Resolution of the Board of the National Bank of the Kyrgyz Republic of 28 December 2022

No. 2022-П-12/83-7-(НПА)

On Amendments

to Certain Regulatory Legal Acts

of the National Bank of the Kyrgyz Republic

In accordance with Articles 5, 9 and 64 of the Constitutional Law of the Kyrgyz Republic "On the National Bank of the Kyrgyz Republic", the Board of the National Bank of the Kyrgyz Republic resolves:

1. To introduce amendments to the following resolutions of the Board of the National Bank of the Kyrgyz Republic (attached):

• "On Certain Regulatory Legal Acts of the National Bank of the Kyrgyz Republic" of 30 June 2010 No. 52/4;

• "On Approval of the Procedure for the Work of Commercial Banks and Other Financial and Credit Organizations Licensed and Regulated by the National Bank of the Kyrgyz Republic with Pledged Property" of 4 July 2012 No. 28/7;

• "On Approval of the Regulation "On Certain Transactions/Operations of Commercial Banks and Microfinance Companies of the Kyrgyz Republic with Immovable Property" of 29 August 2012 No. 36/2;

• "On Approval of the Instruction on Working with Bank Accounts, Bank Deposit Accounts" of 31 October 2012 No. 41/12;

• "On Approval of the Regulation "On Corporate Governance in Commercial Banks of the Kyrgyz Republic" of 17 May 2017 No. 19/12;

• "On Approval of the Instruction "On Requirements for Bank Operations with Affiliated and Connected Persons of the Bank" of 31 May 2017 No. 21/5;

• "On Approval of the Regulation "On Minimum Requirements for External Audit of Banks and Other Financial and Credit Organizations Licensed by the National Bank of the Kyrgyz Republic" of 15 June 2017 No. 2017-П-12/25-2-(НПА);

• "On Approval of the Instruction on the Exercise of Banking Supervision" of 20 June 2018 No. 2018-П-12/24-2-(НПА);

• "On Approval of the Regulation "On Minimum Requirements for Liquidity Risk Management of Commercial Banks of the Kyrgyz Republic" of 29 March 2019 No. 2019-П-12/17-3-(НПА);

• "On Approval of the Regulation "On Minimum Requirements for the Organization of Internal Control in Commercial Banks for the Purpose of Countering the Financing of Terrorist Activities and the Legalization (Laundering) of Criminal Proceeds", the Regulation "On the Procedure for Conducting Exchange Operations with Cash Foreign Currency in the Kyrgyz Republic" and on Introducing Amendments and Additions to Certain Regulatory Legal Acts of the National Bank of the Kyrgyz Republic on Issues of Countering the Financing of Terrorist Activities and the Legalization (Laundering) of Criminal Proceeds" of 14 August 2019 No. 2019-П-12\42-1-(НПА);

• "On Temporary Decisions of the National Bank of the Kyrgyz Republic on Regulating the Activities of Commercial Banks of the Kyrgyz Republic" of 10 March 2022 No. 2022-П-12/13-2-(НПА).

2. This resolution enters into force upon the expiration of 15 (fifteen) days from the day of official publication.

3. To the Legal Department:

• from the day of receipt of the relevant documents, within 3 (three) working days, 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 Regulatory Legal Acts of the Kyrgyz Republic.

4. To the Supervision Methodology Department, after official publication, within 3 (three) working days, to bring this resolution to the attention of the Legal Entity Association "Union of Banks of Kyrgyzstan", commercial banks, OJSC "State Development Bank of the Kyrgyz Republic", the Legal Entity Association "Association of Microfinance Organizations", the Legal Entity Association "National Association of Credit Unions and Cooperatives", the Legal Entity Association "Association of Credit Information Users", non-banking and specialized financial and credit organizations, credit bureaus, exchange bureaus, structural subdivisions, regional departments and the representative office of the National Bank of the Kyrgyz Republic in Batken Oblast.

5. 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 Supervision Methodology Department.

Chairman K. Bokontaev

Annex
to the resolution of the Board of the National Bank of the Kyrgyz Republic of 28 December 2022 No. 2022-П-12/83-7-(НПА)

Amendments

to Certain Regulatory Legal Acts

of the National Bank of the Kyrgyz Republic

1. To introduce to the resolution of the Board of the National Bank of the Kyrgyz Republic "On Certain Regulatory Legal Acts of the National Bank of the Kyrgyz Republic" of 30 June 2010 No. 52/4 the following amendment:

in the Regulation "On Minimum Requirements for Credit Risk Management in Commercial Banks and Other Financial and Credit Organizations Licensed by the National Bank of the Kyrgyz Republic", approved by the above-mentioned resolution:

• in the twenty-fourth paragraph of subparagraph 4 of paragraph 30, the first sentence shall be set forth in the following wording:

"- the bank may independently or with the involvement of an appraiser/appraisal organization conduct an assessment of the value of the collateral.".

