Belarus – Know Your Customer (KYC) Rules

 

 

There is a general lack of transparency and accountability throughout the Belarusian financial sector. Corruption and illegal narcotics trafficking are primary sources of illicit proceeds. Due to excessively high taxes, an intricate taxation system, underground markets, and the “dollarization” and “eurozation” of the economy, a significant volume of foreign-currency cash transactions eludes the banking system. Illicit proceeds and assets are sometimes laundered in Belarus through the sale of stolen cars using forged paperwork; depositing illicit funds into operating accounts of businesses in the form of contributions increasing authorized capital; the sale of illicitly acquired assets through retail networks; and the transfer of assets to balance sheets of front companies.

The concentration of power in the hands of the Presidency and the lack of a system of checks and balances among the various branches of government are the greatest hindrances to the rule of law and transparency of governance. Economic decision-making in Belarus is highly concentrated within the top levels of government, and financial institutions have little autonomy.

KNOW-YOUR-CUSTOMER (KYC) RULES:

 

Enhanced due diligence procedures for PEPs:

 

PEP is an abbreviation for Politically Exposed Person, a term that describes a person who has been entrusted with a prominent public function, or an individual who is closely related to such a person. The terms PEP, Politically Exposed Person and Senior Foreign Political Figure are often used interchangeably

    • Foreign PEP: YES
    • Domestic PEP: NO

Belarus – KYC covered entities

 

The following is a list of Know Your Customer entities covered by Belarusian Law:

    • Banks and non-bank financial credit institutions
    • Professional operators of the securities market
    • Persons engaged in exchange transactions, including commodity exchanges
    • Insurance firms and insurance brokers
    • Postal service operators
    • Property leasing firms

Belarus – Suspicious Transaction Reporting (STR) Requirements:

 

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

The following is a list of STR covered entities covered by Belarusian Law:

    • Banks and non-bank financial credit institutions
    • Professional operators of the securities market
    • Persons engaged in exchange transactions, including commodity exchanges
    • Insurance firms and insurance brokers
    • Postal service operators
    • Property leasing firms

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

 

Prosecutions: Not available
Convictions: Not available

 

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

In April 2006, the United States issued an advisory to U.S. financial institutions, which remains in effect, alerting them to guard against a potential money laundering threat involving Belarusian government senior regime elements (including senior executives in state-owned enterprises) seeking to move misappropriated Belarusian state assets as well as proceeds from illicit arms sales to or through the U.S. financial system, either acting individually or through government agencies and associated front companies.

In June 2006, the United States imposed targeted financial sanctions on Belarusian government senior regime elements. In addition, in April 2004, Infobank, Minsk (renamed PJSC Trustbank) was designated as being of primary money laundering concern under section 311 of the USA PATRIOT Act. In 2007, the United States imposed sanctions on the state petrochemical conglomerate, Belneftekhim, which U.S. officials believe is personally controlled by President Alexander Lukashenko. On August 11, 2011 the United States imposed additional, new economic sanctions against four major Belarusian state-owned enterprises. These four entities have been determined to be owned or controlled by the Belneftekhim conglomerate. The additional sanctions were in response to continued incarceration of political prisoners and crackdown on political activists, journalists and civil society representatives.

On December 19th, 2011, the European Union Council implemented Regulation (EU) No 1320/2011 relating to the asset-freezing measures directed by the Council of the European Union in respect of Belarus.

The Government of Belarus (GOB) has taken steps to construct a legal and regulatory framework to fight money laundering and terrorist financing, including by strengthening basic customer due diligence (CDD) requirements, introducing special CDD procedures for politically exposed persons, and criminalizing insider trading. Despite these efforts, serious deficiencies remain, and in many instances, implementation falls below international standards.

The GOB sometimes uses the AML law as a political tool against its opposition rather than to fight economic crimes. Further enforcement problems are caused by inadequate training, staffing and funding of the relevant agencies, as well as poor national and international cooperation.

Belarus ranks 143 out of 183 countries surveyed in Transparency International‘s 2011 International Corruption Perception Index.

The GOB should take serious steps to combat corruption in commerce and government. The GOB also should take steps to ensure the AML/CFT framework operates more objectively and less as a political tool.