SIGNUM | Financial Monitoring: Money Laundry Prevention

Dear Sirs,

Herewith SIGNUM would like to draw your attention to legislative innovation of the Republic of Kazakhstan – Financial Monitoring. Finance monitoring has been introduced by Law of RK “On prevention of money-laundering and terrorism financing” dated 28.08.2009 which has been entered into force from 09.03.2010.

Main goal of financial monitoring is anti-money laundering and prevention of terrorism and extremism financing.

Items of financial monitoring are suspicious operations and between-limits operations (see Table №1).

The legislation refers operations that match such criteria as lack of economic substance, avoidance of financial monitoring and if there is suspicion on financing of terrorism and (or) extremism to suspicious operations.

Financial monitoring is carried out on the basis of information provided by legal entities subject to financial monitoring. Information provided by entities of financial monitoring consists of client’s identification data, reporting activities and information about suspicious operations.

Legal entities subject to financial monitoring are as follows:

•\tBanks, organizations carrying out some banking activity;

•\tStock Exchanges;

•\tInsurance (reinsurance) organizations, insurance brokers;

•\tPension savings funds;

•\tProfessional participants of securities market, central securities depository;

•\tNotaries carrying out notarial actions with money and (or) any other property;

•\tAudit organizations;

•\tOrganizers of gambling business or lottery;

•\tMail operator rendering services on money transfer;

•\tLawyers and other independent experts on legal issues on sales and purchase of real estate, management of money, securities, bank accounts, etc.

Please note that Committee of Financial Monitoring has a right to deny transaction conduction or suspend transaction with money or property.

And the ground for denial of operation is non-submission of identification data, while the ground for suspension of operation is message from market entity on suspiciousness of operation.

In order to avoid suspension or denial of transaction operations SIGNUM strongly recommends you to provide full and clear information on operations that are subject to financial monitoring.

We hope that presented information will be useful for you. Should you have any additional questions, please do not hesitate to contact Talgat Saryev (tbs@signumlaw.com) and Rakhat Baisuanov (rdb@signumlaw.com).

Table №1

Operations Subject to Financial Monitoring:

single operation as well as operation carried out within seven consecutive calendar days

Information contained in this Client Update is of general nature and cannot be used as legal advice or recommendation. Please seek for a specific advice in relation to any questions. Please note that Kazakhstan and Turkmenistan are emerging economies and their legislation and legal systems are in constant development. Should you have any questions or would like to discuss subjects addressed in this Client Update please contact us.