2. To introduce to the resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the "Procedure for the Work of Commercial Banks and Other Financial and Credit Organizations Licensed and Regulated by the National Bank of the Kyrgyz Republic with Pledged Property" of 4 July 2012 No. 28/7 the following amendments:

in the "Procedure for the Work of Commercial Banks and Other Financial and Credit Organizations Licensed and Regulated by the National Bank of the Kyrgyz Republic with Pledged Property", approved by the above-mentioned resolution:

• paragraph 8 shall be set forth in the following wording:

"8. If the credit policy provides for the acceptance of pledged property located (registered) outside the Kyrgyz Republic, in this case the board of directors of the bank/FCO shall be responsible for ensuring the repayment of loans in accordance with the legislation of the Kyrgyz Republic.";

• in paragraph 10:

the first paragraph shall be set forth in the following wording:

«10. The Bank/MFO must analyze the state of the relevant market (movable/immovable property, etc.) and determine the criteria by which a particular property is accepted as collateral. The quality criteria depending on the type of pledged property may be different, but must at a minimum take into account the following:»;

in the sixth paragraph, replace the word «условия» with the word «критерии»;

• restate paragraph 11 as follows:

«11. The Bank/MFO must verify the existence of the collateral with a visit to its location and check its quality. Based on the results of the check, a report is drawn up, which is certified by the signature of the head of the structural subdivision for lending/work with collateral and must include at a minimum the following information:

• location of the collateral;

• conditions of storage of the collateral;

• qualitative and quantitative parameters of the collateral;

• fair value based on an internal valuation or a valuation by an appraiser/appraisal organization;

• the approaches used and/or methodology for valuing the collateral;

• other.»;

  • in paragraph 16, restate paragraphs five and six as follows:

    • «- engagement of an appraiser/appraisal organization;

    • the quantitative ratio of the loan amount to the fair value of the collateral;»;

  • in paragraph 20:

restate the first paragraph as follows:

«20. When the bank/MFO considers the subject of collateral as security for a loan, the following characteristics of the collateral should be taken into account:»;

in the text in the official language, in the second paragraph, replace the word «справедливая» with the word «справедливую»;

restate paragraphs seven and eight as follows:

• «- description of the current economic conditions and market situation that affect the fair value of the collateral at its location;

• other necessary information to ensure a quality analysis.»;

  • restate paragraph 21 as follows:

«21. In the documents of the bank/MFO regulating the basic principles of working with collateral, it is necessary to provide that, if the bank/MFO is unable to independently and competently conduct a valuation of the collateral, the bank/MFO must conclude an agreement with an appraiser/appraisal organization.»;

• in paragraph 21-1:

in the first paragraph, replace the words «независимого оценщика» with the words «оценщика/оценочной организации»;

in the second paragraph, replace the words «оценщика (внутреннего либо привлеченного)» with the words «внутреннего оценщика/ оценщика/оценочной организации»;

in the fourth paragraph, replace the words «независимому (привлеченному) оценщику» with the words «оценщику/оценочной организации»;

restate the fifth paragraph as follows:

• «- the assumption that the current or future use of the services of an internal appraiser/ appraiser/appraisal organization depends on the amount at which the internal appraiser/appraiser/appraisal organization values the property;»;

in the sixth paragraph, replace the words «независимого (привлеченного) оценщика» with the words «оценщика/оценочной организации»;

in the seventh paragraph, replace the words «независимым оценщиком» with the words «оценщиком/оценочной организацией»;

• in the first paragraph of paragraph 23-1, replace the words «независимых специалистов-оценщиков, имеющих соответствующий сертификат» with the word «оценщика».

3. Make the following amendments to the Resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the Regulation 'On Certain Transactions/Operations of Commercial Banks and Microfinance Companies of the Kyrgyz Republic with Real Property'" dated 29 August 2012 No. 36/2:

in the Regulation "On Certain Transactions/Operations of Commercial Banks and Microfinance Companies of the Kyrgyz Republic with Real Property", approved by the above-mentioned resolution:

• in paragraph 3:

the sixth paragraph shall be worded as follows:

"Valuation – is the process of determining (calculating) the value of real property as of a specific date on the basis of a valuation report prepared by a valuer/valuation organization in accordance with the requirements of the legislation on valuation activities.";

the paragraph shall be supplemented with the seventh and eighth paragraphs of the following content:

"Valuer (independent specialist valuer) – an individual holding a qualification certificate for carrying out valuation activities, issued in the manner established by the Cabinet of Ministers of the Kyrgyz Republic.

Valuation organization – a legal entity registered in the manner established by legislation, whose main activity is valuation activities, and which has at least two valuers holding qualification certificates on its staff.";

• in subparagraph "g" of paragraph 7, the words "independent valuer" shall be replaced with the words "valuer/valuation organization";

• in paragraph 16:

in subparagraph "v", the words "independent valuer" shall be replaced with the words "valuer/valuation organization";

in the text in the official language, the word "other" shall be excluded;

• in the first paragraph of paragraph 27, the words "independent professional valuer" shall be replaced with the words "valuer/valuation organization";

• in paragraph 28:

in the second paragraph, the words "independent (engaged) valuer" shall be replaced with the words "valuer/valuation organization";

the eighth paragraph shall be worded as follows:

"A valuer/valuation organization may carry out the valuation of the same other real property of the bank no more than two times in a row.";

• paragraph 29 shall be worded as follows:

"29. The bank's assignment for the valuation of other real property to a valuer/valuation organization shall be executed in writing, and the report of the valuer/valuation organization on the valuation shall include the valuation assignment and contain the results of the valuation for all parameters specified in the bank's valuation assignment.

