Kuwait’s Administrative Risk-based Model for the Prevention of Money Laundering: Costs and Benefits of Compliance with the Financial Action Task Force (fatf) Standards

Abstract

During the period from 2013-2015, Kuwait adopted the new administrative risk-based anti-money laundering and combating the financing of terrorism (aml/cft) regulatory framework. This article analyses the costs and benefits of the compliance of the new framework with the fatf’s standards, focusing on the structural changes: (1) a move from a hybrid-prosecutorial to a fully-fledged administrative model of financial intelligence unit; (2) adoption of the risk-based approach to the prevention of money laundering and terrorist financing (ml/tf); and (3) the increase in reporting obligations and preventive measures. The main argument advanced in the article is that while the new framework is highly compliant with fatf standards and will maintain the already low level of ml/tf in Kuwait, in comparison with the pre-2013 anti-money laundering regulations, the costs of compliance for reporting parties and clients are higher, and outweigh the benefits. The article suggests how to respond to this and other challenges.