Resolution of the Board

of the National Bank

of the Kyrgyz Republic

of 21 August 2019
No. 2019-П-33/43-7-(НФКУ)

«On approval of the Regulation «On minimum requirements for the organization

of internal control in exchange bureaus in the Kyrgyz Republic

for the purposes of countering the financing of terrorist activities

and legalization (laundering) of criminal proceeds»

In accordance with Articles 20 and 68 of the Law of the Kyrgyz Republic «On the National Bank of the Kyrgyz Republic, banks and banking activities», the Board of the National Bank of the Kyrgyz Republic resolves:

• 1. To approve the Regulation «On minimum requirements for the organization of internal control in exchange bureaus in the Kyrgyz Republic for the purposes of countering the financing of terrorist activities and legalization (laundering) of criminal proceeds» (attached).

• 2. To recognize as no longer in force:

  • the Resolution of the Board of the National Bank of the Kyrgyz Republic

  • «On approval of the Regulation «On minimum requirements for the organization of internal control in exchange bureaus in the Kyrgyz Republic for the purposes of countering the legalization (laundering) of criminal proceeds and the financing of terrorist or extremist activities» of 30 June 2010 No. 52/5;

  • the third paragraph of item 1 of the Resolution of the Board of the National Bank of the Kyrgyz Republic «On introducing amendments and additions to certain resolutions of the Board of the National Bank of the Kyrgyz Republic» of 29 January 2014 No. 2/15;

  • item 2 of the Appendix to the Resolution of the Board of the National Bank of the Kyrgyz Republic «On introducing amendments and additions to certain resolutions of the Board of the National Bank of the Kyrgyz Republic» of 29 January 2014 No. 2/15;

  • the fourth paragraph of item 1 of the Resolution of the Board of the National Bank of the Kyrgyz Republic «On introducing amendments and additions to certain resolutions of the Board of the National Bank of the Kyrgyz Republic» of 10 February 2016 No. 7/2;

  • item 3 of the Appendix to the Resolution of the Board of the National Bank of the Kyrgyz Republic «On introducing amendments and additions to certain resolutions of the Board of the National Bank of the Kyrgyz Republic» of 10 February 2016 No. 7/2.

• 3. To the Legal Department:

  • to publish this resolution on the official website of the National Bank of the Kyrgyz Republic;

  • after official publication, to send this resolution to the Ministry of Justice of the Kyrgyz Republic for inclusion in the State Register of Normative Legal Acts of the Kyrgyz Republic.

• 4. This resolution enters into force upon the expiration of fifteen days from the day of official publication.

• 5. To the Department of Supervision of Non-Bank Financial and Credit Organizations: to bring this resolution to the attention of exchange bureaus, regional departments and the representative office of the National Bank of the Kyrgyz Republic in Batken region.

• 6. To entrust control over the execution of this resolution to the member of the Board of the National Bank of the Kyrgyz Republic supervising the Department of Supervision of Non-Bank Financial and Credit Organizations.

Acting Chairman N.Zhenish

Appendix
to the Resolution of the Board of the National Bank of the Kyrgyz Republic of 21 August 2019 No. 2019-П-33/43-7-(НФКУ)

REGULATION

on minimum requirements for the organization of internal control in exchange bureaus in the Kyrgyz Republic for the purposes of countering the financing of terrorist activities and legalization (laundering) of criminal proceeds

Chapter 1. General provisions

1. The purpose of this Regulation is to define minimum requirements for the organization of internal control in exchange bureaus holding a license of the National Bank of the Kyrgyz Republic (hereinafter – the National Bank), for the purposes of countering the financing of terrorist activities and legalization (laundering) of criminal proceeds (hereinafter – CFT/AML).

2. The National Bank conducts inspections of the activities of exchange bureaus on issues of organizing internal control for CFT/AML purposes and sends information on its results to the authorized state body in the field of CFT/AML (hereinafter – the financial intelligence body) in the established procedure.

3. For the purposes of this Regulation, the following concepts are used:

Internal control – a set of measures to identify operations (transactions) subject to control and reporting and suspicious operations (transactions), as well as to prevent other operations (transactions) with monetary funds directly related to the financing of terrorist activities and legalization (laundering) of criminal proceeds.

