Relevance of amendments to Kazakhstan’s anti-money laundering (AML) and counter terrorist financing (CTF) law to AIFC Participants

Astana Financial Services Authority (AFSA) hereby informs AIFC Participants that the amendments to Kazakhstan’s anti-money laundering (AML) and counter terrorist financing (CTF) law signed by the President of Kazakhstan on 13 May 2020 will also extend to AIFC Participants. AFSA identified around 50 new norms which will extend to AIFC Participants subject to AML supervision pursuant to AIFC AML Rules.

AFSA supervises and regulates AIFC Participants pursuant to AIFC AML Rules, which are made in application of the AML Law of the Republic of Kazakhstan (No 191-IV dated 28 August 2009), the Criminal Code of the Republic of Kazakhstan No 226-Vdated 3 July 2014 (the “Criminal Code”) and international conventions and treaties ratified by the Republic of Kazakhstan

The amendments relate to financial monitoring procedures, such as customer due diligence, internal control and reporting of suspicious transactions, gives the authorised body in the field of financial monitoring the authority to draw up reports on administrative offenses in relation to financial monitoring entities that do not have a state regulatory body. This category includes five subjects of financial monitoring, including independent legal consultants, lessors without a license, accounting organizations, realtors and distributors of precious metals, stones and jewelry.

The law regulates international cooperation procedures for authorized bodies in the field of combating the legalization and laundering of proceeds from crime and the financing of terrorism, including the search and return of criminal assets.

These amendments will begin to take effect from 14 November 2020.

Summary of amendments relevant AIFC Participants supervised by AFSA are as follows:

• Expansion of the scope of regulated sectors to add new categories of “financial monitoring entity” (subparagraph 19) in paragraph 1 of Article 3). It means that the appropriate requirements of the AML/CTF Law will apply to the relevant AIFC Participants. The list of relevant activities of the AIFC Participants for the purpose of AML/CTF Law will be adopted by AFSA in consultation with the Ministry of Finance of the Republic of Kazakhstan in compliance with the FATF Recommendations.
• AFSA should adopt the Requirements applicable to the Rules of Internal Control for AML/CTF purposes for the AIFC Participants (paragraph 3-2 of Article 11). This paragraph was amended and the relevant amendments to the Requirements will be adopted by AFSA in consultation with the Ministry of Finance of the Republic of Kazakhstan.
• AFSA should adopt the Requirements to Customer Due Diligence in cases when the AIFC Participants establish the non-face to face business relations with its customers (paragraph 11 of Article 5). The Requirements will be adopted by AFSA in consultation with the Ministry of Finance of the Republic of Kazakhstan.

Other amendments to the AML/CTF Law of Kazakhstan include the following:

• Expanded definition of implementation of the Targeted Financial Sanctions and combating the Financing of Proliferation of Weapons of Mass Destruction (as required by the FATF Recommendations).
• Financial monitoring entities are provided an opportunity to identify and detect suspicious transactions in accordance with its AML policies, controls and procedures as per the amendments in paragraph 3 of Article 4. Therefore, the signs of suspicious activity should be established in the AML policies, controls and procedures of the financial monitoring entities.
• Requirements to obtain additional information on the customer’s nature of activities and source of funds in case of Enhanced Due Diligence and describe the new cases when the measures of the Customer Due Diligence are not applicable in line with the amendments in Article 5. In addition, the amendments make new prohibitions addressing the process of the non-face to face establishing business relationships by financial monitoring entities with its customers and provide new measures for the Enhanced Due Diligence regarding persons from the countries which failed to implement or not sufficiently implemented the FATF Recommendations.
• Procedures and requirements on providing information to the Financial Intelligence Unit (FIU) by financial monitoring entities (amendments to Article 10).
• Requirements in relation to recordkeeping and AML training (amendments to paragraphs 4 and 8 of Article 11)
• Procedures for conducting the National Risk Assessment and cooperation between FIU, law enforcement authorities and supervisory state authorities (new paragraphs 3,4,5 and 6 in Article 11-1).
• Requirements in relation to the Targeted financial sanctions relating to the financing of terrorism and proliferation of weapons of mass destruction in line (new Article 12-1 and the amendments in Article 12).
• Measures to protect the charity funds and religious organisations against the financing of terrorism (new Article 12-2).

Requirements in relation to freezing of assets/transactions in case of identification of customers from the list of persons or organisations related to the financing of terrorism or proliferation of weapons of mass destruction (paragraphs 1-1 and 2 of Article 13).