Introduction

Counterfeit payment-instrument regulation in Kuwait protects the integrity of payments made by cheque, bank card, electronic transfer, e-wallet, and other electronic payment methods. A “counterfeit” instrument can include a forged cheque or signature, an altered cheque amount or payee, a cloned or unlawfully used bank card, a fake payment instruction, or an electronic transfer initiated without the customer’s authority.

Kuwait does not rely on one single “counterfeit card” statute. Instead, protection comes from the combined operation of the Penal Code, Commercial Code, Electronic Transactions Law, Central Bank of Kuwait (CBK) regulation, and general civil-liability principles.

Legal and Regulatory Framework

1. Penal Code: forgery, use of forged documents and fraud

Kuwait’s Penal Code, Law No. 16 of 1960, criminalises forgery and the knowing use of forged documents. A cheque is a commercial payment document; therefore, creating a false cheque, forging a drawer’s signature, changing its amount or beneficiary, or knowingly presenting it for payment can amount to forgery and use of a forged instrument.

The prosecution must normally establish:

• A material alteration or fabrication of an instrument or signature;
• Intent to represent it as genuine;
• Potential or actual harm to another person, bank, or the payment system; and
• Knowledge or criminal intent when the accused used the forged item.

A person who merely possesses a suspicious instrument is not automatically guilty. The prosecution must connect that person to forgery, knowing use, participation, or fraudulent intent.

2. Dishonoured cheques are different from counterfeit cheques

A cheque with insufficient funds is not necessarily counterfeit. It may be genuine but dishonoured because the drawer lacked funds, withdrew funds, closed the account, stopped payment improperly, or intentionally drafted the cheque so it could not be cashed.

Article 237 of the Penal Code is particularly important for bad-faith cheque offences. The Commercial Code also treats a cheque as a payment instrument payable on sight, rather than a deferred credit instrument. Accordingly, a forged cheque may create forgery liability, while a genuine cheque issued dishonestly without funds may create a separate cheque offence. 

3. Commercial Code and bank–customer relationships

The Commercial Code governs the cheque’s formal requirements, presentment, payment, endorsement, and commercial effect. Where a forged signature or altered instruction is involved, the key legal questions are usually:

• Was the payment instruction authentic?
• Did the bank follow the mandate and verification procedures?
• Was the customer negligent in safeguarding the cheque book, card, PIN, password, or authentication device?
• Did a merchant, collecting bank, or beneficiary act in bad faith or without reasonable care?

A bank that debits a customer’s account on an unauthorised payment instruction may face contractual and civil exposure, subject to the statutory rules on customer notice and negligence.

4. Electronic Transactions Law No. 20 of 2014

Law No. 20 of 2014 modernised this area for digital payments. It defines electronic payment broadly as transferring and paying money through electronic means. Article 28 recognises electronic money transfers as a valid method of settling payments. 

The law is especially important where the “counterfeit instrument” is not paper-based—for example, a stolen card credential, unauthorised digital-wallet payment, forged electronic signature, manipulated transfer instruction, or compromised bank-login approval.

Article 29 requires financial institutions conducting electronic-payment business to comply with CBK regulation, AML/CFT obligations, safe-service requirements, and banking secrecy.

Article 30 creates an important allocation of risk:

• The customer is generally not responsible for an illegal electronic record if they notify the financial institution before the transaction and report loss of the payment means or suspected compromise of the electronic signature.
• The customer may be liable where their negligence caused or materially contributed to the unauthorised use, provided the institution itself performed its duty to prevent misuse.

Thus, a bank cannot simply label every unauthorised card or transfer transaction as “customer responsibility.” The facts of notification, security controls, and customer conduct matter.

5. CBK supervision of cards, wallets and payment firms

The CBK’s May 2023 Instructions for Regulating the Electronic Payment of Funds place electronic-payment providers under direct supervision. The framework uses five licensing categories depending on the nature and volume of the activity. It requires governance, risk management, AML/CFT controls, cybersecurity, business continuity, and customer-protection controls. 

For counterfeit-payment risk, this means regulated entities should maintain controls such as:

• Customer authentication and transaction monitoring;
• Card and credential security;
• Fraud detection and incident escalation;
• Authentication and payment logs;
• Complaint and dispute-handling procedures;
• Limits and controls for risky remote transactions; and
• Business continuity and cybersecurity safeguards.

The CBK may issue binding instructions under Article 31 of Law No. 20 of 2014. A regulated institution that breaches those instructions can be subject to the sanctions framework under the Central Bank and banking-regulation law.

Criminal, Civil and Regulatory Consequences

A counterfeit-payment event can create several parallel proceedings.

Victims should preserve the cheque, card transaction record, bank statement, app notifications, merchant evidence, device information, police report, and all communications with the bank. Speed matters: prompt notification can affect both loss prevention and legal responsibility.

Case Laws

1. Kuwait Court of Cassation, KCC 1229/2017

In KCC 1229/2017, the accused faced allegations involving forged bank statements and a bounced cheque. The reported case summary indicates that a central issue was whether the accused had actually issued the cheque, with an assertion that it had been stolen by the beneficiary. The case illustrates that criminal responsibility cannot rest merely on possession or presentation of a cheque: the court must examine authorship, authenticity, possession, and the factual source of the instrument. 

2. Kuwait Court of Cassation, KCC 1378/2016

In KCC 1378/2016, the prosecution relied on Article 237 in relation to a cheque issued on behalf of a company. The defendant was initially convicted, but the Court of Appeal annulled the conviction and exempted him from punishment after considering evidence of settlement of the cheque debt. This demonstrates that payment or settlement can have major consequences in cheque prosecutions, though it does not automatically erase an independent forgery offence. 

3. Principle derived from the case law

The reported decisions show three practical principles:

• Courts distinguish between a forged instrument and a genuine but dishonoured instrument.
• Criminal liability requires reliable proof of the accused’s role and intent.
• Settlement may affect punishment or the continuation of certain cheque-related proceedings, but it is not a general licence to use forged payment instruments.

Conclusion

Kuwait regulates counterfeit payment instruments through a layered system. Paper-based fraud is addressed principally through forgery rules, cheque law, and civil liability. Digital fraud is addressed through Law No. 20 of 2014 and CBK payment-service regulation, with an emphasis on authorised transactions, customer notification, security controls, and provider accountability.

The most important distinction is between a counterfeit or altered instrument and a genuine instrument dishonoured for lack of funds. Both can be serious, but they involve different legal elements, evidence, defences, and consequences.