KUWAIT CITY, July 31: Four supervisory authorities - the Capital Markets Authority, the Central Bank of Kuwait, the Ministry of Commerce and Industry, and the Insurance Regulatory Unit - which are members of the National Committee for Combating Money Laundering and Financing of Terrorism, have affirmed the absolute ban on using virtual assets as a payment or investment tool, reports Al-Qabas daily. This came within the scope of strengthening efforts to combat money laundering and terrorism financing, and was based on the conclusions of the study prepared by the National Committee for Combating Money Laundering and Financing of Terrorism regarding the required commitment for applying recommendation No. 15 of the international requirements, issued by the Financial Action Task Force (FATF) related to dealing with virtual assets. According to informed sources, these moves come within the framework of the State of Kuwait’s preparations for the process of mutual evaluation, to which the State of Kuwait will be subjected, in the field of combating money laundering and terrorism financing by FATF.

Assets
Virtual assets are defined as assets that have a digital representation of their value, that can be digitally traded or transferred, and that can be used for payment or investment purposes or the other corresponding value. In separate circulars, the four entities affirmed that virtual assets do not include digital representations of paper currencies, securities, and other financial assets that were discussed in another part of the FATF recommendations.

Those entities affirmed their commitment to the following:
1. Absolute prohibition of the use of virtual assets as a payment tool/method, or to recognize it as a decentralized currency in the State of Kuwait. Therefore, you must refrain from conducting transactions whereby virtual currencies are used as a payment tool/method within the scope of this prohibition.

2. It is prohibited to deal with virtual assets as a means of investment. Therefore, it is necessary to refrain from providing this type of services to any of the clients.

3. It is prohibited to issue or grant to any natural or legal person within the State of Kuwait a license to provide virtual asset services as a commercial business for his own benefit or on behalf of others (in addition to the fact that no licenses have been previously issued in this regard).

4. Securities regulated by the Central Bank of Kuwait and other securities and financial instruments regulated by the Capital Markets Authority are excluded from this prohibition.

5. Absolute ban on all virtual currency/asset mining activities.

The regulatory authorities called on the institutions that subject to their supervision to constantly educate customers about the risks that may result from dealing in virtual assets (which are carried out through transactions outside the State of Kuwait with the knowledge of customers), especially encrypted currencies because they do not carry a legal status, and does not get issued or supported by any government. It is also not linked to any asset or issuer, and the prices of these assets are always driven by speculation that exposes them to a sharp decline. The measures or penalties stipulated in article 15 of law No. 106/2013 on combating money laundering and terrorism financing shall apply to anyone who violates this circular without prejudice to the penalties stipulated in each supervisory authority.