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IdentifierCreatedClassificationOrigin
02KUWAIT5465 2002-12-22 07:00:00 UNCLASSIFIED Embassy Kuwait
Cable title:  

KUWAIT: 2002-03 INCSR REPORT (FINANCIAL CRIMES AND

Tags:   SNAR EFIN KU 
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					  UNCLAS KUWAIT 005465 

SIPDIS

STATE FOR INL AND NEA/ARP
JUSTICE FOR OIA, AFMLS AND NDDS
TREASURY FOR FINCEN

E.O. 12958: N/A
TAGS: SNAR EFIN KU
SUBJECT: KUWAIT: 2002-03 INCSR REPORT (FINANCIAL CRIMES AND
MONEY LAUNDERING)

REF: STATE 240035

1.(U) Following is Embassy Kuwait's submission for the
2002-2003 INCSR report. Text is keyed not to specific
questions but to subject headings in reftel.



2. (U) General Questions: Despite its relative wealth,
Kuwait is not considered a major financial center nor a 'hot
spot' for money laundering. Nevertheless, as a matter of
policy and practice, and as a member in the Financial Action
Task Force (through the Gulf Cooperation Council) the State
of Kuwait is taking active measures to combat money
laundering and terrorist finance.



3. (U) Laws and Regulations to Prevent Money Laundering:
Money Laundering related to any criminal activity was
specifically criminalized in February 2002. Even before the
passage of the law, bank regulators had strengthened
'know-your-customer' requirements and other rules designed to
prevent and detect money laundering, such as mandatory
suspicious transaction reporting, mandatory training for bank
officers, and so forth. Such rules apply to all financial
institutions as defined by the Minister of Finance, to
include insurance firms and money exchangers. The new law
imposes reporting requirements for cross-border currency
movements, but the implementing regulations for this are
still being finalized. The new law also envisions the
creation of an interagency Financial Intelligence Unit. To
our knowledge, there have been no arrests or prosecutions
specifically on money laundering or terrorist finance charges
in 2002. However, two terrorist suspects were charged in
late 2002 with "gathering funds for, and financing the
establishment of, military training camps abroad."



4. (U) Terrorist Finance Section: The money laundering law
of 2002 does not specifically cite terrorist financing as a
crime; however, the definition of criminal activity is
sufficiently broad so as to allow such interpretation.
Kuwaiti authorities have complied with their obligations
under UN resolutions to search for and seize terrorist assets
(although none have yet been identified in Kuwait). As
regards the possible misuse of charity funds, the Kuwaiti
government did order the freeze of assets of two overseas
branches of a Kuwaiti charity in January 2002, and is
developing new regulatory and oversight mechanisms to ensure
the transparency and accountability of charity operations.
This includes the creation of a new charity oversight
department in the Ministry of Social Affairs and Labor.
Kuwait is not a party to the 1999 International Convention
for the Suppression of the Financing of Terrorism.



5. (U) Offshore Financial Centers: Kuwait is not considered
an offshore financial center, nor are offshore banks or
financial institutions permitted.



6. (U) International Cooperation: There is no formal
bilateral agreement on record exchanges with U.S.
authorities, although Kuwaiti law permits such cooperation in
response to specific requests on the basis of reciprocity.



7. (U) Asset Forfeiture and Seizure Legislation: The 2002
Money Laundering Law allows the broad seizure of assets
("funds, properties, proceeds and means") as a penalty for
money laundering crimes. The law does not stipulate how
seized assets are to be disposed of.



8. (U) Asset Seizure Enforcement: As the implementing
regulations for the 2002 Money Laundering Law remain
unfinished, there have been no asset seizures under it.
However, the Kuwaiti government is working to develop
effective procedures for tracing and seizing assets within
the banking sector and beyond.
JONES