Kazakhstan: New Law Targets Money Laundering

Kazakhstan is tightening its grip on financial oversight. The Majilis has approved a new bill in its first reading aimed at strengthening financial monitoring in line with recommendations from the Financial Action Task Force (FATF), Orda.kz reports.

Key Changes in the New Law:

• Wider oversight: The list of organizations subject to financial monitoring now includes stock brokers, mobile operators, clearing houses, and the state corporation, Government for Citizens.
• Mandatory reporting: All monitored entities must report suspicious transactions to the relevant authorities.
• Transaction thresholds: Deals involving cultural assets or cryptocurrencies worth over 5 million tenge will now be automatically flagged for review. Dual-level risk assessment: A two-tier anti-money laundering (AML) and counter-terrorism financing (CFT) system will be introduced, with national assessments conducted by the Financial Monitoring Agency and sector-specific evaluations carried out by relevant government bodies.

Financial crimes are undermining the foundations of our economic stability. Professional money launderers are using increasingly sophisticated methods to legalize their illicit proceeds, making them harder to detect. This demands constant legislative updates to keep up with evolving threats. The proposed amendments aim to address the following issues. First, expanding the authority of financial monitoring bodies. Under the draft law, the agency will be tasked with analyzing and tracking suspicious transactions involving non-profit organizations to assess the risk of money laundering and the financing of illegal activities,said Zhenis Yelesemov, Deputy Chair of Kazakhstan’s Financial Monitoring Agency. 

At the same time, mobile operators and the "Government for Citizens" state corporation will be added to the list of entities subject to financial monitoring. Mobile companies will be required to report data on mobile balance top-ups, while "Government for Citizens" will provide information on real estate transactions exceeding 50 million tenge, similar to the current obligations placed on notaries.

Additionally, all financial monitoring entities will face mandatory requirements to report suspicious activity, based on patterns that may indicate money laundering or terrorist financing.

Financial monitoring entities will be required to report cases where a client may be using their services to launder money or finance terrorism, based on the overall pattern of their activity with funds and other property. The Financial Monitoring Agency will define what constitutes suspicious behavior. For example, frequent money transfers between accounts that fall below reporting thresholds, especially when the source of the funds is unclear, Yelemesov explained. 

The system for assessing money laundering risks will also be overhauled. Under the proposed changes, risk assessments will be conducted at two levels: a national-level review by the Financial Monitoring Agency and a sector-specific assessment by relevant government bodies, to be carried out every three years.

Additionally, thresholds for certain transactions involving money or assets will be revised. For example, the threshold for cash transactions involving the purchase or sale of cultural valuables, as well as their import or export, is set to drop from 45 million to just 1 million tenge.

Meanwhile, any transaction involving digital assets worth 5 million tenge or more will also be flagged for financial monitoring.

Original Author: Ilya Astakhov