Call for stronger legislation and international cooperation

KUWAIT CITY, Aug 3: In light of the threat of the Financial Action Task Force (FATF) to put Kuwait on the grey list due to money laundering and financing terrorism risks, and the failure of the concerned authorities to put an end to this phenomenon that is considered deadly for national economies; experts who met with the political leadership have agreed on the need to take legislative, procedural and executive steps to stop this destructive phenomenon.

The repercussions of this phenomenon have reached the ‘catastrophic’ level in terms of the national economy, foreign relations, and the classification of Kuwait by international institutions and the entities operating in the country like banks, companies, and investors.

The modus operandi of those involved in money laundering continues to develop like that of drug smugglers; hence, the need for advancements in legislation and follow-up methods to get rid of this phenomenon, which is likely to eliminate the competitiveness of the economy, expel foreign direct investment and illegal accumulation of wealth among people. In separate interviews with the staff of the newspaper, the experts attributed the growing money laundering crimes to the loopholes in the law on criminalizing the act of laundering money.

They urged the government to take new and innovative measures to curb such crimes and activate the role of the Financial Investigations Unit in combating money laundering by taking advantage of the golden reform era that the country is experiencing, which was specified by His Highness the Amir Sheikh Mishal Al-Ahmad Al-Jaber Al-Sabah.

Criminal
Asrar Hayat, an entrepreneur and certified trainer and consultant on the Criminalization of Public Official Bribery Act applied in the United States and Britain, clarified that the increasing number of money laundering cases facilitates other criminal activities, such as drug trafficking and financing terrorism. She stressed that money laundering encourages corruption in public and private sectors by undermining governance and limiting development, in addition to the immense risks and effects that harm Kuwait’s reputation abroad, as it makes investors lose confidence in the country’s economy, especially if it reaches the stage of ‘financial isolation’; meaning the international banks and financial institutions cut their relations with ‘correspondent’ banks in Kuwait.

This, in turn, affects trade and transfers; and exposes banks to high-risk clients and transactions that may lead to financial instability, she warned. She said money laundering operations include manipulating the market by pumping illegal funds, which affects asset prices such as real estate, stocks and others. It leads to economic instability and unfair competition, which enables companies to be involved in money laundering to undermine legitimate commercial activities; prompting their exit from the market, she explained. She warned about the legal and regulatory consequences. “We are afraid that Kuwait will face international sanctions, which will affect its economic and trade relations,” she added.

Economy
Regarding the impact of money laundering on GDP, she pointed out that the economy will decline if money laundering operations continue; as these operations lead to the transfer of resources to unproductive activities and illicit economies, in addition to widening inequality in society, as the returns and benefits of illicit activities will go into the pockets of a small group. “This will exacerbate the imbalance, create income inequality and lead to social tension. The biggest problem is the erosion of people’s confidence in institutions and the government.

Therefore, addressing money laundering in Kuwait requires strong regulatory frameworks, effective enforcement and international cooperation to mitigate the risks and protect the economy,” she explained. Head of Real Estate Appraisers Association Qais Al-Ghanim asserted that money laundering is already rampant in the real estate market even before the Ministry of Justice focused on this issue, as sales were done in cash in the past. “Nevertheless, the decisions of the ministry resulted in certain changes; such that payment is now done through certified checks.

This significantly reduced money laundering operations in the real estate market, but certain legal loopholes remain; thus, the continuation of money laundering operations in one way or another,” he disclosed. He said money laundering was common in the purchase of land, particularly in external areas where payment was made in cash, leading to an unusual increase in prices. He pointed out that land owners received tempting offers, so the sale transaction was completed quickly. “Real estate exhibitions previously witnessed money laundering operations,” he asserted. “Fortunately, the Ministry of Justice’s procedures eliminated the largest part of such operations. We hope the government will take broader steps to address the legal loopholes, as the continuation of money laundering affects social life. This is manifested in the group that did not own anything and then head towards obtaining obscene wealth,” he explained.