For the valuation of other real property, the bank shall enter into a contract for the performance of the valuation with a valuer/valuation organization in accordance with the requirements of legislation.".

4. Make the following amendments to the Resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the Instruction on Working with Bank Accounts, Accounts for Bank Deposits (Deposits)" dated 31 October 2012 No. 41/12:

in the Instruction on Working with Bank Accounts, Accounts for Bank Deposits (Deposits), approved by the above-mentioned resolution:

• in paragraph 11:

the paragraph shall be supplemented with the eighth paragraph of the following content:

"High-risk countries – states and territories (entities) that do not apply or apply to an insufficient extent international standards on combating money laundering, terrorism financing and weapons of mass destruction financing, as well as offshore zones.";

the seventeenth paragraph shall be worded as follows:

"Financial Intelligence Unit – the authorized state body of the Kyrgyz Republic in the field of combating terrorism financing and legalization (laundering) of criminal proceeds.";

• in the third paragraph of paragraph 15, the words "approved by the resolution of the Government of the Kyrgyz Republic and the National Bank of the Kyrgyz Republic dated 9 September 2005 No. 420/21/4" shall be replaced with the words "approved by the resolution of the Board of the National Bank of the Kyrgyz Republic dated 8 December 2021 No. 2021-П-14/68-7-(ПС).";

• in the second paragraph of paragraph 22-3, the word "Government" shall be replaced with the words "Cabinet of Ministers";

• paragraph 28 shall be worded as follows:

"28. In the event that the original of a document submitted to the bank in accordance with the requirements of this Instruction is drawn up in a foreign language, a translation of the documents into the state or official language of the Kyrgyz Republic, certified by a translation agency, shall be submitted to the bank.";

• in paragraph 39, the words "of a minor person" shall be replaced with the word "child";

• throughout the text of paragraph 42, the word "minor" in various case forms shall be replaced with the word "child" in the corresponding case forms;

• paragraph 48 shall be supplemented with the eighth paragraph of the following content:

"In the event of identification of an individual entrepreneur in accordance with the requirements of the Procedure for Identification and Verification of Clients in Remote Mode, the opening of accounts under a bank account agreement shall be carried out without the personal presence of the depositor himself/herself.";

in Appendix 1 to the Instruction:

• subparagraph 2 of paragraph 1 shall be worded as follows:

"2) verification of the client before and during the opening of a bank account, as well as checking of information after the opening of the account, in the cases provided for by this Instruction;";

• in paragraph 3, the word "minors" shall be replaced with the words "children under 16 years of age";

• paragraph 5 shall be worded as follows:

"5. For the identification of individuals, the bank shall use one of the following documents:

1) for citizens of the Kyrgyz Republic:

• passport of a citizen of the Kyrgyz Republic (ID card);

• birth certificate (for opening an account in favor of children under 14 years of age, as well as for opening an account by the child himself/herself aged from 14 to 16 years);

• identity card of an officer, warrant officer, or military ID of a serviceman of conscript service;

• driver's license (only when replenishing a client's bank account by third parties, as well as by the clients themselves who have an account in the bank);

  • 2. for foreign citizens:

    • passport of a foreign citizen;

    • residence permit in the Kyrgyz Republic;

  • 3. for stateless persons – residence permit in the Kyrgyz Republic;
  • 4. for refugees:

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

    • refugee certificate;

  • 5. for kairylmans – kairylman certificate.";

• in paragraph 7, the word "must" shall be replaced with the words "shall be entitled, taking into account the application of a risk-based approach";

• in the first paragraph of paragraph 10, the word "verification" shall be replaced with the word "check";

• in the first paragraph of paragraph 11, the word "verification" shall be replaced with the words "due diligence";

• paragraph 12 shall be stated in the following wording:

"12. When carrying out transactions on a bank account, the client must indicate the purpose of the payment and provide the bank with payment documents drawn up in accordance with the requirements established by the regulatory legal acts of the Kyrgyz Republic.

The bank shall be entitled to require the client to provide documents confirming the legality and economic expediency of the transaction, using a risk-based approach. Such documents may include invoices issued to the client, contracts concluded by the client, payment documents (for example, invoices, bills of lading), etc.

In the event of the client's refusal to provide the requested documents, the bank must refuse to carry out the transaction on the account. This condition must be stipulated in the bank account agreement between the bank and the client.

The bank must establish reasonable deadlines for the client to submit additional documents, including information about the counterparty, but not more than 10 (ten) working days, for the purpose of determining the economic expediency and legality of the transactions carried out, as well as the source of origin of the client's funds and the beneficial owner. If the client has not submitted the documents requested by the bank within the established deadlines, the bank must refuse the client to carry out the transaction on the account.

