Resolution of the Board of the National Bank of the Kyrgyz Republic No. 30/2 of 16 October 2006 on Amendments and Additions to the Interim Instruction on Working with Deposits

REPEALED

in accordance with resolution of the Board of the National Bank of the Kyrgyz Republic

of 31 October 2012 No. 41/12

Registered with the Ministry of Justice of the Kyrgyz Republic

26 November 2006. Registration number 119-06.

Bishkek

of 16 October 2006 No. 30/2

RESOLUTION OF THE BOARD OF THE NATIONAL BANK

OF THE KYRGYZ REPUBLIC

On Amendments and Additions to the

Interim Instruction on Working with Deposits

Having considered the draft amendments and additions to the Interim Instruction on Working with Deposits, guided by Articles 7, 43 of the 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 approve the amendments and additions to the Interim Instruction on Working with Deposits, approved by resolution of the Board of the National Bank of the Kyrgyz Republic No. 4/4 of 19 February 2003 (registration number of the Ministry of Justice of the Kyrgyz Republic No. 25-03 of 25 March 2003) (attached).

2. The Supervision and Licensing Methodology Department, together with the Legal Department, shall in the established procedure carry out state registration of this resolution with the Ministry of Justice of the Kyrgyz Republic.

3. This resolution enters into force from the moment of official publication after state registration with the Ministry of Justice of the Kyrgyz Republic.

4. From the moment this resolution enters into force, the following shall be recognized as repealed:

• resolution of the Board of the National Bank of the Kyrgyz Republic No. 6/8 of 27 March 2004 "On Establishing Correspondent Relations with Banks and Other Financial and Credit Institutions Registered in States and Territories of Offshore Zones" (registration number of the Ministry of Justice of the Kyrgyz Republic No. 49-04 of 23 April 2004).

5. Commercial banks and OJSC "Settlement-Savings Company" shall bring their internal acts into compliance with this resolution, after its entry into force, by 1 January 2007.

6. Commercial banks and OJSC "Settlement-Savings Company" shall bring information related to proper verification of clients served in the bank as of the date of entry into force of this resolution into compliance with this resolution within one calendar year from the day of entry into force of this resolution.

7. After publication of the registered normative legal act, the Legal Department shall inform the Ministry of Justice of the Kyrgyz Republic of the source of publication (name of the publication, its number and date).

8. Control over the execution of this resolution shall be entrusted to the Deputy Chairman of the National Bank of the Kyrgyz Republic Bokontaev K. K.

Chairman of the Board Alapaev M.O.

                                                 Approved by resolution of the Board of the National Bank of the Kyrgyz Republic of 16 October 2006 No. 30/2

              Amendments and Additions to the Interim

               Instruction on Working with Deposits

I. The first paragraph of the preamble after the words "On Banks and Banking Activity in the Kyrgyz Republic" shall be supplemented with the words ", "On Countering the Financing of Terrorism and Legalization (Laundering) of Proceeds from Crime".

II. Point 4.1 shall be supplemented with paragraphs 3, 4, 5, 6, 7 and 8 as follows:

"The bank has no right to open and maintain anonymous bank accounts (deposits), bearer bank accounts (deposits), without identification of clients in accordance with this Instruction and other normative legal acts of the Kyrgyz Republic.

The bank has no right to open a bank account for a client if:

• the client has not submitted the relevant documents necessary to fulfill the requirements for opening a bank account, identification of the client;

• unreliable documents have been submitted;

• there is information about this client's participation in legalization (laundering) of proceeds from crime and/or terrorist activity, obtained in accordance with the norms of the legislation of the Kyrgyz Republic.

When opening and maintaining a bank account, the bank must comply with the "know your client" policy in accordance with the requirements specified in Appendix 1."

