In its recently released report, the State Audit Bureau placed responsibility on the Ministry of Commerce and Industry for the emergence of a real estate fraud case.
This case allowed certain real estate companies to engage in deceptive practices, such as fraudulently marketing properties they did not own, conducting money laundering schemes, and perpetrating real estate fraud, resulting in financial losses for a majority of their clients, many of whom are citizens, reports Al-Qabas daily.
The Bureau assessed the losses suffered by those affected by real estate fraud in Kuwait to be as high as 890 million dinars. They highlighted the Ministry of Commerce and Industry’s lack of commitment to enforcing Ministerial Resolutions, specifically No. 293 of 2013 concerning the organization of real estate exhibitions, No. 252 of 2016, and No. 639 of 2017, which pertain to the marketing, promotion, and sale of real estate and land.
In response to the Bureau’s observations, the Ministry of Commerce and Industry contended that it had not verified the accuracy of the mentioned financial amount.
Additionally, the Ministry clarified that the implicated companies had not conducted any exhibitions in recent years and had not engaged in any new exhibitions involving individuals facing accusations since 2017.
Furthermore, the Ministry emphasized its commitment to enhancing safeguards by introducing Ministerial Resolution No. 224 of 2019, which amended Ministerial Resolution No. 639 of 2017 regarding the regulation of real estate exhibitions.
This amendment was enacted to protect the financial interests and assets of both citizens and residents. One significant addition to Article Five of Ministerial Resolution No. 639, as per Clause No. 8, mandates the submission of a declaration from a Kuwaiti lawyer certified by the Kuwaiti Bar Association as a guarantee.
In case of foreign property:
1 – The integrity of all ownership documents for the offered property and the validity of the certifications received on them from the official authorities in the country in which the property is located.
2 – The offered property is free of any violations, financial claims, government dues, or any restrictions or real rights that prevent ownership registration.
3 – The suitability of the vacant land offered for construction on and the possibility of obtaining the necessary licenses for that from the official authorities in the headquarters country.
In case of the internal real estate:
1 – The existing building conforms to the plans issued by the Kuwait Municipality.
2 – There are no violations on the property that prevent it from being registered.
3 – The property is free of real rights (original or consequential), such as mortgage, lien, and any official or private entitlements or debts.
4 – The property is free of any restrictions or legal procedures such as seizure and prohibition of disposal.
The Ministry of Commerce and Industry added that it had issued Ministerial Resolution No. 191 of 2020 to amend some articles of Ministerial Resolution No. 252 of 2016.
In its observation, the Audit Bureau monitored the work of the Ministry of Commerce and Industry; the Ministry’s lack of tight control over money laundering operations in real estate activity due to the Ministry’s delay in implementing the real estate broker’s documents to complete the process of mechanizing real estate deals.
The Bureau stated this, and requested the necessity of the Ministry applying the electronic real estate broker’s book and automating real estate activities to reduce suspicious sales.
For its part, the Ministry of Commerce stated due to technical reasons, the process of issuing the electronic intermediary book has been postponed, noting that the Public Authority for Civil Information which is the body entrusted with the work of the program, has nearly completed the linking processes with government agencies, and the electronic intermediary system will be launched in the near future, provided that it will be at intervals, starting with the first phase with transactions.
Concerning free (personal) documents, and then at another stage the mortgaged documents, and then the heirs’ documents and other transactions according to the nature of each property, whether commercial or investment. Thus, control over real estate transactions will be tightened and the manipulation of real estate brokers in sales processes will be reduced.
The Bureau emphasized its observation and the need to expedite taking serious measures and work to complete the mechanization that requires linking government agencies related to this issue to tighten control over real estate sales operations and benefit from what is done in this regard.