If the client's transactions are recognized as suspicious and/or the client is assigned a high risk level, the bank shall not be entitled to carry out any transactions on the client's account while awaiting the requested documents until the client submits the relevant documents.";

in Appendix 3 to the Instruction:

• paragraph 3 shall be stated in the following wording:

"3. The bank shall not be entitled to establish correspondent relations with banks, as well as with their affiliated persons, subsidiary banks and separate subdivisions that are not independent legal entities, registered in high-risk countries (offshore zones), the list of which is approved by a decision of the Commission on Combating the Financing of Terrorist Activities and the Legalization (Laundering) of Criminal Proceeds on the proposal of the financial intelligence unit and on the basis of the FATF Public Statement.

Note: FATF is an intergovernmental organization (group) for the development and implementation of international standards on combating money laundering, terrorist financing and the financing of the proliferation of weapons of mass destruction.

The list of high-risk countries is determined by the financial intelligence unit.";

• the second paragraph of paragraph 4 shall be stated in the following wording:

“If the bank establishes correspondent relations with banks from high-risk countries, the bank’s risk of involvement in the financing of terrorist activities and the legalization (laundering) of criminal proceeds increases.”.

5. To introduce into the resolution of the Board of the National Bank of the Kyrgyz Republic “On approval of the Regulation ‘On corporate governance in commercial banks of the Kyrgyz Republic’” of 17 May 2017 No. 19/12 the following changes:

in the Regulation “On corporate governance in commercial banks of the Kyrgyz Republic”, approved by the above-mentioned resolution:

• paragraph 3-1 shall be set out in the following wording:

“3-1. The Board of Directors and the Management Board of the bank have the right to engage advisers, consultants (specialists, experts, etc.) to prepare analytical, reference, informational materials and recommendations on matters within their remit in accordance with the duties assigned to them.

The activities of advisers and consultants must be carried out within the framework of job descriptions/service provision contracts.

Advisers and consultants are not officials of the bank and cannot be involved in the conduct of the bank’s operational activities (lending, etc.). The opinions of advisers and consultants are advisory in nature, and the said bodies bear responsibility for all decisions taken by the Board of Directors and the Management Board of the bank.”;

• paragraph 6 shall be set out in the following wording:

“6. Matters within the exclusive competence of the general meeting of shareholders of the bank are determined by the laws of the Kyrgyz Republic “On banks and banking activity” and “On joint-stock companies”.”;

• paragraph 8 shall be set out in the following wording:

“8. In accordance with the Law of the Kyrgyz Republic “On banks and banking activity” (hereinafter – the Law), shareholders of the bank must not take actions that harm the interests of the bank’s clients.”;

• the first paragraph of paragraph 10 shall be supplemented with a sentence as follows:

“The Regulation on the Board of Directors is approved by the general meeting of shareholders.”;

• in the text in the official language, in the fourth paragraph of paragraph 12, the word “соответствующей” shall be replaced by the word “соответствующие”;

• in the text in the official language of paragraph 18:

  • in the second paragraph, the words “касающимся”, “несущим” shall be replaced by the words “касающихся”, “несущими”;

  • in the third paragraph, the word “установленной” shall be replaced by the word “утвержденной”;

• in the text in the official language of the twelfth paragraph of paragraph 19, the word “роспись” shall be replaced by the word “подпись”;

• in the text in the official language of the fifth sentence of paragraph 20, the word “роспись” shall be replaced by the word “подпись”;

• in the first sentence of the first paragraph of paragraph 22, the word “монетарным” shall be replaced by the word “банковским”;

• in the text in the official language of the first paragraph of paragraph 24, the word “ими” shall be replaced by the word “им”;

• in paragraph 28:

  • in the text in the official language of the fourth paragraph, the word “представление” shall be replaced by the word “предоставление”;

  • in the text in the official language of the fifth, sixth and seventh paragraphs, the word “представлять” shall be replaced by the word “предоставлять”;

  • the ninth paragraph, after the word “нормативных”, shall be supplemented with the word “правовых”;

• in the text in the official language of the twelfth paragraph of paragraph 30, the word “роспись” shall be replaced by the word “подпись”;

• in the text in the official language of the second paragraph of paragraph 31, the words “принятии решений” shall be replaced by the words “принятии решения”;

• in the text in the official language of paragraph 32:

  • the third paragraph shall be set out in the following wording:

“- use the powers granted to them for the purpose of performing the tasks and functions for which they are appointed for the period established by the Law;”;

• in the sixth paragraph, the words “в отношении” shall be replaced by the words “по отношению”;

• paragraph 38 shall be set out in the following wording:

“38. The Committee considers candidates for the position of Corporate Secretary, assesses candidates for compliance with the established requirements and submits its recommendations to the Board of Directors.”;

• in paragraph 39, the words “нормативным актом по вознаграждению” shall be replaced by the words “документом о вознаграждениях”;

• in the first paragraph of paragraph 40, the word “предоставляемого” shall be replaced by the word “установленного”;

• the first paragraph of paragraph 40-1 shall be set out in the following wording:

“40-1. The remuneration system must be organized in such a way as to ensure a reasonable level of ratio of remuneration to the results of the bank’s work and the personal contribution of the bank’s employee to achieving these results.”;