III. In section 5, all subsequent text after paragraph 21 shall be stated in the following wording:

"To open a bank account under a bank deposit agreement, depositors-individuals (residents and non-residents) must submit:

1) an application for opening an account, signed by the client, which shall indicate:

• surname, name, patronymic of the client (in accordance with passport data), maiden name (if any);

• date and place of birth;

• citizenship;

• full address-(1) of permanent place of residence (registration), telephone number, fax, email address;

• full address-(1) of temporary place of stay, telephone number, fax;

• information about the identity document (name, series, issuing authority, date of issue), personal number, if any;

• taxpayer identification number (if any) - on the basis of a certificate of registration with the tax authority;

• place of work and occupation;

• purpose and expected nature of business relations with the bank;

• other information at the bank's discretion.

2) identity document of the client;

3) card of specimen signatures with the client's specimen signature and seal imprint of the individual entrepreneur (if any).

Individuals carrying out individual entrepreneurial activity without forming a legal entity, in addition to the above documents, must additionally submit to the bank a copy of a document of the established form issued by an authorized body and confirming the fact of state registration (re-registration) as an individual entrepreneur, or a copy of a document confirming the fact of engaging in entrepreneurial activity without state registration, in cases provided for by the legislation of the Kyrgyz Republic.

In the event that the client in whose favor the account is opened by parents, other legal representatives or third parties is a person under sixteen years of age, an application shall be submitted containing information about the client in whose favor the account is opened, as well as information about the person opening the account; identity document of the parents, other legal representatives or third parties, and the client's birth certificate; card with specimen signatures of persons entitled to dispose of funds in the account.

To open a bank account under a bank deposit agreement, depositors-legal entities (residents) must submit:

1) an application for opening an account, signed by persons specified in the card of specimen signatures, authorized to sign contracts and financial documents with the right of first and second signature and certified by the seal of the legal entity, which must contain:

• full and abbreviated (if any) name of the legal entity and its name in a foreign language;

• information about state registration of the legal entity: date, number, name of the registering body, place of registration:

• taxpayer identification number (if any) or code of the foreign organization (if any);

• OKPO codes;

• location;

• postal address-(2);

• contact telephone and fax numbers;

• type of activity of the legal entity;

• purpose and expected nature of business relations with the bank;

• other information at the bank's discretion;

2) permission of the Central Treasury to open an account in the bank (for state enterprises and institutions);

3) certificate of state registration (re-registration) of the legal entity with the Ministry of Justice of the Kyrgyz Republic and statistical bodies. For legal entities registered in the Free Economic Zone, such document shall be the Registration Certificate issued by the FEZ Directorate;

4) notarized copy of the Charter (Regulation), registered by justice bodies, including amendments and additions;

5) copy of the license for the right to carry out activities subject to licensing in accordance with the requirements of the legislation of the Kyrgyz Republic, certified in the established procedure;

6) document confirming registration of the legal entity-taxpayer-resident with the tax service of the Kyrgyz Republic (copy of TIN and/or certificate from the tax authority indicating TIN);

7) document certifying the authority of the head of the legal entity to dispose of the legal entity's funds (such document may be either the minutes of the meeting of founders or shareholders on the election of the head of the legal entity, or the decision of founders or shareholders on the appointment of the head of the legal entity, determining the scope of authority, if they are not established by the Charter);

8) card with specimen signatures and seal imprint, notarized (minimum requirements for this document are given in Appendix 2).

To open a bank account under a bank deposit agreement, depositors-legal entities (non-residents) must submit:

1) an application for opening an account, signed by persons specified in the card of specimen signatures, authorized to sign contracts and financial documents with the right of first and second signature and certified by the seal of the legal entity, which must contain:

• full and abbreviated (if any) name of the legal entity and its name in a foreign language;

• information about state registration (re-registration) of the legal entity: date, number, name of the registering body, place of registration;

• taxpayer identification number (if any) or code of the foreign organization (if any);

• location;

• postal address-(3);

• contact telephone and fax numbers;

• type of activity of the legal entity;

• purpose and expected nature of business relations with the bank;

• other information at the bank's discretion;

2) extract from the trade register of the country of origin on registration of the firm as a legal entity or other document confirming registration of the client as a legal entity in accordance with the requirements of the legislation of the country of origin;

3) copy of the Charter (or other document determining the procedure of activity), including amendments and additions, certified in the procedure established by legislation;

