The Astana Financial Services Authority has hosted a panel session “The Impact of Economic Sanctions on Financial Centres and the Role of Financial Regulators in Preventing Financial Crime.” The session involved Deputy CEO and Chief Regulatory Officer of AFSA Gareth Ling, Deputy Chairman of Financial Services Commission of Bulgaria Vladimir Savov, Non-Executive member of the Board of AFSA Mukhtar Bubeyev, Director of Financial Stability Department at Central Bank of Azerbaijan Rustam Tahirov, Head of Market Surveillance and Issuer Supervision at Central Bank of Hungary Peter Bakos and Chief Executive Officer of Brillink Bank Elizabeth Chung.

The response of countries to the imposition of wide-ranging sanctions highlights the need to strengthen the role of the financial regulator in protecting financial systems and preventing financial crime.

The panel session focused on the impact of economic sanctions on the financial centres, as well as the importance of the financial regulator in systematically and rigorously identifying and mitigating sanctions risks from all areas.

“It was a shocking development one year ago. It had to diversify away from new procurement, new sources of gas, for example, in the aftermath of the sanctions imposed. In the financial sector, we as a regulator immediately tried to ascertain what is the level of exposure of our supervising entities to financial assets basically in the conflict zone, if you will. It turns out it’s not that big but immediately for example in the insurance sector. So, you know, we had to think a little bit creatively in a non-traditional situation, which happened actually for the first time for all of us. So, we have to find ways to minimise the suffering for ourselves and also for our supervised entities, while remaining, of course, fluid and planned, because there is no other way around it. So, creativity and flexibility, I guess, are the names of the game in situations like this,” said Deputy Chairman of Financial Services Commission of Bulgaria Vladimir Savov.

“One of the most important topics for the last period is high inflation. And the response to that inflation is the risk towards monetary policy and higher rates as a result. So, this is not, and I do believe that this is not only a monetary policy challenge but also it poses challenges from a regulatory point of view. And what we have seen is quite interesting how financial crime and fraud is correlated to interest rates. What we have seen in Hungary, a significant increase in illicit and unauthorised lending due to this high-rate environment,” noted Head of Market Surveillance and Issuer Supervision at Central Bank of Hungary Peter Bakos.

“This impact is a mixture of negative and positive. I wouldn’t say positive, but new opportunities arise because of this. So, if we come to negative aspects, probably disruption in trade and supply chain and rising prices and inflation is a key challenge for regulators. And probably all regulators around the region and the world. But on the other hand, relatively high energy prices as well as increased potential perspective for gas export to Europe is kind of a mitigating factor in this,” said Director of Financial Stability Department at Central Bank of Azerbaijan Rustam Tahirov.

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The Astana Financial Services Authority (AFSA) is the independent regulator of the Astana International Financial Centre (AIFC), which is established in accordance with the Constitutional Law of the Republic of Kazakhstan “On the Astana International Financial Centre” for the purposes of regulating financial services and related activities in the AIFC. AFSA administers the AIFC Regulations and Rules and is responsible for the authorisation, registration, recognition and supervision of financial firms and market institutions in the AIFC.

Around 2,000 firms from 75 countries are registered in the AIFC. These firms provide banking, insurance, investment, professional and other services. The range of financial services offered at the AIFC is comparable to the list of services available in long-established financial centers of the world, such as London, Hong Kong, Singapore, Dubai and others. www.afsa.kz

The Astana International Financial Centre (AIFC) is an independent jurisdiction with a favourable legal and regulatory environment and a developed infrastructure for starting and doing business, attracting investment, creating jobs and developing Kazakhstan’s economy. https://aifc.kz/ 

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