Kuwait Enacts Strict Law Criminalizing Unlicensed Money Exchange Activities

New Decree-Law Targets Informal Financial Networks

Kuwait has taken a decisive step to strengthen its financial oversight and combat illicit financial activities by enacting a new decree-law that criminalizes unlicensed money exchange operations. The decree-law, identified as No. 162/2025, was officially published in the 'Kuwait Al-Youm' gazette on December 28, 2025, and is slated to come into force one month later, on January 28, 2026.

This legislative action introduces a new Article (12 bis) to the existing Law Regulating Commercial Establishment Licenses (Law No. 111 of 2013). The law broadly targets any individual or entity engaged in buying, selling, exchanging, or transferring local or foreign currency for the public without possessing a valid license. This includes operations conducted through traditional shops, online platforms, and informal networks such as 'hawala' systems.

Severe Penalties for Violators

The new decree-law outlines stringent penalties for those found in violation. For individuals, the consequences include:

• Imprisonment for up to six months
• A fine of up to KD 3,000 (Kuwaiti Dinars)
• Or both penalties

Commercial establishments or businesses that engage in unlicensed money exchange activities will face even tougher sanctions, including:

• Fines ranging from KD 5,000 to KD 20,000
• Mandatory closure of the establishment or any of its branches involved in the offense
• Confiscation of equipment and seized funds
• Publication of court rulings in the official gazette

The Public Prosecution has been granted full authority to investigate and prosecute offenses arising from this amendment, underscoring the government's commitment to rigorous enforcement.

Bolstering Economic Stability and Combating Illicit Finance

The primary motivations behind this legislative move are multifaceted, focusing on safeguarding Kuwait's economic and financial stability. Officials have stated that the law aims to:

• Strengthen financial oversight
• Combat money laundering and the financing of terrorism
• Protect consumers from fraudulent practices
• Curb informal trading and 'hawala'-style operations, which operate outside regulated banking and exchange channels
• Address the opacity and vulnerability to misuse inherent in alternative remittance systems
• Ensure compliance with international financial standards

The Ministry of Commerce and Industry described the move as a 'decisive measure' to protect the country's economic and financial stability, noting that alternative remittance systems create a 'parallel economy' with no documentation or regulatory oversight. This new law is part of a broader strategy to enhance Kuwait's defenses against illicit financial activities.

Ongoing Efforts to Regulate the Exchange Market

This decree-law builds upon previous efforts by the Central Bank of Kuwait to increase regulation within the money exchange sector. Earlier measures included requiring exchange companies to maintain a paid-up capital of KD 2 million, which led to the closure of several smaller, non-compliant firms. By eliminating unregulated channels, authorities aim to increase compliance across the sector and reinforce confidence among investors and consumers.