Uzbekistan – Know Your Customer (KYC) Rules

 

 

Uzbekistan operates largely on a cash economy and with decentralized accounting systems, which makes money laundering difficult to detect. Furthermore, deficiencies in Uzbekistan‘s recently-enacted AML/CFT law pose significant risks of money laundering and terrorism financing.

Uzbekistan is not an important regional financial center and does not have a well-developed financial system. Corruption, narcotics trafficking and smuggling generate the majority of illicit proceeds. Local and regional drug trafficking and other organized crime organizations control narcotics markets and proceeds from other criminal activities, such as smuggling of cash, high-value transferable assets (e.g., gold), property, or automobiles. Uzbekistan is home to a significant black market for smuggled goods. This black market does not appear to be significantly funded by narcotics proceeds, but can be used to launder drug-related money.

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

Uzbekistan-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

Uzbekistan – KYC covered entities

 

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

    • Banks, credit unions, micro-credit institutions
    • Securities brokers
    • Members of the Stock Exchange
    • Insurance brokers
    • Leasing companies
    • Money transfer companies
    • Postal operators
    • Dealers in precious metals and stones
    • Real estate agents
    • Notaries, lawyers, audit organizations
    • Pawn shops
    • Lotteries

Uzbekistan – Suspicious Transaction Reporting (STR) Requirements:

 

Number of STRs received and time frame: 17,151 in 2010

Number of CTRs received and time frame: Not available

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

    • Banks, credit unions, micro-credit institutions
    • Securities brokers
    • Members of the Stock Exchange
    • Insurance brokers
    • Leasing companies
    • Postal operators
    • Dealers in precious metals and stones
    • Real estate agents
    • Notaries, lawyers, and audit organizations

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

 

Prosecutions: 61 in 2010
Convictions: 58 in 2010

 

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Uzbekistan‘s legal system is generally susceptible to corruption and political influence. Legislation to reestablish AML measures has been adopted piecemeal since April 2009, leading to confusion from vague requirements, incomplete procedures and occasional conflicts with banking regulations. Government secrecy surrounding cases and statistics inhibits evaluation. The Prosecutor General‘s Office attempts to maintain secrecy by not releasing the criteria for identifying suspicious transactions, even to banks. Fearing the consequences of not reporting criminal activity, banks adopted excessively cautious policies that led to massive over-reporting in 2010.

Ambiguities in the law make it difficult to determine the division of authority among the Prosecutor General‘s Office and other law enforcement bodies in money laundering cases. In addition to the Financial Intelligence Unit (FIU), the Ministry of Internal Affairs and the National Security Service also investigate money laundering and terrorist finance, respectively, and both are making efforts to build financial crime departments.

The ability to freeze assets is limited; financial institutions can hold suspicious transactions for three business days, and the FIU can extend that by two days. After five business days the transaction must be resumed unless the assets can be seized as the result of a criminal case, leaving a very narrow window for investigation. The porous borders also allow for money to exit Uzbekistan into neighboring countries.

In July 2011, Uzbekistan was admitted as a member of the Egmont Group of Financial Intelligence Units. International donors are advising the government on money laundering issues to improve the legal framework and build national enforcement capacity.