4) copy of the founding agreement, certified in the procedure established by legislation;

5) copy of the license for the right to carry out activities subject to licensing in accordance with the requirements of the legislation of the country of origin, certified in the procedure established by legislation;

7) document certifying the authority of the head of the legal entity to dispose of the legal entity's funds (such document may be either the minutes of the meeting of founders or shareholders on the election of the head of the legal entity, or the decision of founders or shareholders on the appointment of the head of the legal entity, determining the scope of authority, if they are not established by the Charter);

6) card with specimen signatures and seal imprint, certified in the procedure established by legislation.

Branches and representative offices of legal entities (residents and non-residents) carrying out economic activity in the Kyrgyz Republic, to open a bank account under a bank deposit agreement, must submit to the bank:

1) an application for opening an account, signed by persons specified in the card of specimen signatures, authorized to sign contracts and financial documents with the right of first and second signature and certified by the seal of the legal entity, which must contain:

• full and abbreviated (if any) name of the legal entity and its name in a foreign language;

• information about state registration of the legal entity: date, number, name of the registering body, place of registration;

• taxpayer identification number (if any) or code of the foreign organization (if any);

• OKPO codes;

• location;

• postal address4;

• contact telephone and fax numbers;

• type of activity of the legal entity;

• purpose and expected nature of business relations with the bank;

• other information at the bank's discretion.

2) copy of the Charter or Regulation on the activity of the parent organization, notarized, including amendments and additions;

3) copy of the document on the basis of which the subdivision carries out its activity (for example, Regulation on the branch, etc.), notarized;

4) document confirming registration of the legal entity-taxpayer-resident with the tax service of the Kyrgyz Republic;

5) certificate of registration with the tax authorities of the Kyrgyz Republic.

6) certificate of accounting registration (re-registration) with the Ministry of Justice of the Kyrgyz Republic and statistical bodies;

7) document certifying the authority of the head of the subdivision of the legal entity to dispose of the account (power of attorney executed in accordance with the requirements of legislation);

8) document with a list of operations and official consent from the legal entity to conduct these operations, if this is not reflected in the regulation on the structural subdivision and/or in the power of attorney issued to the head of the structural subdivision;

9) card with specimen signatures and seal imprint, certified in the procedure established by the legislation of the Kyrgyz Republic.

To open a bank account under a bank deposit agreement, international organizations, their projects, diplomatic and consular missions operating in accordance with international agreements ratified in the established procedure, must submit documents in accordance with the following list, unless a different procedure for opening an account is provided for in the relevant international agreement:

1) an application for opening an account, signed by persons specified in the card of specimen signatures, authorized to sign contracts and financial documents with the right of first and second signature and certified by the seal of the legal entity, which must contain:

• full and abbreviated (if any) name of the organization or mission, including in a foreign language;

• information about state registration of the organization or mission: date, number, name of the registering body, place of registration;

• taxpayer identification number (if any) or code of the foreign organization or mission (if any);

• location;

• postal address-(5);

• contact telephone and fax numbers;

• type of activity of the organization or mission;

• purpose and expected nature of business relations with the bank;

• other information at the bank's discretion.

2) international treaty ratified by the Jogorku Kenesh of the Kyrgyz Republic, within the framework of which the international organization, its project, diplomatic or consular mission operates;

3) regulation on the international organization, or its project (if any);

4) order (contract, letter of the relevant superior organization) confirming the authority of persons to sign contracts and financial documents with the right of first and second signature;

5) letter of the authorized state body (Ministry of Foreign Affairs of the Kyrgyz Republic) confirming accreditation of the international organization (its project) and its employees;

6) cards with specimen signatures, certified by the authorized state body or embassy of the relevant country in the Kyrgyz Republic, of which the international organization or its project is a resident.

In the event that the original document submitted to the bank in accordance with this point is executed in a foreign language, a translation of the documents into the state and/or official language of the Kyrgyz Republic, legalized in the established procedure in accordance with the requirements of the legislation of the Kyrgyz Republic, must be submitted to the bank."

