AML-CFT

Assessment of compliance with AML-CFT requirements is an assurance service provided by an independent auditor. It involves examining and evaluating compliance with anti-money laundering and counter-terrorism financing legislation, as well as the regulations and instructions issued by the regulatory authorities in this regard.

In this context, the State of Kuwait enacted Law No. 106 of 2013 regarding Anti-money Laundering and Combating the Finance of Terrorism, in addition to recommendations issued by Financial Action Taskforce (FATF), an inter-governmental body established in 1989 by the G7 member states.

What is the State of Kuwait’s body tasked with receiving notices related to money laundering and financing of terrorism?

Article (16) of Law No. (106) of 2013, as amended, concerning Anti-Money Laundering and Combating the Financing of Terrorism sets forth that:

A Unit called the “Kuwait Financial Intelligence Unit” shall be established. It shall be an independent legal person and serve as the body responsible for receiving, requesting, analyzing, and disseminating information concerning suspected proceeds of crime or funds related, linked to or to be used for money laundering or terrorism financing according to the provisions of this Law.

What are the regulators in the State of Kuwait tasked with the supervision of AML-CFT?

The State of Kuwait’s regulators concerned with the supervision of AML-CFT are as follows:

What are the mandatory requirements and determinants issued by Central Bank of Kuwait regarding AML-CFT?

The Central Bank of Kuwait issued detailed instructions to its supervised entities regarding AML-CFT, which can be summarized as follows:

1. Banks:

   Circular No. (2/ BS, IBS, 507/2023) dated 16 February 2023 regarding AML-CFT.

2. Finance Companies:

   Circular No. (2/ FC/ 309/2023) dated 23 July 2013 regarding AML-CFT.

3. Exchange Companies:

   Circular No. (2/ ES/ 508/2023) dated 16 February 2023 regarding AML-CFT.

4. E-Payment Services Providers, E-Money Services Providers and E-Payment Systems Operators

   Circular No. (2/ PS/ 529/2023) dated 05 July 2023 regarding AML-CFT.

The AML-CFT instructions include the mandatory requirements and determinants that CBK supervised entities should observe, including but not limited to risk identification and assessment, development and approval of policies, procedures and internal controls, compliance with due diligence measures towards customers and politically exposed persons, suspicious transaction reporting obligations, and record retention requirements.

Does the Central Bank of Kuwait require engaging an audit firm to verify Exchange Companies, E-Payment Services Providers, E-Money Services Providers and E-Payment Systems Operators’ compliance with AML-CFT requirements?

Yes, the Central Bank of Kuwait requires Exchange Companies, E-Payment Services Providers, E-Money Services Providers and E-Payment Systems Operators to engage an audit firm to conduct examination and assessment of compliance AML-CFT requirements.

The required Report should be prepared on a semiannual basis as at 30 June and 31 December of every year, no later than 60 days from the end of the reporting period.

(Reference for Exchange Companies: Circular No. (2/ES/542/2024) dated 18 April 2024 to all exchange companies regarding the engagement of an audit firm to conduct examination and assessment of compliance with AML-CFT requirements)

Reference for E-Payment Services Providers, E-Money Services Providers and E-Payment Systems Operators: Circular No. (2/PS/577/2025) dated 24 April 2025 to all E-Payment Services Providers, E-Money Services Providers and E-Payment Systems Operators regarding the engagement of an audit firm to conduct examination and assessment of compliance with AML-CFT requirements)

What are the mandatory requirements and determinants issued by Capital Markets Authority regarding AML-CFT?

These requirements and determinants are stated in the provisions of the Executive Bylaws of Law No. 7 of 2010 regarding the Establishment of Capital Markets Authority and Regulation of Securities Business, as amended, Module 16: Anti-Money Laundering & Combating Financing of Terrorism.

The AML-CFT mandatory requirements and determinants include but are not limited to developing effective regulations, policies, and procedures, assessing the risks of money laundering and financing of terrorism, applying enhanced due diligence procedures to any client with a high-risk profile, monitoring the business relationship with clients, complying with record retention and suspicious transaction reporting requirements.

Does CMA require engaging an external auditor to verify compliance with AML-CFT requirements by a licensed person?

Yes, CMA requires engaging an external auditor to prepare a report including the evaluation of compliance with all legislative determinants and requirements set forth in AML-CFT Law as well as CMA regulations issued in this regard.

The required report should be prepared on annual basis for the period from 1 January to 31 December of every year, and provide CMA with a copy thereof no later than 31 March of every year as per the following references:

(Reference: Executive Bylaws – Module 16: Anti-Money Laundering & Combating Financing of Terrorism, Article 7.7)

(Reference: CMA Circular No. 13 of 2017 dated 14/12/2017)

What legislation and international standards does the independent auditor adopt in preparing the Assessment of Compliance with AML-CFT Requirements Report?

1. Central Bank of Kuwait legislation and regulations
2. Capital Markets Authority legislation and regulations
3. Legislation and regulations of other administrative and regulatory authorities
4. International Standards on Auditing (ISA)

What is the added value to business entities from Compliance with AML-CFT Legislation Report?

1. Comply with laws, regulations, resolutions, and instructions issued by Central Bank of Kuwait and Capital Markets Authority.
2. Enhance the business entity’s reputation and increase all stakeholders’ confidence.
3. Protect the business entity and its clients from illegal transactions, which may involve money laundering, terrorism financing, or any other criminal activity.
4. Contribute to optimizing the capital market integrity and credibility.

What are the services offered by Baker Tilly Kuwait?

1. Preparing Assurance Report on Examination and Assessment of Compliance with AML-CFT Requirements

   This report should be prepared by Exchange Companies, E-Payment Services Providers, E-Money Services Providers and E-Payment Systems Operators on a semiannual basis as at 30 June and 31 December of every year no later than 60 days from the end of the reporting period.

2. Preparing Assurance Report on Compliance with AML-CFT Legislation

   This report should be prepared by the licensed companies on an annual basis and copy thereof to be submitted to the CMA no later than 31 March of every year.

Why Baker Tilly?

1. Baker Tilly in Kuwait is a member of Baker Tilly International network based in the UK, ranked amongst the top 10 global accounting networks.
2. Auditors in Baker Tilly Kuwait are licensed by Ministry of Commerce and Industry and are registered with the regulatory authorities, e.g., Central Bank of Kuwait, Capital Markets Authority and Insurance Regulatory Unit.
3. Extensive experience in providing AML-CFT service to companies operating across various business sectors in the State of Kuwait.
4. Highly experienced bilingual team with specialized academic qualifications and professional certifications.
5. Commitment to performing AML-CFT engagements according to predefined timelines, with no delays and responsiveness to client requirements.