Approval of Internal Control Rules for Combating Money Laundering and Terrorist Financing in Commercial Banks

44 (388) — 45 — 472-Article

GOVERNMENT OF THE CENTRAL BANK OF THE REPUBLIC OF UZBEKISTAN DEPARTMENT FOR COMBATING TAX AND CURRENCY CRIMES AND MONEY LAUNDERING UNDER THE PROSECUTOR GENERAL OF THE REPUBLIC OF UZBEKISTAN

DECISION

472 On Approval of Internal Control Rules for Combating Money Laundering from Criminal Activities and Terrorist Financing in Commercial Banks

Registered by the Ministry of Justice of the Republic of Uzbekistan on October 23, 2009, Registration No. 2023

(Enters into force from November 2, 2009)

In accordance with the Laws of the Republic of Uzbekistan "On the Central Bank of the Republic of Uzbekistan" (Vedomosti of the Oliy Majlis of the Republic of Uzbekistan, 1995, No. 12, Article 247), "On Banks and Banking Activities" (Vedomosti of the Oliy Majlis of the Republic of Uzbekistan, 1996, No. 5-6, Article 54), and "On Combating Money Laundering from Criminal Activities and Terrorist Financing" (Collection of Legislation of the Republic of Uzbekistan, 2004, No. 43, Article 451), the Government of the Central Bank of the Republic of Uzbekistan and the Department for Combating Tax and Currency Crimes and Money Laundering under the Prosecutor General decide:

1. To approve the Internal Control Rules for Combating Money Laundering from Criminal Activities and Terrorist Financing in Commercial Banks in accordance with the Appendix.

2. This decision enters into force ten days after the date of its state registration by the Ministry of Justice of the Republic of Uzbekistan.

Chairman of the Central Bank F. MULLAJONOV

Tashkent city,
October 13, 2009,
No. 23/6

Collection of Legislation of the Republic of Uzbekistan, 2009.

472-Article — 46 — 44 (388) No.

Head of the Department for Combating Tax and Currency Crimes and Money Laundering under the Prosecutor General
3. DUSANOV

Tashkent city,
October 13, 2009,
No. 32

Collection of Legislation of the Republic of Uzbekistan

GOVERNMENT OF THE CENTRAL BANK OF THE REPUBLIC OF UZBEKISTAN AND THE DEPARTMENT FOR COMBATING TAX AND CURRENCY CRIMES AND MONEY LAUNDERING UNDER THE PROSECUTOR GENERAL OF THE REPUBLIC OF UZBEKISTAN

APPENDIX
to the Decision No. 23/6, 32 dated October 13, 2009 of the Government of the Central Bank of the Republic of Uzbekistan and the Department for Combating Tax and Currency Crimes and Money Laundering under the Prosecutor General of the Republic of Uzbekistan

INTERNAL CONTROL RULES for Combating Money Laundering from Criminal Activities and Terrorist Financing in Commercial Banks

I. General Provisions

1. These Rules establish the procedure for organizing and implementing internal control in commercial banks for the purpose of combating money laundering from criminal activities and terrorist financing, in accordance with the Laws of the Republic of Uzbekistan "On the Central Bank of the Republic of Uzbekistan" (Vedomosti of the Oliy Majlis of the Republic of Uzbekistan, 1995, No. 12, Article 247), "On Banks and Banking Activities" (Vedomosti of the Oliy Majlis of the Republic of Uzbekistan, 1996, No. 5-6, Article 54), "On Bank Secrecy" (Vedomosti of the Oliy Majlis of the Republic of Uzbekistan, 2003, No. 9-10, Article 144), and "On Combating Money Laundering from Criminal Activities and Terrorist Financing" (Vedomosti of the Oliy Majlis of the Republic of Uzbekistan, 2004, No. 9, Article 160).

