Kuwait targets foreigners in commercial concealment crackdown

KUWAIT CITY: Kuwait has introduced strict penalties for commercial concealment, targeting arrangements that allow foreigners to conduct economic activities in violation of the law or the conditions of their licenses.

According to Arab Times Online, the provisions define commercial concealment as situations in which a foreigner is allowed to engage, directly or indirectly, in an economic activity without complying with the applicable legal requirements.

The scope of economic activity is broad, covering commercial, professional, industrial and service activities, ensuring that various forms of actual market activity fall within the law.

The law stipulates that no natural or legal person may conduct an economic activity in Kuwait without first obtaining the licenses and approvals required under applicable laws and regulations. It specifically prohibits foreigners from engaging in economic activities in violation of the law, whether directly, indirectly or through any other means.

Authorities will also target arrangements in which a foreigner uses another person as a front to conduct business or attempts to disguise an illegal activity as a legitimate one.

Jail and fines of up to KD100,000

Penalties for violating the main prohibition are severe. Anyone found guilty of violating Article 2 may face imprisonment for between one and three years, along with a fine ranging from KD10,000 to KD100,000, or an amount equivalent to the total profits obtained from the illegal activity, whichever is greater.

The court may impose both penalties or either one of them. Fines may also be multiplied based on the number of people involved in the violations or the number of activities carried out in breach of the law.

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A separate violation covered by Article 11 carries a penalty of up to six months in prison and a fine of up to KD10,000, or either penalty. Here too, fines may be multiplied according to the number of violators or violating activities.

Managers and companies can also be held accountable

The legislation extends liability beyond individuals directly involved in an offense. The person responsible for the actual management of a legal entity may also be punished if it is established that they knew about the violation or that the offense occurred because they failed to perform duties required as part of their management responsibilities.

The provision is intended to ensure that individuals who direct, supervise or control an activity cannot avoid responsibility simply because the business operates through a legally registered company.

Legal entities can also face joint liability with their employees when an offense is committed in the name of the company or on its behalf. This reinforces corporate accountability and aims to prevent companies from being used as a legal cover for commercial concealment or other illegal activities.