Kyrgyzstan – Know Your Customer (KYC) Rules

 

 

The Kyrgyz Republic (Kyrgyzstan) operates largely on a cash economy and with decentralized accounting systems, which makes money laundering difficult to detect. The banking sector is small and the Kyrgyz Republic is not a regional financial center. A significant percentage of the country‘s GDP comes from remittances from abroad, posing a money laundering vulnerability. Corruption, organized crime, and a significant shadow economy also make the country vulnerable to money laundering and terrorist financing. Narcotics trafficking, tax and tariff evasion, and corruption related to the performance of official duties or government contracts are generally regarded to be the major sources of laundered proceeds. Money laundering also allegedly occurs through trade-based fraud and bulk cash carriers.

The presence of hawalas, money or value transfer services, and free trade zones poses risks in regard to money laundering; however, there is little information available on these topics.

Kyrgyzstan-Flag-128

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

Kyrgyzstan (Kyrgyz Republic) – KYC covered entities

 

The following is a list of Know Your Customer entities covered by Kyrgyzstan (Kyrgyz Republic) Law:

    • Banks, credit institutions
    • Stock brokerages
    • Foreign exchange offices
    • Casinos
    • Insurance companies
    • Notaries
    • Tax consultants/auditors
    • Realtors
    • the state‘s property agency
    • Trustees
    • Jewelry stores and dealers

Kyrgyzstan (Kyrgyz Republic) – 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 Kyrgyzstan (Kyrgyz Republic) Law:

    • Banks, credit institutions
    • Stock brokerages
    • Foreign exchange offices
    • Casinos
    • Insurance companies
    • Notaries
    • Tax consultants/auditors
    • Realtors
    • the state‘s property agency
    • Trustees
    • Jewelry stores and dealers

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

 

Prosecutions: None 2008 – 2011
Convictions: None 2008 – 2011

 

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Government of the Kyrgyz Republic (GOKR) has adopted anti-money laundering/counter-terrorist financing (AML/CFT) legislation and established the Financial Intelligence Service (FIS). However, the lack of political will and interagency cooperation, resource constraints, inefficient financial systems, and corruption hamper efforts to effectively combat money laundering and terrorist financing. Also, the FIS is not recognized by other government entities as a ―legitimate‖ investigative agency, which causes a lack of cooperation and information sharing across agency lines. As of December 2011, the Kyrgyz Republic‘s Parliament and the GOKR were discussing the possibility of eliminating the FIS and transferring its functions to another government agency.

The banking system is at risk for money laundering, as oversight of the banking sector is generally weak, and key reporting issues need to be resolved: auto dealers and real estate developers are not included in the list of entities required to report large dollar transactions. Additionally, the statutory threshold amount that triggers mandatory reporting remains high at $25,000.

The GOKR should continue to strengthen legislation as it relates to money laundering and financial crimes that support terrorist organizations. In addition, the Kyrgyz Republic must increase and enhance training in AML/CFT investigative techniques. The GOKR developed an action plan to adequately criminalize money laundering and terrorist financing; establish and implement an adequate legal framework for identifying, tracing and freezing terrorist assets; establish and implement adequate measures for the confiscation of funds related to money laundering; establish effective customer due diligence measures for all financial institutions; and implement an adequate and effective AML/CFT supervisory program for all financial sectors.

As of January 1, 2012, casinos will be outlawed in the Kyrgyz Republic. This will provide one less opportunity for money launderers to hide and disperse assets under the cover of a legitimate business operation.