Tajikistan – Know Your Customer (KYC) Rules

 

 

Tajikistan operates largely on a cash economy and with decentralized accounting systems, which makes money laundering difficult to detect. Furthermore, deficiencies in Tajikistan‘s recently enacted AML/CFT law increase Tajikistan‘s vulnerability to money laundering and terrorism financing.

Criminal proceeds laundered in Tajikistan derive from both foreign and domestic criminal activities related to the large amounts of opium and heroin trafficked from Afghanistan to Russia via Tajikistan. The money laundering proceeds are primarily controlled by high-level drug trafficking networks, with some smaller actors involved. It is suspected that corruption at high levels within the government facilitates the drug trade and associated money laundering. Some money laundering takes place in the formal financial sector, according to the National Bank of Tajikistan (NBT), the Central Bank. Other banks offer clients whose income is likely to be criminally derived the ability to purchase properties in the Persian Gulf States, particularly Dubai. Tajik authorities have reported that some unlawfully derived proceeds are handled through offshore accounts in the Middle East.

While there is a market for smuggled goods, there is little evidence that most items are financed with narcotics money, with the exception of imported cars and other luxury items. There are concerns about the abuse of non-profit organizations, hawalas, money or value transfer services, free trade zones, and bearer shares in regard to money laundering; however, the Government of Tajikistan (GOT) has not provided any information with respect to this issue.

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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

Tajikistan – KYC covered entities

 

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

    • Banks
    • Money remitters
    • Foreign exchange dealers
    • Microfinance institutions

Tajikistan – 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 Tajikistan Law:

    • Banks
    • Money remitters
    • Foreign exchange dealers
    • Microfinance institutions

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

 

Prosecutions: Not available
Convictions: Not available

 

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Tajikistan adopted several laws in 2011 that attempt to address severe shortcomings identified by international experts. Several changes to the law on securities, adopted in June, establish a regulatory authority, introduce a state register and determine the procedures for transfer of rights to securities. Rules were also adopted for bank payment cards to help identify and limit suspicious transactions and counter the legalization of proceeds from crime and terrorist financing using these instruments.

While the new AML/CFT law does increase the due diligence requirements for foreign politically exposed persons, it does not impose similar requirements for domestic PEPs. The new law defines tipping off; however, international experts have raised serious concerns about the law‘s effectiveness in meeting international recommendations. The new law also put in place new suspicious reporting requirements, but these need some improvements in order to meet international standards. In addition, concerns remain about the authorities‘ ability to access these in a timely fashion.

The GOT has developed an action plan to address noted deficiencies, including by adequately criminalizing money laundering and terrorist financing, establishing and implementing adequate procedures for the confiscation of funds related to money laundering and for identifying and freezing terrorist assets, enhancing financial transparency, ensuring a fully operational and effectively functioning financial intelligence unit (FIU), improving STR requirements, and improving and broadening customer due diligence measures. The GOT also should criminalize tipping off and should provide for criminal liability for legal persons.

The NBT indicated it has received a number of STRs and CTRs since May, but it was not authorized to provide exact numbers. The NBT developed a list of indicators of suspicious transactions and, using provisions of the new law, created an FIU. The FIU will be able to analyze and disseminate information, although there are concerns about its independence and allocated resources.

While Tajikistan has signed several international agreements pertaining to money laundering and financial crime, the government needs to codify these in Tajik law. The country needs to amend its laws to better address seizure, forfeiture, and ultimate disposition of assets determined to be unlawfully derived proceeds of money laundering in accordance with international standards. In addition, the GOT needs to improve its criminalization of terrorist financing to comply with international standards and establish procedures to implement United Nations Security Council Resolutions 1267 and 1373.