Shrouded in Secrecy: Corporate Ownership, Electronic Reports, and Fines Up to 10,000 Dinars

The Ministry of Commerce and Industry has updated the guidance document on the concept of the beneficial owner, as part of efforts to strengthen national measures against money laundering and terrorist financing, enhance the transparency of legal persons and legal arrangements, and ensure the availability of accurate and up-to-date information in the beneficial owner register, in line with the requirements and recommendations of the Financial Action Task Force (FATF). This update aims to support the effectiveness of the transparency framework and mitigate the misuse of legal persons and legal arrangements to conceal actual ownership or control.

According to the new guidance, which Al-Anbaa obtained a copy of, a standalone section has been added regarding the reporting of incorrect or inaccurate beneficial owner data. This supports the Ministry’s beneficial owner register by ensuring that sufficient, accurate, and updated beneficial owner data is made available to competent authorities in a timely manner. The register maintains searchable digital records, supports searches by legal person and beneficial owner, enables risk-based verification and review, tracks changes over time, facilitates the reporting and correction of conflicts, and includes safeguards to protect personal data and prevent improper disclosure.

The guidance states that to ensure the accuracy and reliability of beneficial owner data, the Ministry of Commerce and Industry has established regulatory procedures for receiving and processing reports concerning incorrect, inaccurate, or misleading beneficial owner data submitted to the Ministry. These measures contribute to maintaining sufficient, accurate, and updated data in accordance with relevant international standards. Reports may be submitted by:

- Individuals or legal persons who are aware of incorrect or inaccurate beneficial owner data.

- Competent authorities, including regulatory bodies such as the Central Bank of Kuwait, the Capital Markets Authority, the Insurance Regulatory Unit, law enforcement agencies, the Kuwait Financial Intelligence Unit, and entities subject to the supervision of the Anti-Money Laundering and Counter-Terrorist Financing Administration within the Ministry of Commerce and Industry.

The Ministry receives reports through official electronic channels, in compliance with laws and regulations governing the confidentiality of the reporter’s data.

The guidance notes that when incorrect or misleading beneficial owner data is confirmed, appropriate legal or regulatory measures will be taken, including the imposition of administrative or financial penalties stipulated in the Ministerial Decision, or referral to law enforcement agencies as appropriate.

The updated guidance emphasizes that competent authorities must have timely access to basic data and beneficial owner data held by companies, the Ministry of Commerce and Industry, financial institutions, designated non-financial businesses and professions (DNFBPs), and other relevant sources. Financial institutions and DNFBPs must also have access to the necessary data to perform due diligence procedures and report conflicts.

Foreign competent authorities should be able to request data through approved cooperation channels. Any broader access must be subject to applicable confidentiality, data protection, and privacy safeguards. Public authorities involved in procurement must have timely access to basic data and beneficial owner data related to bidders and contracting parties. Procurement entities may request bidders to submit beneficial owner data directly, obtain it from the Ministry of Commerce and Industry or other competent authorities, or rely on other official sources where the data is sufficient, accurate, and up-to-date. Beneficial owner data should be considered part of buyer integrity checks, conflict-of-interest assessments, sanctions screening, and anti-money laundering/counter-terrorist financing risk evaluations.

The guidance further states that Kuwait must be capable of providing timely and effective international cooperation regarding beneficial owner data. This includes facilitating access by foreign competent authorities to companies’ basic data, sharing shareholder and ownership data, and utilizing domestic powers to obtain beneficial owner data on behalf of foreign counterparts, subject to legal requirements and established cooperation channels.

The section on penalties and enforcement stipulates that penalties for violations of beneficial owner obligations in Kuwait must be effective, proportionate, and dissuasive, applied to the legal or natural person responsible for the violation. Conduct subject to penalties includes failing to obtain or retain beneficial owner data, failing to update data, failing to submit data to the Ministry of Commerce and Industry or competent authorities, providing false or misleading data, failing to disclose nominal status, non-cooperation with financial institutions and DNFBPs conducting due diligence, and regulated entities’ failure to identify, verify, or monitor beneficial owner data.

Supervisory authorities with oversight of beneficial owner compliance requirements, such as the Central Bank of Kuwait, the Capital Markets Authority, the Insurance Regulatory Unit, and the Ministry of Commerce and Industry, have the authority to enforce penalties. Enforcement measures include fines and administrative sanctions to ensure institutions meet their anti-money laundering and counter-terrorist financing obligations. Regulators may issue warnings, demand corrective actions, or impose fines based on the severity of non-compliance. In extreme cases, they may suspend or revoke operating licenses, potentially removing non-compliant institutions from the financial market.

Enforcement procedures are based on Law No. 106 of 2013, which provides the legal framework for combating money laundering and terrorist financing, granting authorities the power to impose administrative and criminal penalties for violations of anti-money laundering and counter-terrorist financing rules, including beneficial owner obligations.

The Ministry of Commerce and Industry may impose a financial penalty ranging from a minimum of 1,000 Kuwaiti Dinars to a maximum of 10,000 Kuwaiti Dinars on any natural person who intentionally provides false or misleading data or information regarding the beneficial owner.

Penalties are applied in accordance with the principle of proportionality, considering the severity and nature of the violation, without prejudice to the Ministry’s right to take other regulatory or legal measures, or to refer the matter to law enforcement agencies whenever there is suspicion of a crime under applicable legislation.