Population: 4.3 million

Wealth in domestic bank deposits: 157 billion USD (November 2023)

Offshore expatriated wealth: 53.1 billion USD

Main offshore banking locations: N/A

Number of individual brokerage accounts: N/A

Crypto adoption (% of population): N/A

TLDR

Kuwait maintains liberal policies allowing free movement of capital and currency conversion, while restricting foreign ownership outside of approved sectors. The trading and marketing of foreign financial products in Kuwait is regulated under the oversight of the Capital Markets Authority (CMA). Kuwait makes a distinction between professional and non-professional investors based on strict financial and sector experience criteria. The country aims to strike a balance between promoting foreign investment to support economic growth in key areas and preserving the stability of domestic markets. Cryptocurrency activities remain comprehensively prohibited in Kuwait, including mining, payments, and investments.

Exchange controls

Kuwait has an open policy when it comes to the movement of capital and currency conversion. There are no formal restrictions on the flow of capital in and out of Kuwait. The Central Bank of Kuwait seeks to maintain the stability of the Kuwaiti Dinar against major global currencies. Historically, the KD was pegged to the US Dollar from 2003-2007 but has since shifted to an undisclosed weighted basket of international currencies. This policy change aims to protect the KD’s purchasing power and contain imported inflation risks.

Kuwait also permits up to 100 percent foreign ownership of local companies, with approval, in industries targeted for growth like infrastructure, IT, healthcare, tourism, and investment management. This allowance for majority foreign ownership comes through the 2013 Foreign Direct Investment Law and is intended to stimulate private sector expansion and attract foreign capital. However, most other sectors have a 51 percent minimum ownership requirement for Kuwaiti or GCC nationals. Additionally, strategic sectors like petroleum, real estate, and telecommunications remain restricted from any foreign ownership.

While Kuwait maintains generally liberal capital movement policies, the regulatory environment balances attracting investment flows with preserving national economic and financial interests. Initiatives like the National Fund for SME Support demonstrate a domestic focus on private sector job creation as well. The Kuwait Investment Authority sovereign wealth fund serves as the country’s primary outward investor.

Distribution rules for foreign investment products

The marketing and selling of foreign financial securities in Kuwait falls under the regulatory authority of the Capital Markets Authority (CMA) as outlined in Law No. 7 of 2010. These activities can only be conducted through CMA-licensed individuals or corporate entities. Foreign issuers face restrictions including avoiding public promotional campaigns within Kuwait borders, limiting investor communications to outside of the country, and executing all documentation related to the securities abroad rather than locally.

The CMA maintains broad supervision and enforcement powers focused on ensuring a fair and transparent Kuwaiti securities market. Their regulatory purview spans monitoring issuers, intermediaries, and exchanges to conduct investigations, impose monetary sanctions or trading suspensions, and demand full public disclosures. The CMA reports to a Board of Commissioners appointed based on the recommendation of the Minister of Commerce and Industry.

All public issuances and IPOs also require CMA approval and regulation. Their comprehensive remit includes licensing securities market participants, drafting resolutions, evaluating license applications, supervising market conduct, receiving grievances, and filing lawsuits based on observations or complaints regarding infractions. The CMA provides opinions to specify application of relevant laws and issues binding decisions on their legal interpretation.

Qualified investors

Kuwait makes a clear regulatory distinction between professional and non-professional investors under the oversight of the Capital Markets Authority (CMA). The criteria for obtaining professional investor status are strict, targeting those with substantial financial sector expertise or resources.

Professional investors by legal status include government bodies, central banks, regulated financial institutions both locally and abroad, and companies with over 1 million KWD in capital. High net-worth individuals can also qualify through high trading volumes, defined as quarterly averages above 250,000 KWD, or by holdings over 100,000 KWD in licensed financial institutions. Experienced financial sector professionals with over one year of relevant work experience also meet the criteria.

These professional investors can participate in private securities placements and other investments targeted to sophisticated investors who can understand complex products and analyze advanced financial structures.

The CMA oversight implements this professional investor distinction to delineate those requiring standard consumer protections from those with assumed financial capability either through individual wealth, institutional status, sectoral expertise, or a combination of these attributes. Ultimately, the tiered investor classification aims to ensure integrity and stability across Kuwaiti securities markets.

Cryptocurrency regulation

As of 2023, Kuwait has implemented a comprehensive ban on the use of cryptocurrency for payments and investments. This decision, taken by the country’s Capital Markets Authority (CMA), aims to address concerns related to money laundering and financial security. The CMA’s stance is an ‘absolute prohibition’ on most cryptocurrency operations, including mining, payments, and investments, due to perceived risks and the lack of legal status of cryptocurrencies.