Identification – the procedure for establishing identification data about the client and (or) the beneficial owner.

Verification – the procedure for verifying the identification data of the client and (or) the beneficial owner.

Beneficial owner – an individual (individuals) who ultimately (through a chain of ownership and control) directly or indirectly (through third parties) owns the right of ownership or controls the client, or an individual on whose behalf or in whose interests an operation (transaction) is carried out.

Identification of operations subject to control and reporting – a stage of organizing internal control for CFT/AML purposes, which includes determining operations subject to control and reporting.

Operations (transactions) subject to control and reporting – operations (transactions) with monetary funds provided for in Articles 23, 24, 25, 26 of the Law of the Kyrgyz Republic «On countering the financing of terrorist activities and legalization (laundering) of criminal proceeds».

Threshold amount – a value established by the Government of the Kyrgyz Republic.

The concept of «Extremist activity» corresponds to the norms of the conceptual apparatus of the Law of the Kyrgyz Republic «On countering extremist activity».

Chapter 2. Internal control system for CFT/AML

4. Exchange bureaus are obliged to develop and apply an internal control program, including those based on a risk-oriented approach, allowing effective implementation of the norms of the legislation of the Kyrgyz Republic in the field of CFT/AML. The internal control program of an exchange bureau must comply with the legislation of the Kyrgyz Republic in the field of AML/CFT, and is also developed and applied taking into account the specifics of the activity, staffing levels, client base and risk level of the exchange bureau.

The exchange bureau must have a person responsible for the development and implementation of the internal control program for compliance with AML/CFT legislation in accordance with the requirements established by the Government of the Kyrgyz Republic. The same responsible employee of the exchange bureau is sent for training at least once every three years. At the same time, the responsible employee must know the current legislation of the Kyrgyz Republic on AML/CFT issues.

5. Assessment of the adequacy of the program and procedures to the requirements of AML/CFT legislation, as well as assessment of the effectiveness and reliability of internal control for the purposes of compliance with AML/CFT legislation, are carried out by the person responsible for assessing the internal control system in the exchange bureau.

The general assessment of the adequacy of the program and procedures, as well as the assessment of the effectiveness and reliability of internal control rules for the purposes of compliance with AML/CFT legislation, are carried out on an ongoing basis, but not less than once every three years.

The norms specified in this paragraph do not apply to an exchange bureau in which the same person is the responsible employee, the head of the exchange bureau, as well as the head and participant/shareholder of the legal entity that opened the exchange bureau.

6. In the course of carrying out operations with cash foreign currency, employees of the exchange bureau must carry out the following measures:

• 1) When carrying out a one-time operation (transaction) or several interrelated one-time operations (transactions) for the purchase and sale (exchange) of cash national and/or foreign currency in the amount from 70,000 to 1,000,000 soms (or the equivalent amount in foreign currency calculated at the official rate of the National Bank on the day of the operation (transaction)), the identity of the client is established on the basis of an identity document.

Identity documents include:

    - in respect of citizens of the Kyrgyz Republic:

      - a) passport of a citizen of the Kyrgyz Republic of the 2004 model (ID card);

      - b) identification card – passport of a citizen of the Kyrgyz Republic of the 2017 model (ID card);

      - c) certificate of the civil registry authorities on the birth of a citizen – for a citizen of the Kyrgyz Republic who has not reached 16 years of age;

      - d) military ID;

      - e) driver's license;

    - in respect of foreign citizens:

      - a) passport of a foreign citizen;

      - b) residence permit in the Kyrgyz Republic;

    - in respect of stateless persons – residence permit in the Kyrgyz Republic;

    - in respect of refugees:

      - a) certificate of registration of an application for recognition of a person as a refugee;

      - b) refugee certificate.

In addition to establishing the identity of the client, employees of the exchange bureau must check the client for presence or absence in the Sanctions lists and the List of persons, groups, organizations with information about their participation in the legalization (laundering) of criminal proceeds.

• 2) When carrying out a one-time operation (transaction) or several interrelated one-time operations (transactions) for the purchase and sale (exchange) of cash national and/or foreign currency in an amount equal to or exceeding 1,000,000 soms (or the equivalent amount in foreign currency calculated at the official rate of the National Bank on the day of the operation (transaction)), employees of the exchange bureau are obliged to conduct proper due diligence of the client.

