10 Kuwaiti influencers suspected of money laundering

Abu Dhabi: Ten Kuwaiti social media influencers are on the radars of the Kuwaiti state security agency after their bank accounts showed massively inflated balance, Kuwaiti media reported.

“Kuwait’s Public Prosecution has received ten complaints against five influencers after their bank accounts dramatically inflated and summons warrants will be issued once state security intelligence is gathered,” an informed source told Al Qabas.

“There are two entities that assist in confidential inquiries about the source of these funds: The investigations unit and the state security apparatus, as money laundering crimes are classified as serious state security crimes,” the source said.

On whether the accused can get rid of the inflated money by transferring it to other accounts, the source said: “In the event that the crime is proven, all the money and properties that have been transferred will be recovered and seized.”

Money laundering came to light in a big way in Kuwait after the Public Prosecution’s investigation into the 1Malaysia Development Berhad scandal or 1MDB scandal. It is a political scandal in Malaysia, involving laundering of billions of dollars in kickbacks provided by Chinese state company CCCC as ‘commission’ to Malaysia’s then prime minister Najib Razak, with connections to high-profile Kuwaiti officials. 
Another high-profile money laundering case being investigated in Kuwait is the one involving Bangladeshi member of parliament, Mohammad Shahid Islam, who has been remanded along with senior Kuwaiti officials, on charges of human-trafficking and money laundering.

Chairman of the Public Money Defence Association, lawyer Saleh Al Ajmi, said convict of a money-laundering crime faces ten years’ imprisonment and a fine of double the amount laundered. 
“However, if the convict used influence in the crime, his jail time will be aggravated to 20 years,” he said.

Kuwaiti Emir Sheikh Sabah Al Ahmad Al Jaber Al Sabah, has addressed his concerns over attempts being made to portray Kuwait as a hotbed for corruption.

The Emir called upon the Kuwait Anti-Corruption Authority to contain the spread of false accusations and unjust campaigns with regard to corruption in Kuwait.

“We have seen the spread of information throughout various social media platforms that accuses and offends Kuwait — with no credible evidence — of becoming a breeding ground for corruption,” he said.

Kuwait’s Prime Minister Sabah Al Khalid Al Sabah said: “Nobody will be protected by their position or name if they have committed a crime that infringes on public money.”

Dr Fahad Al Afasy, Minister of Justice and Minister of Islamic Affairs, said: “Kuwait’s anti-corruption authority has received 280 complaints regarding corruption. From those, 59 have been considered by the authorities and 38 have been transferred to the public prosecutor.”

Abdul Aziz Al Ibrahim, chairman of the General Authority for Anti-Corruption, said: “We believe that our role goes beyond treating corruption issues, rather raising awareness to prohibit corruption from even taking place.”

What is Money Laundering?

The goal of a large number of criminal acts is to generate a profit for the individual or group that carries out the act. Money laundering is the processing of these criminal proceeds to disguise their illegal origin. This process is of critical importance, as it enables the criminal to enjoy these profits without jeopardising their source.

Illegal arms sales, smuggling and organised crime — including drug-trafficking and running prostitution rings — can generate huge amounts of proceeds. Embezzlement, insider trading, bribery and computer fraud schemes can also produce large profits and create the incentive to “legitimise” the ill-gotten gains through money laundering.

When a criminal activity generates substantial profits, the individual or group involved must find a way to control the funds without attracting attention to the underlying activity or the persons involved. Criminals do this by disguising the sources, changing the form, or moving the funds to a place where they are less likely to attract attention.

In response to mounting concern over money laundering, the Financial Action Task Force on money laundering (FATF) was established by the G-7 Summit in Paris in 1989 to develop a co-ordinated international response.

How much money is laundered per year?

By its very nature, money laundering is an illegal activity carried out by criminals, which occurs outside the normal range of economic and financial statistics. Along with some other aspects of underground economic activity, rough estimates have been put forward to give some sense of the scale of the problem.

The United Nations Office on Drugs and Crime (UNODC) conducted a study to determine the magnitude of illicit funds generated by drug-trafficking and organised crimes and to investigate to what extent these funds are laundered. The report estimates that in 2009, criminal proceeds amounted to 3.6 per cent of global gross domestic product, with 2.7 per cent ($1.6 trillion or Dh5.88 trillion) being laundered.

This falls within the widely-quoted estimate by the International Monetary Fund, that had stated in 1998 that the aggregate size of money laundering in the world could be somewhere between two and five per cent of the world’s GDP. Using 1998 statistics as a base, these percentages would indicate that money laundering ranged between $590 billion and $1.5 trillion. At the time, the lower figure was roughly equivalent to the value of the total output of an economy the size of Spain.

How is money laundered?

In the initial — or at the placement — stage of money laundering, the launderer introduces his illegal profits into the financial system. This can be done by breaking up large amounts of cash into less conspicuous smaller sums that are then deposited directly into a bank account, or by purchasing a series of monetary instruments (cheques, money orders, etc.) that are then collected and deposited into accounts at another location.

After the funds have entered the financial system, the second — or layering — stage takes place. In this phase, the launderer engages in a series of conversions or movements of funds to distance them from their source. The funds might be channelled through the purchase and sales of investment instruments, or the launderer might simply wire the funds through a series of accounts at various banks across the globe. This use of widely scattered accounts for laundering is especially prevalent in those jurisdictions that do not cooperate with anti-money laundering investigations. In some instances, the launderer may disguise the transfers as payments for goods or services, thus giving them a legitimate appearance.

Having successfully processed his criminal profits through the first two phases, the launderer then moves them to the third stage, that is integration. In this stage, the funds re-enter the legitimate economy. The launderer may choose to invest the funds into real estate, luxury assets, or business ventures.