2. The following main concepts are used in these Rules:
   commercial bank — a commercial bank that is a resident of the Republic of Uzbekistan and holds a license for the relevant type of activity; internal control — the activity of a commercial bank aimed at identifying operations that must be reported to the special authorized state body; Internal Control Service — a special subdivision of a commercial bank responsible for implementing internal control; responsible employee — a person responsible for implementing internal control in a branch of a commercial bank; employees of the Internal Control Service — employees of the Internal Control Service at the head office of a commercial bank, the responsible employee at a branch of a commercial bank, or the head and employees of the Internal Control Service; the internal control system of a commercial bank — the sum of actions of the Internal Control Service aimed at achieving the goals and performing the tasks defined by these Rules and internal documents, carried out in cooperation with other subdivisions of the commercial bank; internal documents — documents regulating the activities of a commercial bank and approved by its management in accordance with legislation; internal rules — an internal document establishing the procedure for organizing and implementing internal control in a commercial bank and its branches; special authorized state body — the Department for Combating Tax and Currency Crimes and Money Laundering under the Prosecutor General of the Republic of Uzbekistan, acting on behalf of the Directorate for Combating Money Laundering and Terrorist Financing (hereinafter referred to as the Department); customer — a physical or legal person who has applied to a commercial bank with an order (application, request) to carry out an operation involving monetary funds or other property; beneficial owner of a customer — a legal person — a person who owns or controls the customer, i.e., one or more persons who have property or control rights over a person who benefits from the customer and (or) the operation being carried out; participants in an operation — customers, their representatives, and partners of the customer participating in the operation; suspicious operation — an operation involving monetary funds or other property, raised during the process of introducing these Rules, which has aroused suspicion and doubt in the commercial bank regarding whether it was carried out for the purpose of money laundering from criminal activities and (or) terrorist financing, until a decision is made to include (or not include) it in the list of suspicious and doubtful operations; doubtful operation — an operation involving monetary funds or other property, in the process of preparation, commission, or completion, which has raised suspicion in the commercial bank during the process of introducing these Rules that it was carried out for the purpose of money laundering from criminal activities and (or) terrorist financing; operations to be reported — operations
   involving monetary funds or other property identified based on a comprehensive analysis using the criteria and signs of suspicion established by these Rules, and which must be reported to the Department; one-time operations — operations involving monetary funds or other property carried out on a one-time basis without opening a bank account, which are not repeated for at least one month; regularly carried out operations — operations involving monetary funds or other property carried out regularly by customers during the analysis period; analysis period — a period during which a commercial bank analyzes a customer's operations involving monetary funds or other property in the next inspection stage, the duration of which may range from several days to several months depending on the type of operation performed by the customer; adequate verification of customers — the constant study of practical business relations and operations carried out by a customer, as well as the verification of the identity and powers of the customer and the persons on whose behalf the business is conducted, and the identification of the beneficial owner of the customer by studying the property and management structure based on constituent documents, in order to check their consistency with information about such a customer and their activities; identification of a customer — the determination of information about a customer by a commercial bank based on documents submitted by the customer for the purpose of adequate verification of the customer; identification of the beneficial owner of a customer — the determination of the owner or controlling person of a customer who is a legal entity by a commercial bank by studying the property and management structure based on constituent documents (charter and (or) founding agreement, statute) established by legislation; countries not participating in international cooperation in combating money laundering from criminal activities and terrorist financing — countries or territories that are not participating in international cooperation in combating money laundering from criminal activities and terrorist financing and are not introducing international standards in this area into their national legislation. The list of such countries and territories is formed by the Department; offshore zone — countries and territories that provide a preferential tax regime and (or) provide for non-disclosure and non-provision of information about financial operations; agencies participating in combating money laundering from criminal activities and terrorist financing — law enforcement, supervisory, licensing, registration, and other state bodies that have functions of control and supervision over the activities of organizations carrying out operations involving monetary funds or other property.

3. The goals of the internal control system of commercial banks are:
   effective detection and prevention of operations involving monetary funds or other property aimed at money laundering from criminal activities and terrorist financing; preventing the intentional or unintentional involvement of a commercial bank in criminal activities, the inclusion of capital obtained as a result of criminal activities in its charter fund (capital), and the entry of criminal persons into the management of a commercial bank; ensuring strict compliance with the requirements of legislation on combating money laundering from criminal activities and terrorist financing.

4. The main tasks of the internal control system of commercial banks are:
   implementing measures for adequate verification of customers in accordance with legislation, these Rules, and internal documents; identifying and studying the beneficial owners of customers, as well as implementing reasonable and possible measures to identify the source of monetary funds or other property used in carrying out an operation; detecting suspicious and doubtful operations based on criteria established by these Rules and internal documents; timely submission of information (documents) about suspicious operations identified during the implementation of internal control to the Department; suspension of operations to be reported, except for operations involving crediting funds to the account of a legal or physical person, for three working days from the date by which the operation must be performed, and notifying the Department of such an operation on the day the operation is suspended; ensuring the confidentiality of information related to combating money laundering from criminal activities and terrorist financing; ensuring the storage of information about operations involving monetary funds or other property, as well as identification information and materials on adequate verification of customers, within the time limits established by legislation; providing the management of a commercial bank with accurate information and materials on a regular and timely basis for making relevant decisions; forming a database of information about suspicious operations carried out or attempted, and persons related to customers who carried out suspicious operations (managers, founders), as well as exchanging such information with other commercial banks and state bodies in accordance with legislation; studying the internal control systems of banks establishing correspondent relationships with banks in the Republic and abroad; implementing necessary measures aimed at preventing illegal acts, in particular, the threat of using the services of a commercial bank for money laundering from criminal activities and (or) terrorist financing, using new technologies that increase the anonymity of operations; identifying persons related to terrorist activities from the customer database in response to inquiries.