IV. In paragraph 8 of section 6, after the words "When opening a settlement" exclude the words "or correspondent".

V. Section 6 shall be supplemented with point 6.2. as follows:

"6.2. The procedure for the bank's work with correspondent accounts is determined in accordance with the requirements specified in Appendix 3".

VI. Paragraph 4 of point 7.1 shall be considered point 7.2 and stated as follows:

"7.2. When re-issuing an account in the event of the start of liquidation (conservation), the following must be submitted to the bank:

• decision of the supreme management body of the legal entity or a body authorized by it, and in case of bankruptcy - decision of the meeting of creditors (in case of out-of-court declaration of bankruptcy) or court decision indicating the surname, name, patronymic of the liquidator (conservator);

• notarized card with specimen signatures and seal imprint of the legal entity".

VII. Point 7.2 shall be considered point 7.3 and stated as follows:

"7.3. Closing of an account is carried out upon the client's application, unless otherwise provided by the legislation of the Kyrgyz Republic or the agreement. The client's file must indicate the basis for closing the account".

VIII. Point 7.3 shall be excluded.

IX. Section 7 shall be supplemented with points 7.4-7.6 as follows:

"7.4. The bank has the right to terminate the bank deposit agreement (bank account agreement) unilaterally with the mandatory inclusion of this condition in the bank deposit agreement (bank account agreement) and notification of the client one calendar month before closing the account in the event that:

• the client has not submitted the relevant documents necessary to fulfill the requirements for opening a bank account, identification of the client, conducting operations on the account,

• unreliable documents have been submitted,

• there is information about this client's participation in legalization (laundering) of proceeds from crime and/or terrorist activity, obtained in accordance with the norms of the legislation of the Kyrgyz Republic.

7.5. In the event of absence of funds in the bank account for a period determined by the agreement, the bank may close the account, if provided for by the agreement, with mandatory notification of the account holder of its closure at least one month before closing the account.

7.6. In the event that funds are received into a client's bank account that has been closed:

1) from the holder of the previously closed account - the bank must conclude a new bank deposit agreement (bank account agreement) with mandatory compliance with the client identification requirements established by this Instruction;

2) from a third party in the form of cash - the bank must not accept the funds;

3) from a third party in the form of a non-cash payment - the bank must return the funds to the sender within the next business day with a note on the closure of the account".

X. Appendix 1 to the Instruction shall be stated as follows:

                                                    "Appendix 1.

         Requirements for the "know your client" policy:

1. The "know your client" policy determines the procedure for proper verification of clients and includes:

1.1. the procedure for identifying the client when opening a bank account;

1.2. tracking operations on the client's account and other measures at the bank's discretion.

2. The client must provide a full package of required documents for opening an account and/or conducting a banking operation.

3. The client identification procedure involves establishing the identity of the person opening the account on the basis of an identity document with a photograph, collecting information about the client in accordance with sections 5 and 6 of this Instruction.

4. When opening a bank account and conducting operations on the account of a client-legal entity, the bank must verify the authority and authenticity of persons (on the basis of an identity document) entitled to dispose of funds in the client's account.

5. In the event that the bank establishes that a representative is acting on behalf of the client, the bank identifies and studies the representative, verifies his authority, and also identifies and studies the represented client in compliance with the requirements of this Instruction.

6. When studying documents, in particular, the constituent documents of a legal entity and documents confirming its state registration, banks, for the purpose of more thorough study of their client, must pay special attention to the legalization of documents, and also study:

• all constituent documents of the legal entity - client, including all registered amendments and additions to them, as well as other necessary documents confirming the state registration of the client as a legal entity;

• the composition of founders (participants) of the legal entity, identifying persons who have the ability to influence decision-making by the bodies of the legal entity;

• the structure of the management bodies of the legal entity and their powers.

7. In the event that a third party opens a bank account in the name of the client, the bank must obtain from the third party information and documents allowing identification and study of the client in whose name the account is opened and the third party opening the account, in accordance with the requirements of this Instruction.