• in the text in the official language of the second sentence of paragraph 42, the words “должен”, “взвешиваются” shall be replaced by the words “должны”, “взвешиваться”;

• in the first paragraph of paragraph 43, the words “нормативный акт” shall be replaced by the word “документ”;

• paragraph 44 shall be set out in the following wording:

“44. A New Products Committee may be created in the bank to decide on the need to develop new banking products, introduce new products to the banking services market, to control the process of the bank’s entry into the market of new products developed by the bank in accordance with the requirements of legislation on antimonopoly regulation, as well as when transitioning to digital service channels, in order to establish an acceptable level of risks and create adequate systems for controlling digital banking operations.”;

• paragraph 45 shall be set out in the following wording:

“45. The Committee is authorized to take decisions regarding new banking products and the transfer of banking operations to digital platforms in order to ensure an effective, targeted and controlled process of initial assessment, subsequent development, testing and introduction of banking products or services within existing resource constraints.”;

• paragraph 46 shall be set out in the following wording:

“46. The Committee may determine the degree of involvement of particular bank divisions in the process of developing new banking products and digital banking platforms.”;

• paragraph 47 shall be set out in the following wording:

“47. The Committee must conduct an assessment of risks and ways to reduce (minimize) them during the development and introduction of new banking products, as well as during the transfer of banking operations to digital platforms.”;

• paragraph 48 shall be set out in the following wording:

«48. The activities of the Committee shall be regulated by the requirements of the legislation of the Kyrgyz Republic and the internal regulation on the Committee, which is approved by the bank's Board of Directors.»;

• supplement paragraph 49 with a second sentence as follows:

«When introducing new banking products related to digital banking platforms and remote customer servicing, the heads of structural subdivisions for information technology and information security must be included in the committee without fail.»;

• restate paragraph 50 as follows:

«50. When adopting a decision on the development and introduction of new banking products and digital banking servicing platforms, the Committee must, within its powers, comply with the requirements of the legislation and regulatory legal acts of the Kyrgyz Republic.»;

• in the first paragraph of paragraph 53, replace the words «normative acts» with the word «documents»;

• in paragraph 55, replace the words «normative acts» with the word «documents»;

• in paragraph 56:

  • in the text in the official language, in the first paragraph, replace the word «ими» with the word «им»;

  • in subparagraph 1, replace the words «normative acts» with the word «documents»;

  • in the text in the official language of subparagraph 3, replace the words «в отношении» with the words «по отношению»;

• in the text in the official language of the title of chapter 8, replace the word «conflicts» with the word «conflict»;

• in paragraph 58:

  • in the third paragraph, replace the word «conducting» with the word «implementation»;

  • restate paragraphs six and seven as follows:

    • «- prevention of conflicts of interest and identification of situations and areas of activity where a conflict of interest may arise;

    • establishment of remuneration, compensations and incentives for an employee (including the Board of Directors and the Management Board), taking into account not only the bank's performance results, but also in accordance with the strategic goals and compliance with the bank's professional ethics standards;»;

• restate paragraph 60 as follows:

«60. The bank must develop mechanisms ensuring compliance with the requirements of the legislation and regulatory legal acts of the National Bank on preventing conflicts of interest and regulating transactions with affiliated and related persons of the bank, with members of the Management Board, the Board of Directors, with other officials, significant participants, as well as any other individuals connected with the said persons by common interests.

In order to identify and prevent conflicts of interest, the bank needs at least the following:

• develop procedures for informing the bank's Board of Directors and Management Board about potential threats in the bank's activities related to conflicts of interest;

• ensure that officials and employees of the bank provide information about close relatives before appointment (election) to a position;

• maintain a database on instances of conflicts of interest.

In the event of a conflict of interest, an official or employee of the bank is obliged to immediately notify the bank's Management Board and/or Board of Directors thereof.

Untimely disclosure of a conflict of interest entails liability in accordance with the banking legislation of the Kyrgyz Republic.»;

• restate the first paragraph of paragraph 61 as follows:

«61. The Nominations and Remuneration Committee ensures compliance with the bank's internal documents concerning:».

6. To introduce the following change to the resolution of the Management Board of the National Bank of the Kyrgyz Republic «On approval of the Instruction «On requirements for bank transactions with affiliated and related persons of the bank» dated 31 May 2017 No. 21/5:

in the Instruction «On requirements for bank transactions with affiliated and related persons of the bank», approved by the above-mentioned resolution:

• in subparagraph 6 of paragraph 13, replace the words «independent appraiser» with the words «appraiser/appraisal organization».

