.
- An order requiring the submission of structured reports on the measures taken to address the violation.
- Imposition of a financial penalty on the violating financial institution not exceeding 500,000 dinars for each violation.
- Prohibition of the perpetrator from working in the relevant sector for a period determined by the regulatory authorities.
- Restriction of the powers of members of the Board of Directors, members of executive or supervisory management, or its directors and controlling owners, including the appointment of an interim supervisor.
- Removal or request to change members of the Board of Directors and members of the executive or supervisory management.
- Suspension, restriction, or prohibition of the practice of any activity, work, or profession.
- Suspension of the license.
- Withdrawal of the license.
