Commentary on Amendment and Addendum No. 10 to the Instruction on Opening Bank Accounts in Banks of the Republic of Uzbekistan

COMMENTARY ON AMENDMENT AND ADDENDUM NO. 10 TO THE INSTRUCTION ON OPENING BANK ACCOUNTS IN BANKS OF THE REPUBLIC OF UZBEKISTAN

Commentary on Amendment and Addendum No. 10 to the Instruction on Opening Bank Accounts in Banks of the Republic of Uzbekistan

As is known, the opening of bank accounts for clients (residents and non-residents), temporary blocking of accounts, their re-registration, and closure in the Republic of Uzbekistan are regulated on the basis of the requirements of the "Instruction on Opening Bank Accounts in Banks of the Republic of Uzbekistan" (registration number 1948, April 27, 2009).

The legal basis for this Instruction includes the Civil Code of the Republic of Uzbekistan, the Laws "On the Central Bank of the Republic of Uzbekistan," "On Banks and Banking Activity," "On Currency Regulation," and "On Electronic Documents Circulation," as well as Resolution No. 357 of the Cabinet of Ministers of the Republic of Uzbekistan dated August 20, 2003, "On Fundamental Improvement of the System of Procedures for Registration for Entrepreneurial Activity."

If amendments and additions are made to the above legislative acts or other legislative acts related to them, it becomes necessary to introduce relevant amendments and additions to Instruction No. 1948 as well. In particular, in order to create new facilities and privileges for the development of private entrepreneurship and small business activities by the leadership of our republic, many new legislative acts are being adopted, and relevant amendments and additions are being regularly made to existing legislative acts.

Accordingly, relevant amendments and additions are being made to the "Instruction on Opening Bank Accounts in Banks of the Republic of Uzbekistan" (registration number 1948, April 27, 2009), approved by Resolution No. 22/3 of the Board of the Central Bank of the Republic of Uzbekistan dated July 23, 2011, and relevant news were reported in previous issues of the newspaper.

The next amendments and additions to this Instruction were introduced on the basis of Resolution No. 24/3 of the Board of the Central Bank of the Republic of Uzbekistan dated September 5, 2015, and were registered with the Ministry of Justice of the Republic of Uzbekistan on September 15, 2015, under number 1948-10. Below, we discuss Amendment and Addendum No. 10 introduced into Instruction No. 1948.

Today, as a result of the widespread introduction of modern technological innovations into social life, a system of convenient opportunities for using electronic information databases is being created in the republic's legislative system. Any legislative act can be found in the existing electronic information repository by entering its state registration number or name. Therefore, the references to the sources of legislative acts that served as the basis for developing Instruction No. 1948 were removed from its preamble, and it is presented in the following edition:

"This Instruction establishes the procedure for opening, re-registering, and closing bank accounts in national and foreign currencies by banks in accordance with the Civil Code of the Republic of Uzbekistan, the Laws 'On the Central Bank of the Republic of Uzbekistan,' 'On Banks and Banking Activity,' 'On Currency Regulation,' and 'On Electronic Documents Circulation,' and Resolution No. 357 of the Cabinet of Ministers of the Republic of Uzbekistan dated August 20, 2003, 'On Fundamental Improvement of the System of Procedures for Registration for Entrepreneurial Activity.'"

Paragraph 3 of this Instruction grants legal entities the right to open demand deposit accounts, as well as savings, time, loan, and other deposit accounts in national and foreign currencies in one or several banks. According to Paragraph 9, accounts are opened for clients on the same day, and information is transmitted to the State Tax Committee of the Republic of Uzbekistan through the National Information Base of Bank Depositors of the Republic of Uzbekistan.

Furthermore, according to Paragraph 2.3 of the "Procedure for Using Information from the National Information Base of Bank Depositors for Automated Registration of Taxpayers for Tax Purposes" (registration number 614, January 30, 1999), changes occurring in the NIBD information are sent daily to the Tax Committee's mailbox.

As a result of the application in practice of the norms in Paragraph 9 of Instruction No. 1948 and Paragraph 2.3 of Regulation No. 614, the necessity for the norm established in Paragraph 5 of Instruction No. 1948, which states that "legal entities have the right to open secondary demand deposit accounts in national and foreign currencies in other banks after notifying the state tax authority where they are registered upon opening their main account," has disappeared. Therefore, Paragraph 5 of the Instruction was recognized as having lost its force.

The third bullet point of Paragraph 8 of Instruction No. 1948 noted that banks are prohibited from requesting additional documents other than those specified in this Instruction, with the exception of cases provided for by legislative acts. It can be seen from the amendments and additions being introduced into this document that any changes in legislative acts are immediately reflected in the relevant documents. Therefore, considering that the words "with the exception of cases provided for by legislative acts" are no longer necessary and may confuse users, these words were removed from the third bullet point of Paragraph 8 of Instruction No. 1948.