7. To introduce the following changes to the resolution of the Management Board of the National Bank of the Kyrgyz Republic «On approval of the Regulation on minimum requirements for external audit of banks and other financial and credit organizations licensed by the National Bank of the Kyrgyz Republic» dated 15 June 2017 No. 2017-П-12/25-2-(НПА):

in the Regulation on minimum requirements for external audit of banks and other financial and credit organizations licensed by the National Bank of the Kyrgyz Republic, approved by the above-mentioned resolution:

• restate the second paragraph of paragraph 3 as follows:

«External audit of a bank – an independent examination of the bank's activities for the purpose of expressing an independent opinion on the reliability of the financial statements in all material respects in accordance with international financial reporting standards and other information in accordance with the legislation of the Kyrgyz Republic.»;

• restate the fourth paragraph of paragraph 7 as follows:

«- the procedure and terms of payment for the services of the audit organization for the audit of financial statements, as well as for the provision of related (non-audit) services to the bank and organizations controlled by the bank.»;

• restate the second paragraph of subparagraph «a» of paragraph 13 as follows:

«This notification must state the existence of registration in the Unified State Register (individual registration number of the audit organization and auditor, date of registration), legal address, including telephone numbers of the audit organization, full name of the head of the audit organization;»;

• restate paragraph 14 as follows:

«14. The external auditor of a bank may only be an audit organization included in the Unified State Register of Auditors, Audit Organizations and Professional Audit Associations on the territory of the Kyrgyz Republic and meeting the requirements established by the National Bank for the audit of banks.»;

• restate paragraph 16 as follows:

«16. The external auditor of a bank must remain independent, objective, and avoid situations that give grounds to believe that a conflict of interest exists. The bank's external auditor, in the presence of risks posing a threat to the independence of the audit organization and the auditor, must provide the bank, in written or electronic form, with information about such risks and the measures applied to mitigate them.»;

• the second paragraph of paragraph 19 shall be amended to read as follows:

«- be included in the Unified State Register of Auditors, Audit Organizations and Professional Audit Associations in the territory of the Kyrgyz Republic, and also have at least three years of audit experience;»;

• the first paragraph of paragraph 20 shall be amended to read as follows:

«20. The head of the audit of financial statements must be listed in the Unified State Register of Auditors, Audit Organizations and Professional Audit Associations in the territory of the Kyrgyz Republic, and must possess:»;

• paragraph 24 shall be amended to read as follows:

«24. A bank heading a banking group, a banking holding company or a parent company and a subsidiary of a bank, constituting an audited group, shall undergo an annual audit by an independent audit organization (external auditor) included in the Unified State Register of Auditors, Audit Organizations and Professional Audit Associations in the territory of the Kyrgyz Republic in accordance with the requirements of this Regulation.»;

• paragraph 40 shall be amended to read as follows:

«40. The audit report shall be prepared in compliance with international auditing standards and the requirements of the National Bank. At the same time, for all users, in accordance with international financial reporting standards, the audit report on the bank's financial statements must be unified.»;

• subparagraph 2 of paragraph 52 shall be amended to read as follows:

«2) the conduct of activity by an audit organization not included in the Unified State Register of Auditors, Audit Organizations and Professional Audit Associations in the territory of the Kyrgyz Republic;».

8. To introduce the following changes to the resolution of the Board of the National Bank of the Kyrgyz Republic «On approval of the Instruction on the implementation of banking supervision» dated 20 June 2018 No. 2018-П-12/24-2-(НПА):

in the Instruction on the implementation of banking supervision approved by the above-mentioned resolution:

• paragraph 1 shall be amended to read as follows:

«1. In accordance with the Constitutional Law of the Kyrgyz Republic «On the National Bank of the Kyrgyz Republic», the Law of the Kyrgyz Republic «On Banks and Banking Activity», the National Bank of the Kyrgyz Republic (hereinafter – the National Bank) shall carry out banking supervision and establish regulatory norms for the purpose of ensuring the stability and reliability of the banking system of the Kyrgyz Republic, protecting the interests of depositors, other consumers and other creditors, and compliance with the banking legislation of the Kyrgyz Republic.»;

• the ninth paragraph of paragraph 4 shall be amended to read as follows:

«- financial intelligence body - the authorized state body of the Kyrgyz Republic in the field of countering the financing of terrorist activity and the legalization (laundering) of criminal proceeds.»;

• in paragraph 7:

  • the eleventh paragraph shall be amended to read as follows:

«In addition, curators/institutional inspectors may meet with the bank's external auditors as necessary, but not less than once a year, and participate in general meetings of shareholders (annual/extraordinary).»;

• paragraph shall be supplemented with the twelfth paragraph as follows:

«When holding a general meeting of shareholders, the bank must notify the National Bank 5 (five) working days before the holding, sending the agenda and materials of the general meeting of shareholders in 2 (two) copies. During the general meeting of shareholders, curators must be provided with copies of the attendance sheet and shareholders' powers of attorney (if any).»;

• in Appendix 3, in the text in the official language, the words «Акт в том» shall be replaced by the words «Акт о том».

