Kuwait’s financial watchdog, the Capital Markets Authority (CMA), has taken strict measures to combat money laundering through cryptocurrencies. In accordance with the requirements set by the Financial Action Task Force (FATF), the CMA has issued a circular prohibiting crypto transactions, investment, and mining.
The CMA’s ban on the use of cryptocurrencies for payments or investment aims to eliminate the risks associated with volatile and unregulated digital currencies. This move is crucial to safeguarding the financial system from potential instances of money laundering.
Moreover, the complete ban on digital asset mining serves as a deterrent against the illicit generation of cryptocurrencies. By disallowing the recognition of cryptocurrencies as decentralized currency, Kuwait aims to curb their usage and prevent potential misuse.
To ensure full compliance, the CMA has warned companies against offering any kind of crypto-related services, with strict penalties outlined for violations. These measures are part of Kuwait’s broader efforts to combat money laundering and align with global recommendations for crypto assets as provided by the FATF.
However, it is important to note that the prohibitions do not extend to securities regulated by the Central Bank of Kuwait and other financial instruments falling under the jurisdiction of the CMA. These specific financial assets are exempt from the cryptocurrency-related restrictions, highlighting the need for proper regulation in these sectors.
The Central Bank of Kuwait has previously expressed a negative stance towards cryptocurrencies, issuing warnings against crypto investments in the past. The recent actions taken by the CMA in collaboration with other regulatory bodies reflect Kuwait’s commitment to strengthening its anti-money laundering efforts across different sectors.
In order to ensure the effectiveness of these measures, the National Committee for Combating Money Laundering and Financing of Terrorism conducted a thorough investigation into the sector. The findings likely influenced the decision to impose the ban on crypto transactions, investment, and mining.
It is important to clarify that while the FATF requires countries to implement measures to prevent money laundering, it does not explicitly mandate banning cryptocurrencies. Kuwait’s decision to do so aligns with its own assessments and efforts to mitigate potential risks and protect its financial system.
Overall, the CMA’s latest circular serves to protect the Kuwaiti economy from potential money laundering risks associated with cryptocurrencies. By instituting these prohibitions, Kuwait is signaling its commitment to combating illicit activities and ensuring the security and integrity of its financial markets.