As is known, Resolution No. 555 of the Cabinet of Ministers was invalidated by Resolution No. 274 of the Cabinet of Ministers of the Republic of Uzbekistan dated September 25, 2012. On the basis of Resolution No. 312 of the Cabinet of Ministers of the Republic of Uzbekistan dated November 25, 2013, "On Measures to Introduce the Mechanism for Registering Business Entities through the Internet Network," the "Instruction on the Procedure for Operating in the Automated Information System for Registration and Identification of Legal Entities 'Reg-System'" (registration number 2594, June 12, 2014) was approved. The above legislative acts do not envisage the submission of a certificate from the statistical body confirming the entry of newly established economic entities into the Unified State Register of Enterprises and Organizations when opening accounts by banks. In this regard, the norm regarding the submission of a copy of the certificate of state registration to the bank by resident legal entities that are not subjects of entrepreneurial activity and recipients of budget funds for opening demand deposit accounts in national currency was recognized as having lost its force in sub-paragraph 'v' of Paragraph 13 of Instruction No. 1948, and relevant amendments and additions were introduced into the "Instruction on Opening Bank Accounts in Banks of the Republic of Uzbekistan" (registration number 1948, April 27, 2009) by Resolution No. 47/10 of the Board of the Central Bank of the Republic of Uzbekistan dated December 30, 2014, and registered with the Ministry of Justice on February 9, 2015, under number 1948-9.

However, the norm regarding the submission of a copy of the certificate confirming entry into the Unified State Register of Enterprises and Organizations issued by statistical bodies remained in sub-paragraph 'g' of Paragraph 28 of the Instruction, which establishes the procedure for commercial banks to open representative accounts in national currency. This paragraph was removed because it contradicts Resolution No. 274 of the Cabinet of Ministers of the Republic of Uzbekistan dated September 25, 2012.

A justified question arises! Where do banks obtain the information necessary to identify clients in accordance with the "Regulation on the National Information Base of Bank Depositors of the Republic of Uzbekistan and the Procedure for Assigning Unique Numbers to Clients and Maintaining the Register of Bank Accounts" (registration number 1863, September 27, 2008) and the "Internal Control Rules for Combating the Legalization of Income Obtained from Criminal Activity and Financing of Terrorism in Commercial Banks" (registration number 2528, November 21, 2013)?

As specified in Paragraph 22 of Instruction No. 2594, banks can obtain information about a legal entity from the Unified State Register of Enterprises and Organizations (KTAZR) in real-time by entering the Main Code of the Enterprise/Organization (KTUT) or the Taxpayer Identification Number (STIN) of the requested legal entity on the official website of the State Statistics Committee www.stat.uz. The round-the-clock operation of this system is ensured by the State Statistics Committee.

As is known, Part 10 of Article 84 of the Tax Code of the Republic of Uzbekistan establishes that banks may open bank accounts for legal entities and individual entrepreneurs only upon presentation of a document confirming their registration with the relevant body of the state tax service.

As noted above, the "Regulation on the Procedure for Registration, Accounting, and Formalization of Permissive Documents for Business Entities" approved in accordance with Resolution No. 357 of the Cabinet of Ministers of the Republic of Uzbekistan dated August 20, 2003, also serves as a legal basis for Instruction No. 1948. According to Paragraph 54 of this Regulation, after the completion of registration and permitting procedures, the registration body issues a certificate of state registration of the legal entity to business entities - legal entities - in the form specified in Appendix 6 to this Regulation, which separately specifies the Taxpayer Identification Number (STIN) as a separate requisite. The presence of the STIN in the certificate of state registration confirms compliance with the norm in Part 10 of Article 84 of the Tax Code, which states that "banks may open bank accounts for legal entities and individual entrepreneurs only upon presentation of a document confirming their registration with the relevant body of the state tax service."

However, the STIN is not specified in the documents to be submitted to the bank by resident legal entities that are not subjects of entrepreneurial activity and recipients of budget funds for opening demand deposit accounts in national currency.

Furthermore, in connection with the invalidation of Resolution No. 555 of the Cabinet of Ministers, according to the amendments and additions introduced into Instruction No. 1948 approved by Resolution No. 47/10 of the Board of the Central Bank of the Republic of Uzbekistan dated December 30, 2014, and registered with the Ministry of Justice on February 9, 2015, under number 1948-9, the norm regarding the submission of a copy of the certificate of state registration to the bank by resident legal entities that are not subjects of entrepreneurial activity and recipients of budget funds for opening demand deposit accounts in national currency was recognized as having lost its force.