5. To achieve the goals and tasks of the internal control system, the Internal Control Service performs the following functions:
   taking measures provided for by legislation, these Rules, and internal documents to prevent illegal acts, including the threat of using the services of a commercial bank for money laundering from criminal activities and (or) terrorist financing; monitoring compliance with the requirements of legislation and internal documents of a commercial bank by the commercial bank; preparing and submitting proposals to management for the elimination of identified shortcomings and errors in the activities of a commercial bank regarding non-compliance with the requirements of legislation and internal documents; monitoring the elimination of errors and shortcomings identified during inspections conducted by authorized representatives of the Central Bank of the Republic of Uzbekistan (hereinafter referred to as the Central Bank), the internal audit service of a commercial bank, external audit, and employees of the Department; collaborating with the Central Bank and the Department on issues of organizing internal control, preventing and eliminating violations of legislation, these Rules, and internal documents by employees.

6. Each commercial bank must develop, approve at the bank's board, and implement a regulation defining the duties, rights, and responsibilities of the Internal Control Service based on legislation and these Rules.
   This Regulation must reflect the following information about the Internal Control Service:
   its goals and tasks; methods to ensure its independence from other subdivisions of a commercial bank; its obligations regarding other subdivisions of a commercial bank, as well as employees of the internal audit service of a commercial bank; its right to receive information necessary for performing its assigned functions, as well as the obligation of employees of other subdivisions of a commercial bank to cooperate on issues of providing such information; its right to conduct studies of possible violations of legislation and internal documents; its right to freely express and disclose obtained information to the Chairman of the Management Board of a commercial bank and, if necessary, to the board of a commercial bank; its obligation to submit a relevant report to the Chairman of the Management Board; its obligation to provide advice to the management of a commercial bank on issues of compliance with legislation and standards, including information about changes in this area; requirements and procedures for selecting employees; the obligation to regularly attend special courses for advanced training.

7. Commercial banks must annually develop and approve internal rules reflecting the following, based on the requirements of these Rules:
   rules for adequate verification of customers, including identification of customers and their beneficial owners, as well as constant monitoring of customer operations; the procedure for formalizing necessary information and ensuring its confidentiality; the procedure for submitting information about evidence of violations of legislation to the Head of the Internal Control Service at the head office of a commercial bank (hereinafter referred to as the Head of the Internal Control Service) by employees of the Internal Control Service; qualification requirements for staff training and education; criteria for detecting suspicious operations and their signs; measures aimed at preventing the use of technological achievements for money laundering from criminal activities and (or) terrorist financing, and others. Internal rules are approved by the board of a commercial bank.

II. Organization of the Internal Control System

8. The internal control system of a commercial bank is organized taking into account the aspects of bank activities, main directions, customer base, and the level of risk associated with customers and their operations.

9. The structure of the internal control system of a commercial bank, including its branches, is determined by the decision of the board of a commercial bank and must be reviewed in accordance with the requirements of the Central Bank.

10. The structure of the internal control system of a commercial bank includes the Internal Control Service of the head office of a commercial bank, as well as the Internal Control Service or a responsible employee in each branch of a commercial bank.

11. The Internal Control Service is formed with a sufficient number of employees to achieve internal control goals and effectively perform tasks.

12. The Head and employees of the Internal Control Service are appointed by the order of the Chairman of the Management Board of a commercial bank.
    The Head of the Internal Control Service must have higher economic or legal education and at least three years of managerial work experience in a subdivision of a commercial bank related to the implementation of financial operations. The following requirements are imposed on a person appointed to the position of Head or employee of the Internal Control Service:
    knowledge of banking and financial legislation, including normative documents of the Central Bank; knowledge of accounting rules, as well as regular participation in special training courses for advanced training.

13. The following persons cannot be appointed to the position of Head or employee of the Internal Control Service:
    persons who have shown dishonest management of a entrusted subdivision or failure to perform duties conscientiously in their activities and ethics; persons previously convicted of a crime in the field of the economy.

14. Within 10 (ten) days after adopting a decision on forming the structure of the internal control system of a commercial bank and appointing the Head of the Internal Control Service, the commercial bank must notify the Central Bank about this, including questionnaire information about the appointed persons.

15. The Head and employees of the Internal Control Service have the following rights:
    request necessary order-giving and accounting documents from managers and employees of subdivisions of a commercial bank for the purpose of implementing internal control; make copies of documents obtained for the purpose of implementing internal control, local

Collection of Legislation of the Republic of Uzbekistan, 2009.
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