For opening an account by a third party under a bank account agreement in the name of the client, a power of attorney executed in

in accordance with the requirements of the legislation of the Kyrgyz Republic,

for the right to open and (or) dispose of an account.

A power of attorney is not required for a representative of a legal

entity authorized to open accounts in accordance with the

legislation of the Kyrgyz Republic, or the constituent

documents of that legal entity.

A power of attorney is not required for an individual

authorized to open accounts in accordance with the legislation of the

Kyrgyz Republic (parents or other legal representatives).

8. In the manner established by the bank's internal documents, and

within a period not exceeding five working days after the opening of a bank

account, a bank employee must initiate measures to verify the information specified:

1) in the application of an individual using at least

one of the following methods:

• confirmation of information from official documents-(6);

• contacting the client by telephone, letter or by

e-mail to confirm the information provided by the client-(7);

• confirmation of the legality of the client's documents-(8);

• another method at the bank's discretion.

2) in the application of a legal entity, using at least

one of the following methods:

• obtaining information from a state body in order to verify

the submitted documents, whether the legal entity has been closed,

liquidated, or is in the process of liquidation;

• contacting the client by telephone to confirm

information after opening the account;

• another method at the bank's discretion.

9. The bank must initiate additional identification of the

client and/or verification of the received information if the bank

has doubts about the reliability of the information obtained during

identification, as well as if:

• a significant transaction occurs (for example, for an amount

exceeding the average balance or turnover on the client's account) and/or

a transaction not characteristic of the given client's activity;

• significant changes are observed in the manner of conducting work on

the client's account;

• the bank realizes that it does not have sufficient information about

the client.

In this case, the bank should make additional requests or

reconcile information, which may include the following:

• personal recommendations (for example, from a regular client

of the bank),

• recommendations from a bank that previously serviced the given client,

• a certificate from the place of work, official confirmation of the position

held (where applicable).

10. When conducting operations on a bank account, the client must

provide the bank with payment documents drawn up in accordance with the

requirements established by the regulatory legal acts of the Kyrgyz

Republic. If the bank has doubts about the economic

feasibility and/or legality of conducting an operation, the bank has

the right to require the client to provide documents confirming

the legality and economic feasibility of the operation-(9). In case of

refusal by the client to provide the required documents, the bank must refuse

to conduct the operation on the account. This condition must be stipulated in

the bank account agreement between the bank and the client.

11. The bank must constantly monitor operations on clients' accounts.

The bank must have an understanding of the normal and reasonable activity on

the accounts of its clients in order to identify operations not

characteristic of the given client's activity.

The bank should pay attention to operations of the client that are irrational from an economic

or commercial point of view, operations with large

amounts of cash (for example, exceeding the average

turnover on transactions and operations of the given client) and other operations not

corresponding to the client's usual practice.

In order to recognize unusual or suspicious operations, the bank

must establish key indicators of such accounts, taking into account general

information about the client, for example, information about the country of origin and

the source of funds, the type of operation and other risk factors.

For all accounts, banks are recommended to establish information

systems for recognizing unusual or suspicious operations.

12. With respect to unusual or suspicious operations, the bank must
    determine whether the client is acting on behalf of another person and then take steps to obtain data to establish the identity of that other person (the ultimate beneficiary).

When determining the ultimate beneficiary with respect to

legal entities, special attention must be paid to shareholders, persons with

signature rights or other persons who have a significant share in

the capital, or in any other way exercise control over

the client. If the owner is another legal entity, the bank must strive to establish the owners or persons exercising control over that legal entity.

If necessary, the bank may use sources of

information available to it on lawful grounds.

13. The conclusions made by the bank with respect to suspicious operations

must be documented and kept for at least five years from the moment

the operation was carried out."

XI. Supplement the Instruction with a new Annex 3 as follows:

"Annex 3.

Requirements for the bank's work with correspondent accounts

1. Correspondent accounts are divided into two types: the "loro" account

• an account opened in a bank in the name of its correspondent bank; the "nostro"

account - an account of a bank opened with its correspondent bank. The

"nostro" account in a bank is a "loro" account with the correspondent bank.

