Kuwait curbs illegal currency exchange with stricter penalties

Kuwait has approved a draft decree-law that introduces criminal penalties for unlicensed currency exchange, aiming to curb informal trading and hawala-style operations. The Cabinet cleared the measure during a session chaired by the Prime Minister at Bayan Palace. The proposal will proceed through further legal steps before it becomes law.

New rules target unlicensed operators

The draft adds Article (12-bis) to the Law Regulating Commercial Establishment Licenses. As reported by The Times of India, it makes it an offence for anyone to buy, sell, exchange or transfer local or foreign currency for the public without a licence. The restriction applies to activities carried out in person, through shops, online platforms or informal networks.

Officials say the move aims to strengthen financial oversight, limit money-laundering risks and protect consumers. Authorities will also gain expanded powers to investigate cases linked to underground remittance channels.

Jail term, fines and closure of shops

Unlicensed individuals face up to six months in jail and fines of up to KD 3,000, while businesses may be fined between KD 5,000 and KD 20,000. Shops or branches involved in illegal exchange may be shut down. Other punitive measures under discussion include confiscation of equipment and seized funds, publication of court rulings and administrative sanctions.

Authorities track rising financial-crime alerts

According to TOI report, while Kuwait has not released consolidated figures on unlicensed exchange cases, related enforcement indicators reflect rising scrutiny.
The Financial Intelligence Unit received 2,241 money-laundering suspicion reports in the latest cycle, with around 29%, or roughly 640 cases, linked to exchange companies. These were not all illegal operators but show the scale of transactions under review.

The Ministry of Interior recently dismantled three networks tied to forged visas, underground remittance channels and hawala-style transfers, leading to the arrest of more than 20 individuals. Regulators also inspected licensed operators, resulting in more than 130 exchange shops being closed or suspended for compliance violations.

Officials say the informal nature of hawala networks makes it difficult to determine the total volume of money moved outside the legal system. However, the government expects the new penalties to support ongoing efforts to bring currency transactions under tighter oversight.

(With TOI inputs)