In response to requirements set by the FATF (Financial Action Task Force) to prevent money laundering through cryptocurrencies, the Capital Markets Authority of Kuwait has introduced a series of prohibitions. The circular issued by the country’s financial regulator on Monday declares a strict ban on the use of cryptocurrencies for payments or investment as a measure to combat money laundering.
Furthermore, the Capital Markets Authority has implemented a complete ban on all digital asset mining and has also disallowed the recognition of cryptocurrencies as decentralized currency. In addition to these measures, the public has been warned that companies are strictly prohibited from offering any kind of crypto-related services.
It’s important to note that these prohibitions do not apply to securities regulated by the Central Bank of Kuwait and other securities and financial instruments that fall under the jurisdiction of the Capital Markets Authority. These specific financial assets are exempt from the aforementioned cryptocurrency-related restrictions.
The restrictions are intended to align with the global recommendations for crypto assets provided by the Financial Action Task Force (FATF). The decision to impose these measures followed a thorough investigation into the sector by the National Committee for Combating Money Laundering and Financing of Terrorism, as stated by the regulatory authority.
While countries are obligated to implement measures to prevent money laundering and adhere to the FATF’s travel rule, which involves collecting and sharing transaction data for transactions above a certain threshold, it’s important to note that the international watchdog did not explicitly mandate countries to ban cryptocurrencies, as reported to CoinDesk in May.
The regulator cautioned the public about the risks associated with volatile and unregulated digital currencies that lack legal recognition. The notice further emphasized that any violations of these prohibitions would lead to penalties.
Kuwait’s Anti-Crypto Move: The Driving Factors Explored
The Central Bank of Kuwait has displayed a negative stance towards cryptocurrencies. As early as 2021, the bank issued a warning advising against crypto investments.
The recent action taken by the Capital Markets Authority (CMA) aligns with Kuwait’s broader efforts to combat money laundering. Reports suggest that the CMA’s restrictions on crypto assets are part of a comprehensive ban across various regulatory bodies in Kuwait. Similar circulars have also been issued by the Central Bank of Kuwait, the Ministry of Commerce and Industry, and the Insurance Regulatory Unit.
However, it is essential to note that the latest prohibitions do not extend to securities and other financial instruments. Nonetheless, the announcement emphasizes that both the Central Bank of Kuwait and the CMA require regulation for these financial entities. The regulator further pointed out that any violations of Kuwait’s Anti-Money Laundering laws would be subject to penalties as outlined in Article 15 of Law No. 106 of 2013.