Proper due diligence of the client is expressed in the identification of the client: establish the identity of the client-individual: full name, place of residence, date of birth, citizenship – on the basis of an identity document (with photograph), and a document confirming the right of a foreign citizen or stateless person to stay (reside) in the Kyrgyz Republic, address of place of residence (registration) or place of stay, taxpayer identification number (if any) or social protection certificate number, authority to dispose of funds or property, as well as other data required in accordance with the normative legal acts of the Kyrgyz Republic.

Identification of the client is carried out by filling out a questionnaire of the client-individual in the form determined by the Government of the Kyrgyz Republic.

Note: the amount of the operation at which it is necessary to conduct identification of the client is established by the Regulation "On the procedure for conducting proper due diligence of the client", approved by the resolution of the Government of the Kyrgyz Republic of 25 December 2018 No. 606.

• 3) Determine and identify operations (transactions) subject to control and reporting.

• 4) form and send to the financial intelligence body the following reports in accordance with the requirements of the legislation of the Kyrgyz Republic in the field of AML/CFT:

  • a) report on a suspicious operation (transaction) – within five hours from the moment the operation is recognized as suspicious in the established procedure, regardless of the amount of the operation performed.

The list of criteria (signs) of suspicious operations (transactions) is formed by the financial intelligence body. Taking into account the specifics of the activity of exchange bureaus, in addition to the signs of suspicious operations (transactions) formed by the financial intelligence body, exchange bureaus must consider the following characteristic list of signs and criteria of suspicious operations, which may be subsequently supplemented:

      - unmotivated refusal or unjustified delay in providing by the client the requested information (full name, place of registration and residence, date of birth, passport data and other data required in accordance with the normative legal acts of the Kyrgyz Republic);

      - repeated conduct (14 or more times) during a month of operations for the purchase and sale of cash foreign currency that does not have a clear economic or obvious legal purpose, by the same person;

    - b) a report on a cash foreign currency exchange operation performed by individuals or legal entities from high-risk countries must be sent to the financial intelligence body regardless of the amount of the operation performed within two business days from the day of its performance;

    - c) a report on a cash foreign currency exchange operation performed by an individual who has served a sentence for carrying out the legalization (laundering) of criminal proceeds, terrorist or extremist activity, as well as for financing such activity, must be sent to the financial intelligence body within two business days from the day of the operation;

    - d) a report on a cash foreign currency exchange operation performed by public officials must be sent to the financial intelligence body within three business days from the day of the operation.

Reports are sent to the financial intelligence body in accordance with the procedure approved by the Government of the Kyrgyz Republic.

• 5) Record information on cash foreign currency exchange operations, including information about the client, if the amount of the operation (transaction) being performed is equal to or exceeds the threshold amount, in the log of registration of information on operations with clients and submit it to the financial intelligence body within three business days from the day of the operation.

• 6) Keep copies of documents and records relating to the identification, verification and study of the client, as well as the establishment of the beneficial owner, and information on cash foreign currency exchange operations, for at least five years after the transaction between the exchange bureau and the client.

• 6) Other measures, in accordance with the procedure for conducting cash foreign currency exchange operations in the Kyrgyz Republic.

7. The exchange bureau is not entitled to inform clients or other persons about the provision of information to the financial intelligence body in accordance with the requirements of legislation in the field of AML/CFT.

8. The exchange bureau must ensure the confidentiality of information relating to the identification, verification and study of the client, as well as the establishment of the beneficial owner, and information on cash foreign currency exchange operations.

9. The exchange bureau is liable for violation of legislation in the field of AML/CFT, including this Regulation, in the manner provided for by the normative legal acts of the Kyrgyz Republic.

10. The procedure for publishing the Sanctions Lists, the List of persons, groups, organizations with respect to which there is information about their participation in the legalization (laundering) of criminal proceeds, the List of high-risk countries, the List of individuals who have served a sentence for carrying out the legalization (laundering) of criminal proceeds, terrorist or extremist activity, as well as for financing such activity, and other lists and schedules provided for by the legislation of the Kyrgyz Republic in the field of AML/CFT is established by the Government of the Kyrgyz Republic.