Henceforth, when opening accounts for clients, banks can obtain the information necessary for client identification in accordance with the "Internal Control Rules for Combating the Legalization of Income Obtained from Criminal Activity and Financing of Terrorism in Commercial Banks" (registration number 2528, November 21, 2013) directly from the official website of the State Statistics Committee www.stat.uz in real-time, by entering the Main Code of the Enterprise/Organization (KTUT) or the Taxpayer Identification Number (STIN) of the requested legal entity, in accordance with Paragraph 22 of the "Instruction on the Procedure for Operating in the Automated Information System for Registration and Identification of Legal Entities 'Reg-System'" (registration number 2594, June 12, 2014), obtaining information about the legal entity from the Unified State Register of Enterprises and Organizations (KTAZR).

However, Instruction No. 1948 does not contain the norm established in Part 10 of Article 84 of the Tax Code, which states that "banks may open bank accounts for legal entities and individual entrepreneurs only upon presentation of a document confirming their registration with the relevant body of the state tax service."

Based on the above, to introduce into the list of documents to be submitted to the bank by resident legal entities that are not subjects of entrepreneurial activity and recipients of budget funds for opening demand deposit accounts in national currency a document confirming registration with the relevant body of the tax service, Paragraph 13 was supplemented with sub-paragraph 'd' specifying the submission of a document (certificate) confirming registration with state tax authorities.

The third bullet point of Paragraph 18 of Instruction No. 1948 specified that the opening of personal accounts for individuals in the deposit cash desks of banks is carried out in accordance with the "Instruction on the Procedure for Conducting Deposit Operations in Banks of the Republic of Uzbekistan" (registration number 2205, March 4, 2011). Due to the registration of the new edition of Instruction No. 2205, it was invalidated by Resolution No. 19/11 of the Board of the Central Bank of the Republic of Uzbekistan dated August 26, 2015. Therefore, the words "(registration number 2205, March 4, 2011) (Collection of Legislation of the Republic of Uzbekistan, 2011, No. 9, Article 97)" in the third bullet point of Paragraph 18 of Instruction No. 1948 were replaced with the words "(registration number 2711, August 26, 2015)."

As is known, since gaining independence, our Government has paid great attention to the introduction of modern practices such as cashless settlements through electronic payment documents using advanced technical means, information technologies, and information system services in banking activity, and the confirmation of payment documents with an electronic digital signature. Currently, their legal basis is being created. The currently in force Laws "On Electronic Payments," "On Informatization," and "On Electronic Digital Signature" are a clear confirmation of this.

In Decree No. PF-4609 of the President of the Republic of Uzbekistan dated April 7, 2014, "On Additional Measures to Further Improve the Investment Climate and Business Environment in the Republic of Uzbekistan," tasks were assigned to restrict the practice of confirming payment documents with a seal by small business entities, in connection with the expansion of the practice of confirming payment documents with an electronic digital signature and to create further conveniences for them. Furthermore, the Law of the Republic of Uzbekistan "On Accounting" does not contain a norm regarding the confirmation of accounting documents with a seal.

In Law No. ORQ-391 of the Republic of Uzbekistan dated August 20, 2015, "On Amendments and Additions to Some Legislative Acts of the Republic of Uzbekistan Aimed at Further Strengthening the Reliable Protection of Private Property by Business Entities and Removing Obstacles to Their Rapid Development," the rule of having a seal was left to the discretion of legal entities. Henceforth, legal entities and individual entrepreneurs may have a seal at their own discretion. The requirements of the above legislative acts necessitated a review of the norms established in Instruction No. 1948 regarding the presence of a seal for legal entities. Therefore, relevant amendments were introduced into several paragraphs of this document. Specifically, the words "signed and stamped" in Paragraph 35 were replaced with "signed and stamped (if a seal is present)," and Paragraph 36 was supplemented with the introductory phrase "These requirements of this paragraph are applied only if a seal is present" because it was established only with respect to the seal. Also, the name of Appendix 3 to the document was supplemented with the "*" symbol, and a note was provided on its front side: "*The spaces for the seal impression on this page are filled only if a seal is present."

When using the above changes, it should be noted that in Instruction No. 1948, only the presence of the legal entity's seal is optional. For legal entities that prefer to operate without a seal, it is sufficient to indicate only signature samples on the page of Signature Samples and Seal Impression submitted to the bank for opening an account. Furthermore, if existing bank customers prefer to work without a seal, they may apply to the service bank with a request to replace the page of Signature Samples and Seal Impression with a new one containing only signature samples. Conversely, legal entities wishing to work with a seal must submit to the bank a page of Signature Samples and Seal Impression with both signature samples and a seal impression sample for opening bank accounts. Therefore, the name of the page of Signature Samples and Seal Impression in Instruction No. 1948 remains unchanged.