In a surprising move, Kuwait Capital Markets Authority has confirmed that it will prohibit all kinds of virtual asset transactions in the country. The decision was taken to curb money laundering, terror financing activities in the country says the circular by Capital Markets Authority of Kuwait.
The decision was taken to implement the recommendation of the Financial Action Task Force, a body of several nations that seek to deal with the global financial crimes.
Notice by Capital Markets Authrity
The following Circular 10 of 2023, by Capital Markets Authority has been translated from Arabic to English.
In the context of enhancing efforts to combat money laundering and the financing of terrorism, and based on the study conducted by the National Committee for Combating Money Laundering and the Financing of Terrorism regarding the required commitment in implementing Recommendation (15) of the international requirements issued by the Financial Action Task Force (FATF) concerning dealing with virtual assets, which are defined as assets having a digital representation of their value, tradable or transferable digitally, and can be used for payment or investment purposes, Recommendation (15) obliges considering virtual assets as “property,” “proceeds,” “funds,” “funds or other assets,” or “other corresponding value.” It should be noted that virtual assets do not include digital representations of currency notes, securities, and other financial assets addressed in another part of the Financial Action Task Force recommendations.
We hereby affirm our commitment to the following:
- The absolute prohibition of using virtual assets as a means of payment or recognizing them as a decentralized currency in the State of Kuwait. Therefore, you must refrain from conducting transactions using virtual currencies within the scope of this ban.
- Dealing with virtual assets as an investment tool is prohibited, and hence you must refrain from providing this type of service to any clients.
- Issuing or granting any individual or entity within the State of Kuwait a license to provide virtual asset services as a commercial business on their behalf or on behalf of others is strictly prohibited (besides any licenses issued in this regard previously).
- Securities regulated by the Central Bank of Kuwait and other financial instruments regulated by the Capital Markets Authority are exempt from this ban.
- An absolute ban on all virtual assets/mining activities.
Furthermore, it is required to continually inform your clients about the risks that may arise from dealing with virtual assets (transactions conducted outside Kuwait by clients), particularly cryptocurrencies, as they are not legally recognized or supported by any government and are not tied to any asset or issuing entity. The prices of these assets are also always subject to high volatility.
The measures or penalties stipulated in Article (15) of Law No. 106 of 2013 on Combating Money Laundering and the Financing of Terrorism apply to anyone who violates this circular, without prejudice to the sanctions prescribed by each regulatory authority.
Dr. Ahmed Abdulrahman Al-Mulhim Issued on 17/07/2023.
