Finance Ministry Proposes Database for Recipients of Foreign Funds

The Ministry of Finance of the Republic of Kazakhstan has prepared a draft order that would create a database of individuals and entities receiving or spending funds from foreign countries, foreign citizens, and international organizations, Orda.kz reports.

Information about the draft appeared on the Open NPA portal on October 3. Public discussion is open until October 20. In keeping with recent practice, the Ministry of Finance has not published the full text of the document. As a result, conclusions about its content can only be drawn from fragmentary information contained in the explanatory materials.

Scope, Definitions, Rationale

It remains unclear who exactly will be affected by the order. Its title mentions “individuals and/or structural divisions of legal entities,” but there is no explanation of whether this refers exclusively to organizations or also includes private individuals.

It is uncertain whether, for example, people receiving grants from international organizations would be required to file reports. The draft appears to be linked to taxation issues. The explanatory table notes that it was developed to bring current legislation in line with Article 56 of the new Tax Code.

The document suggests that individuals receiving and spending funds from foreign organizations, foreign citizens, stateless persons, or international organizations will have to submit special reports using a prescribed format. These reports would then be entered into a state database. The measure resembles reporting practices in some other countries — for instance, the “foreign agent” requirements applied in Russia.

According to the Ministry of Finance, the project’s goal is to “increase the transparency of information” about those receiving money or property from abroad. The ministry states that the database will “ensure the systematization of information, increase legal certainty and transparency of financial flows, reduce shadow economy risks, and strengthen national security.”

The Ministry does not anticipate any socioeconomic consequences resulting from the new order.

Inquiry to Be Sent

The editorial team at Orda.kz will request the full draft from the Ministry of Finance for review.

It was first reported in the spring that a Majilis party was drafting a Kazakh version of the “foreign agent law.” 

Later, it was revealed that certain elements of such regulation might appear in the law on non-governmental organizations. Now, it seems that government monitoring of individuals and entities receiving foreign funding is being introduced into Kazakh legislation under the pretext of combating the shadow economy.

Original Author: Nikita Drobny