2. This Instruction does not regulate the procedure for the bank's work with

a correspondent account opened with the NBKR.

3. A bank does not have the right to establish direct correspondent

relationships with banks that are registered in offshore zones10, with

their affiliates, subsidiary banks and separate

subdivisions that are not independent legal entities,

as well as those registered in states or territories

providing a preferential tax regime and/or not providing for

disclosure and/or provision of information to banking supervision bodies

in accordance with the requirements and recommendations of the Basel Committee on Supervision.

This restriction does not apply to the establishment of direct

correspondent relationships with branches registered in

offshore zones whose head organizations are located

(registered) outside offshore zones.

4. A bank does not have the right to establish or continue

correspondent relationships with shell banks. The bank must also take precautionary measures against the conclusion of transactions and operations with foreign correspondent banks that allow shell banks to use their accounts.

5. The procedure for establishing correspondent relationships must, at a minimum,

include carrying out the following measures with respect to the correspondent

bank with which the bank intends to establish correspondent

relationships:

1) requesting from the correspondent bank the following documents:

• an application/letter of intent to establish correspondent

relationships;

• copies of the document confirming the registration of the correspondent

bank as a legal entity in the country of origin,

legalized and certified in accordance with the requirements

of the legislation of the Kyrgyz Republic;

• copies of the license certifying the right of the correspondent bank

to carry out operations that the bank intends to conduct within

the framework of the correspondent relationships being established, legalized and

certified in accordance with the requirements of the legislation of the Kyrgyz

Republic.

2) establishing the fact that the correspondent bank was founded in

its country in accordance with the legislation;

3) obtaining the annual financial report of the correspondent bank (with

the conclusion of the audit commission);

4) analysis of the measures applied by the correspondent bank for the purpose

of countering the financing of terrorism and the legalization (laundering)

of proceeds obtained by criminal means, including on the basis of

information obtained from conversations with employees of the correspondent bank;

5) analysis of reports on the assignment of a credit rating to the correspondent bank

(if available and the information on the report is accessible to the public);

6) determination of the main lines of business of the correspondent bank;

7) assessment of the creditworthiness of the correspondent bank;

8) determination of the expected activity of the correspondent bank

that will be carried out through the given correspondent account;

9) requesting information on whether the correspondent bank has such

clients as shell banks, banks registered in the territory

of offshore zones;

10) determining whether the correspondent bank is state-owned

or private;

11) identification of the main owners of private correspondent

banks. After establishing correspondent relationships, the bank

must monitor information about the correspondent bank on the issues

specified in this paragraph.

6. The bank's internal documents must contain the procedure for adopting
   a decision on establishing correspondent relationships, including procedures for coordinating the opening of a correspondent account with the head of the bank, or a person authorized by it, and an authorized collegial body within whose competence the adoption of decisions on this issue falls.

7. If the correspondent bank is registered in the territory of a country

that is a member of the FATF, and has a long-term

creditworthiness rating established by the rating agency Standart and Poor's Corporation not lower than "BB", or a rating corresponding to that value established by the agency Moody's Investors Service or Fitch IBCA, the bank may establish simplified procedures for assessing the creditworthiness, reputation and analyzing the financial condition of the correspondent bank.

8. All information relating to the establishment of correspondent

relationships must be documented and kept for at least five years

from the moment of termination of the correspondent relationships."

Notes:

1-5- It is not permitted for the client to indicate only

the post office box number instead of the full address.

6 - The following may be used as a document for confirmation:

a birth certificate, passport, identity card.

7 - In this case, a disconnected telephone, returned letters or

non-working e-mail addresses must necessitate continuation of the verification of the received information.

8 - For example, through embassies, representative offices of the Kyrgyz

Republic, a notary.

9 - Such documents may be invoices issued to the client, contracts

concluded by the client, etc.

10 - The list of offshore zones is determined in accordance with the

Resolution of the Board of the NBKR "On Establishing Requirements for

Determining Subjects and the List of Offshore Zones" No. 13/2 of 16 April 2003.