Centralized exchange in Kuwait

Central Bank of Kuwait (CBK): Prohibits the banking sector and regulated companies from trading in cryptocurrencies, facilitating related transactions, and accepting crypto for e-payments. The CBK also leads public awareness campaigns warning consumers about crypto risks.

Capital Markets Authority (CMA): Enforces the absolute prohibition on virtual currencies, ensures public companies do not offer crypto services, and issued the primary ban circular in July 2023.

Kuwait's Insurance Regulatory Unit: Issued a circular contributing to the nationwide prohibition and ensures insurance sector entities comply.

Ministry of Commerce and Industry: Warns consumers about cryptocurrency risks.

Ministry of Electricity: Supports enforcement by monitoring electrical grids to identify illegal crypto mining operations.

Prohibit financial institutions under their supervision from dealing in cryptocurrencies or virtual assets, or providing services related to them.

Do not provide a legal framework for the licensing, supervision, or operation of VASPs.

This circular explicitly prohibits local banks and financial institutions licensed by the CBK from dealing in, or providing any services related to, virtual assets. It cites risks like market manipulation, financial crime, operational risk, cyber security risk, and price volatility.

AML/KYC Compliance: Strict adherence to anti-money laundering (AML) and know-your-customer (KYC) regulations, including customer due diligence, transaction monitoring, suspicious transaction reporting, and record-keeping, in line with FATF recommendations (as Kuwait is a member of the FATF).

Local Presence: Typically, a locally incorporated entity and a physical presence would be required, along with local management and compliance officers.

Capital Requirements: Sufficient capital to ensure the stability and solvency of the VASP.

Cybersecurity & Data Protection: Robust measures to protect customer assets and data.

Consumer Protection: Mechanisms for dispute resolution and transparency.

Law No. 106 of 2013 regarding Anti-Money Laundering and Combating the Financing of Terrorism.

Law No. 37 of 2020 amending Law No. 106 of 2013.

USD/EUR 1,000 (or the equivalent in virtual assets or other currency) for transfers between non-custodial wallets (unhosted wallets) or when one VASP is involved.

No de minimis threshold for transfers between two VASPs. In such cases, full originator and beneficiary information must always be collected and transmitted, regardless of the amount.

Collect and Store Information: Obtain and hold accurate and meaningful originator and beneficiary information (names, account numbers/wallet addresses, physical addresses, national ID numbers/passport numbers, etc.) for virtual asset transfers.

Transmit Information: Transmit the required originator and beneficiary information to the beneficiary VASP (or to the beneficiary directly in the case of unhosted wallets) immediately and securely.

Safeguard Information: Ensure the security and confidentiality of the collected information in compliance with data protection laws.

Screen Transactions: Conduct real-time monitoring and screening of virtual asset transactions for potential AML/CFT risks, including sanctions screening.

Risk-Based Approach: Implement a risk-based approach to identify and mitigate money laundering and terrorist financing risks associated with virtual asset activities.

Record Keeping: Maintain records of all transaction information for at least five years, as per general AML/CFT requirements.

Administrative Sanctions: Imposed by the Central Bank of Kuwait, such as fines, suspension or revocation of VASP licenses, restrictions on operations, and public censure.

Criminal Penalties: Imprisonment and substantial monetary fines for individuals and legal entities found guilty of money laundering or terrorist financing offenses, or for serious breaches of AML/CFT obligations. These penalties can be severe, reflecting the seriousness of financial crimes.

Central Bank of Kuwait Circular No. 2/QR/2023 on AML/CFT Framework for Virtual Asset Service Providers (VASPs) (issued February 28, 2023).

Capital Markets Authority (CMA)

Central Bank of Kuwait (CBK)

Ministry of Commerce and Industry (MOCI)

Note: These regulators acted in concert to issue the prohibition.

Entity Targeted: All regulated financial institutions, including banks, investment companies, financial services firms, and virtual asset service providers (VASPs) licensed in Kuwait. This effectively targets the activity itself within the regulated sector. Violation Type: Engaging in any virtual asset activities, including:.

Issuance, trading, or dealing in cryptocurrencies.

Using cryptocurrencies as a payment method.

Licensing of virtual asset service providers (VASPs).

Penalty Amount: Not a specific fine, but a prohibition. The "penalty" for regulated entities found to be non-compliant with this ban would be regulatory sanctions, including license revocation, operational restrictions, and potentially fines under existing financial laws.

Date: Announced in July 2023.

Outcome: All financial institutions supervised by the CMA, CBK, and MOCI are prohibited from providing virtual asset services or engaging in crypto-related activities. The ban was issued in the context of money laundering, terrorist financing risks, and consumer protection concerns, aligning with the recommendations of international bodies like the Financial Action Task Force (FATF).

Reuters: Kuwait issues blanket ban on crypto use for payments, investments