9. To introduce the following changes to the resolution of the Board of the National Bank of the Kyrgyz Republic «On approval of the Regulation «On minimum requirements for liquidity risk management of commercial banks of the Kyrgyz Republic» dated 29 March 2019 No. 2019-П-12/17-3-(НПА):

in the Regulation «On minimum requirements for liquidity risk management of commercial banks of the Kyrgyz Republic» approved by the above-mentioned resolution:

• paragraph 11 shall be supplemented with the second paragraph as follows:

«At the same time, the risk management employee must be included in the ALCO with the right of an advisory vote.»;

• the second paragraph of paragraph 50-1 shall be amended to read as follows:

«The liquidity indicator in foreign currency (LI) shall be calculated in accordance with paragraph 15 of the Regulation «On economic norms and requirements mandatory for commercial banks of the Kyrgyz Republic» approved by resolution of the Board of the National Bank dated 14 December 2022 No. 2022-П-12/78-7-(НПА) (hereinafter - the Regulation «On economic norms and requirements mandatory for commercial banks of the Kyrgyz Republic») for each foreign currency separately, the position of which is significant.»;

• in paragraph 50-2, the figure «21» shall be replaced by the figure «22»;

• in paragraph 50-3, the figure «25» shall be replaced by the figure «26».

10. To introduce the following changes to 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 commercial banks for the purpose of countering the financing of terrorist activity and the legalization (laundering) of criminal proceeds», the Regulation «On the procedure for conducting exchange operations with cash foreign currency in the Kyrgyz Republic» and on introducing changes and additions to certain normative legal acts of the National Bank of the Kyrgyz Republic on issues of countering the financing of terrorist activity and the legalization (laundering) of criminal proceeds» dated 14 August 2019 No. 2019-П-12/42-1-(НПА):

in the Regulation "On the Procedure for Conducting Exchange Operations with Cash Foreign Currency in the Kyrgyz Republic", approved by the above-mentioned resolution:

• in paragraph 3:

  • the twelfth paragraph shall be stated as follows:

"Financial Intelligence Body – an authorized state body of the Kyrgyz Republic in the field of combating terrorist financing and legalization (laundering) of criminal proceeds.";

• the twenty-second paragraph shall be stated as follows:

"Threshold amount – a value established by the Cabinet of Ministers of the Kyrgyz Republic.";

• in paragraph 8:

  • subparagraph 11 shall be stated as follows:

"11) have books of reference-certificates, except for banks and their exchange offices;";

• in the first sentence of the thirty-first paragraph, after the word "bank" add the words ", exchange bureau, MFC, MCC, CS, SFU";

• in the thirty-fourth paragraph, replace the word "Government" with the words "Cabinet of Ministers";

• in paragraph 20:

  • the first paragraph shall be stated as follows:

"20. Banks and their exchange offices, exchange bureaus, MFC, MCC, CS, SFU, when buying or selling foreign currency, regardless of the amount of foreign currency purchased or sold, are obliged to issue a document confirming the transaction. Exchange bureaus, MFC, MCC, CS, SFU, at the client's request, are obliged to fill out a reference-certificate through carbon paper (Appendix 4).";

• the third paragraph shall be stated as follows:

"The first copy of the reference-certificate is issued to the client. The second copies of the reference-certificates are stored in the exchange bureau, MFC, MCC, CS, SFU.";

• paragraph 21 shall be stated as follows:

"21. The reference-certificate must be signed by an authorized person in accordance with internal procedures and job duties, and certified by the seal (stamp) of the exchange bureau, MFC, MCC, CS, SFU. Without the appropriate details, signatures of the employee and the seal (stamp) of the exchange bureau, MFC, MCC, CS, SFU, the reference-certificate is invalid.

Used books of reference-certificates with second copies are stored by MFC, MCC, CS, exchange bureaus, SFU for 1 (one) year from the day of the last entry in them.";

• paragraph 22 shall be stated as follows:

"22. Exchange bureaus, MFC, MCC, CS, SFU are obliged to ensure proper accounting, storage and preservation of reference-certificate forms. In case of their damage, spoilage or destruction, the exchange bureau, MFC, MCC, CS, SFU are obliged to draw up a corresponding act.";

• in paragraph 27:

  • in the text in the official language of subparagraph 1, replace the word "som" with the word "soms";

  • in the text in the official language of subparagraph 2, replace the word "som" with the word "soms";

  • the fourth paragraph of subparagraph 2 shall be stated as follows:

"Note: the list of identity documents is established by the Regulation "On the Procedure for Conducting Proper Customer Due Diligence", approved by resolution of the Government of the Kyrgyz Republic dated 25 December 2018 No. 606.";

• in paragraph 30:

  • in the text in the official language of subparagraph 1, replace the word "som" with the word "soms";

  • in the text in the official language of the first and fourth paragraphs of subparagraph 2, replace the word "som" with the word "soms";

  • supplement the paragraph with the seventh paragraph as follows:

"Information on the identification of client data must be recorded in the transaction registration journal (Appendix 3).;

• Appendix 1a to the Regulation shall be stated as follows:

"Appendix 1a

Journal for recording information on operations conducted with clients for transmission to the financial intelligence body

JOURNAL

JOURNAL

registration of information on operations with clients for transmission to the financial intelligence body

Date of transaction/Date of transaction

Type of operation(1)/Type of operation(1)

Amount of operation in soms/Amount of operation in soms

Full name of client/Name of legal entity/Full name of client/Name of legal entity

PIN, identity document number, date of issue/TIN, certificate number of the Ministry of Justice of the Kyrgyz Republic, date of issue/PIN, number of identity document, date of issue/TIN, number of certificate of the Ministry of Justice of the Kyrgyz Republic, date of issue

