Turkmenistan – Know Your Customer (KYC) Rules

 

 

Turkmenistan is not an important regional financial center. There are only five international banks and a small, underdeveloped domestic financial sector. Foreign companies operate three casinos in Turkmenistan, which under certain conditions could become vulnerable to financial fraud and money laundering. Given Turkmenistan‘s shared border with Afghanistan, money laundering in the country could involve proceeds from the trafficking and trade of illicit narcotics (primarily opium and heroin), and those derived from domestic criminal activities. Although there is no information on cash smuggling, gasoline and other commodities are routinely smuggled across the national borders.

There are no offshore centers in the country. The current Law on Free Economic Zones (FEZs) in Turkmenistan determines the legal regime for conducting business in these zones. There are ten FEZs in Turkmenistan, all created prior to 1998. Businesses operating in a FEZ are exempt from taxes on profits for the first three years of profitable operation. In May 2007, Turkmenistan introduced the Awaza (or Avaza) Tourist Zone (ATZ) to promote the development of its Caspian Sea coast. The tax code exempts construction and installation of tourist facilities in the ATZ from value added tax (VAT). Various services offered at tourist facilities, including catering and accommodations, are also VAT-exempt.

Turkmenistan-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: NO
    • Domestic PEP: NO

Turkmenistan – KYC covered entities

 

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

    • Banks, money exchangers, and money remitters
    • Postal service operators
    • Leasing companies
    • Securities brokers and intermediaries
    • Insurance institutions
    • Portfolio and asset managers
    • Precious metals and stones dealers
    • Accountants, lawyers, notaries, and other legal professionals
    • Real estate agents
    • Lottery or gaming entities
    • Charitable foundations
    • State registrars
    • Pawnshops

Turkmenistan – Suspicious Transaction Reporting (STR) Requirements:

 

Number of STRs received and time frame: Two from January 1 to May 20, 2011

Number of CTRs received and time frame: Not available

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

    • Banks, money remitters, foreign currency dealers, and money exchangers
    • Professional participants in the securities market, commodity exchangers, and firms taking cash payments for investments
    • Leasing organizations; insurance organizations
    • Precious metals and stones dealers
    • Accountants, lawyers, notaries, and other legal professionals
    • Real estate agents
    • Lottery or gaming entities
    • Charitable foundations
    • State registrars
    • Pawnshops

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

 

Prosecutions: Nine from January 1 to May 20, 2011
Convictions: Not available

 

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

In June 2011, Turkmenistan became a member of the EAG. The country‘s new financial intelligence unit, established in 2010, has begun to function. International experts have seen positive movement in the country‘s AML/CFT actions.

In response to international concerns, the parliament adopted a law in 2011 which extends the Criminal Code to include activities designed to conceal the unlawful origin of monetary assets and other property. Turkmenistan should explicitly criminalize tipping off.