AFSA

26 February 2024 12:19:36

The list of financial services that participants of the Astana International Financial Centre can provide to residents of Kazakhstan has been expanded. 12 February this year the National Bank of the Republic of Kazakhstan (NB RK), the Agency of the Republic of Kazakhstan on Regulation and Development of Financial Market (ARDFM) and the Astana International Financial Centre (AIFC) agreed on the relevant changes and additions to the AIFC Rules of currency regulation and provision of information on currency transactions in AIFC.” The amendments and additions are effective retrospectively from 1 January 2024[1].

The list of financial and professional services that AIFC participants can provide to the Kazakhstan market has been expanded. In particular:

1. The possibilities for AIFC participants to provide Islamic services have been expanded. Now along with AIFC Islamic banks, Islamic financing is allowed to Islamic financial organisations of AIFC (in any currency);
2. AIFC participants are granted the right to provide leasing services to residents engaged in agribusiness and road infrastructure construction (in any currency);
3. Within the framework of providing brokerage services on international stock markets, the AIFC participants are authorised to provide services not only relating to securities, but also relating to other types of investments, such as units of investment funds, commodity, derivative and carbon instruments (in any currency);
4. AIFC participants can now provide brokerage services on Kazakhstan securities if they have direct access to the central counterparty's settlements (in any currency). Previously, in order to provide such services a participant had to have an ARDFM licence or direct access to settlements in the Central Securities Depository JSC.
5. Settlement and depository or custodial services of the AIFC Central Securities Depository can now be provided not only for securities included in the official list of the AIFC Exchange, but also for foreign securities (in any currency);
6. The process of investment and investment fund management is clarified. These services are to be provided by management companies having:

- a license of the Astana Financial Services Authority in respect of clients (investors) who are citizens and legal entities of Kazakhstan investing in securities of funds established in AIFC and included in the Official List of the AIFC Exchange or Kazakhstan Stock Exchange (in any currency);

- an ARDFM licence in respect of clients (investors) who are citizens and legal entities of the Republic of Kazakhstan investing in securities of funds established in AIFC and not included in the Official List of AIFC Exchange or Kazakhstan Stock Exchange (in any currency);

7. AIFC participants have a right to provide crowdfunding services as part of the management of an investment crowdfunding platform (in any currency);
8. AIFC participants have a right to provide services of crypto exchanges, brokerage, dealing and custody involving crypto assets as well as investment management with digital assets (in any currency).

The main additions and amendments relating to the procedure for currency transactions include the following:

1. AIFC banks (including Islamic banks) were granted the right to open correspondent accounts with Kazakhstan's second-tier banks in both national and foreign currencies;
2. The conditions for payments and (or) transfers of money of clients of Islamic banks were expanded. Now clients of Islamic banks may carry out such operations not only on services related to Islamic finance, but also on other projects for which a client has attracted financing from this bank;
3. AIFC participants have the right to replenish their authorised capital through second-tier banks of RK in any currency and through AIFC banks in foreign currency;
4. Requirements for AIFC banks to request identifying documents and information (currency agreement, BIN, etc.) for payments and money transfers made between non-residents, unregistered and those not operating in the Republic of Kazakhstan were excluded;
5. Foreign currency exchange can now be carried out by brokers and dealers of AIFC, who have a licence to carry out exchange operations, as well as foreign banks. Previously, such operations could only be carried out by AIFC banks.

In terms of information interaction between AIFC and NB RK, the scope and terms of submitting reports to NB RK were adjusted.

The full text of the amendments and additions to the Rules can be found via this link.

AFSA Chief Executive Officer Nurkhat Kushimov said: “Financial flows between jurisdictions and organisations allow people to receive timely and quality services, develop their businesses, and effectively manage their finances, thereby improving the welfare of the entire country. Recent changes and amendments to the Rules of Interaction between AIFC and Kazakhstani jurisdiction will help bring greater clarity and predictability to the processes and procedures of financial services, facilitating the flow of critical resources for the development of the economy of the country and the region”.

The Rules were first adopted in November 2021. However, during the two years of their implementation, cross-jurisdictional issues between participants and bodies of AIFC and the financial market of Kazakhstan have accumulated. To address these issues, a task force was formed in January 2023 to develop amendments and additions to the Rules. The working group comprised AIFC, NB RK and ARDFM. As a result of regular meetings of the task force and public discussions with market participants, the regulators developed a number of amendments adopted 12 February 2024.

[1] In accordance with paragraph 5 of Article 5 of the Constitutional Law "On AIFC" - acts of the Centre in coordination with the National Bank of the Republic of Kazakhstan shall establish requirements for the provision of information on currency operations, as well as the procedure for information interaction between the bodies of the Centre and the National Bank of the Republic of Kazakhstan". Also, this act is coordinated with the Agency for Regulation and Development of Financial Market in connection with the list of financial and professional services available in the act, which participants of the Center can provide to the market of Kazakhstan.