Address of residence of individual/place of registration of legal entity/Address of residence of individual/place of registration of legal entity

Address of place of stay of individual/location of legal entity/Address of place of stay of individual/location of legal entity

Result of client check in sanctions lists/Result of client check in sanctions lists

Signature of responsible employee/
Signature of responsible employee __________________ Signature of manager/ Signature of manager __________________

Note/Note:

• 1 – type of operation: purchase or sale of foreign currency/type of operation: purchase or sale of foreign currency. ";

• Appendix 3 to the Regulation shall be stated as follows:

"Appendix 3

JOURNAL

registration of operations

"____"___________ 20__

Balance at the beginning of the day

Type of currency

Amount

Incoming operations (purchase)

Outgoing operations (sale)

Name of currency

Amount of currency

Exchange rate

Amount to be issued in som

Non-resident

Full name/

Name

of the legal

entity

PIN, number of the identity document, date of issue/TIN, number of the certificate of the Ministry of Justice of the Kyrgyz Republic, date of issue

Name of currency

Amount of currency

Exchange rate

Amount to be issued in som

Non-resident

Full name/

Name

of the legal

entity

PIN, number of the identity document, date of issue/Number of the certificate of the Ministry of Justice of the Kyrgyz Republic, date of issue

Total currency purchased: Incl. purchased from non-residents

Other income

Total currency sold: Incl. sold to non-residents Other expense

Balance at the beginning of the day

Type of currency

Amount

Signature of the responsible employee
Signature of the responsible official

Notes:

• 1. In the line "Total currency purchased/sold", the total amount of purchased and sold currency is indicated for each type of currency separately.
• 2. In the line "Total currency purchased/sold", in columns 3 and 8 "Exchange rate", the weighted average rate for all purchased or sold currency is indicated. The weighted average rate is calculated as the ratio of the total amount to be issued (columns 4 and 9) to the total amount of purchased/sold foreign currency for each type of currency separately.
• 3. When conducting operations with non-residents, in columns 5 and 10 the entry "N" is made, and the total volume of operations conducted with non-residents during the operating day is reflected in the daily report of the exchange bureau.
• 4. Exchange bureaus do not have the right to conduct operations not related to conducting exchange operations with cash foreign currency through the cash desk of the exchange bureau.";

• throughout the text of Appendix 4 to the Regulation, exclude the words "bank,";

in the Regulation "On Minimum Requirements for the Organization of Internal Control in Commercial Banks for the Purpose of Countering the Financing of Terrorist Activities and Legalization (Laundering) of Criminal Proceeds", approved by the above-mentioned resolution:

• paragraph ten of point 3 shall be stated in the following wording:

"Financial Intelligence Body – an authorized state body of the Kyrgyz Republic in the sphere of countering the financing of terrorist activities and legalization (laundering) of criminal proceeds.";

• paragraph ten of subparagraph 3 of point 8 shall be stated in the following wording:

"The above-mentioned measures for proper verification of the client are applied in the cases and manner established by the Cabinet of Ministers of the Kyrgyz Republic, as well as taking into account the results of the risk assessment.";

• point 23 shall be stated in the following wording:

"23. Training (retraining) of the official responsible for CFT/AML, front-office employees, as well as other bank employees involved in the implementation of the CFT/AML policy, must be carried out on a regular basis, at least once a year in accordance with the requirements established in the Regulation "On General Requirements for the Internal Control Program", approved by resolution of the Government of the Kyrgyz Republic of 25 December 2018 No. 606.";

• subparagraph 7 of point 32 shall be stated in the following wording:

"7) obtaining permission from the Management Board/Chairman of the Management Board or a member of the Management Board supervising the operational activities of the bank (provided that such powers are delegated to him by the Chairman of the Management Board of the bank) to establish or continue business relations with the client;";

• the second sentence of paragraph four of point 42 shall be stated in the following wording:

"The list of operations (transactions) with individuals or legal entities from high-risk countries subject to reporting to the financial intelligence body is determined in the manner established by the Cabinet of Ministers of the Kyrgyz Republic;";

• point 48 shall be stated in the following wording:

"48. The bank forms and sends to the financial intelligence body reports on operations (transactions) subject to control and reporting specified in point 42 of this Regulation, regardless of the amount of the completed or being completed operation (transaction), except for operations (transactions) with cash funds, the threshold amount for which is established by the Cabinet of Ministers of the Kyrgyz Republic.".

11. To introduce the following change to the resolution of the Management Board of the National Bank of the Kyrgyz Republic "On Temporary Decisions of the National Bank of the Kyrgyz Republic on Regulating the Activities of Commercial Banks of the Kyrgyz Republic" of 10 March 2022 No. 2022-П-12/13-2-(НПА):

• paragraph two of point 1 shall be stated in the following wording:

"- for newly issued loans listed in subparagraph 6 of point 25 of the Instruction on determining standards of sufficiency (adequacy) of capital of commercial banks of the Kyrgyz Republic, approved by resolution of the Management Board of the National Bank of the Kyrgyz Republic of 12 October 2022 No. 2022-П-12/63-1-(НПА), establish the degree of credit risk at 300 percent;".