AFSA

27 December 2024 09:29:54

The Astana Financial Services Authority (AFSA) has introduced comprehensive amendments to the Anti-Money Laundering, Counter-Terrorist Financing, and Sanctions Framework within the Astana International Financial Centre (AIFC), effective January 1, 2025.

These amendments have been meticulously designed to enhance existing norms by incorporating necessary clarifications and eliminating ambiguities that have emerged from the practical application of the rules, as addressed through numerous requests from the AIFC Participants and analysed outcomes of inspections and thematic reviews of the AIFC Participants over the recent years.

At the core of these amendments are revisions to the AIFC Anti-Money Laundering, Counter-Terrorist Financing, and Sanctions Rules (AML Rules):

• New Annex to AML Rules contains AML/CFT-specific abbreviations and definitions like “sanctions violation”[1], “watchlists”[2], “geographic area (state or territory) considered to be an area of high risk”[3].
• Key definitions such as “Relevant Person”[4], “Money Laundering Reporting Officer (MLRO)”[5], and “Know Your Employee”[6] have been clarified.
• Additionally, the reference to the AML Practical Guidance will specify economic and financial unilateral sanctions regimes applicable in the AIFC (other than UNSC sanctions)[7].

The revisions also bring the detailed description regarding the application of the Risk-Based Approach, enhancing the processes surrounding Customer Risk Assessment and Customer Due Diligence (CDD):

• Noteworthy is the outright prohibition of reliance on third parties for ongoing CDD monitoring[8], reinforcing accountability among the AIFC Participants.
• Further clarifications have been established concerning the submission of Suspicious Transaction Reports[9] and Threshold Transaction Reports[10], further promoting transparency in reporting obligations.

In aligning the definition of MLRO with the necessity for independence from senior management, the amendments aim to fortify the position's integrity and effectiveness:

• The revised definition will ensure that the MLRO operates in conditions free from undue influence or conflicts of interest. Thus the MLRO should not combine the role of the business owner, shareholder or CEO/executive management.
• To accommodate compliance with these new stipulations, a transitional period of six months will be granted for existing firms where the functions of an MLRO overlap with senior executive management roles, allowing sufficient time for alignment with the new requirements while implementing essential safeguards.

Moreover, consequential amendments have been made to several guidance documents, including the AML Practical Guidance, the Guidance on the Rules of Internal Control, and the Guidance on Customer Due Diligence[i]:

• These documents have been revised to incorporate clarifications on risk scoring and Business Risk Assessment, customer risk profiles, CDD, relying on third-party consultants, MLRO, and etc.
• The updates have been designed to streamline compliance procedures without introducing completely new obligations, reinforcing the AFSA's dedication to facilitating a practical and effective compliance environment.

Collectively, these updates serve to align the legislative framework with international best practices, significantly enhancing the efficacy of AML/CFT measures within the AIFC. The AFSA remains committed to fostering a robust culture of compliance and encourages all stakeholders to review the updated documents, which are now accessible on the AFSA website.

Relevant amendments can be found in Practical Guidance to AIFC Anti-Money Laundering and Counter – Terrorist Financing Framework (“Practical Guidance”); Guidance (Requirements) applicable to the Rules of Internal Control for the purposes of counteracting the legalisation (laundering) of proceeds from crime and the financing of terrorism for financial monitoring entities of the Astana International Financial Centre (the Relevant Persons) (“Guidance on the Rules of Internal Control”); Guidance (Requirements) for the purposes of counteracting the legalisation (laundering) of proceeds from crime and the financing of terrorism, applicable to the Customer Due Diligence in cases when the Astana International Financial Centre Participants (the Relevant Persons) establish non-face to face business relations with customers (“Guidance on CDD”), AIFC General Rules and Anti-Money Laundering And Counter-Terrorist Financing Rules.

Reference: 

The Astana Financial Services Authority (AFSA) is the independent regulator of the Astana International Financial Centre (AIFC), which is established in accordance with the Constitutional Law of the Republic of Kazakhstan “On the Astana International Financial Centre” for the purposes of regulating financial services and related activities in the AIFC. AFSA administers the AIFC Regulations and Rules and is responsible for the authorisation, registration, recognition and supervision of financial firms and market institutions in the AIFC.

Over 3,500 firms from over 80 countries are registered in the AIFC. These firms provide banking, insurance, investment, professional and other services. The range of financial services offered at the AIFC is comparable to the list of services available in long-established financial centers of the world, such as London, Hong Kong, Singapore, Dubai and others. www.afsa.kz

The Astana International Financial Centre (AIFC) is an independent jurisdiction with a favourable legal and regulatory environment and a developed infrastructure for starting and doing business, attracting investment, creating jobs and developing Kazakhstan's economy. https://aifc.kz/ 

Contact information:

Public Relations and Communications Division of AFSA: +7 (717) 264 73 43; +7 7172 61-37-45 email: [email protected]

[1] Sanctions violation is an action aimed the violation, evasion or circumvention of EU, US, or UK sanctions. This definition is provided for general understanding, while the official definition can be found in the Annex 1 to the AML Rules.

[2] Watchlists are a set of information on individuals, organisations, and countries that deserve special attention and appropriate actions. This definition is provided for general understanding, while the official definition can be found in the Annex 1 to the AML Rules.

[3] Geographic areas considered to be an area of high risk include countries identified by the FATF as having strategic AML/CFT deficiencies, those under sanctions or similar measures by UN, EU, US or UK, jurisdictions vulnerable to corruption, those with ties to terrorist activities, and known tax havens. This definition is provided for general understanding, while the official definition can be found in the Annex 1 to the AML Rules.

[4] The definition of the Relevant Person now formally includes FinTech Lab Participants. This definition is provided for general understanding, while the official definition can be found in the AIFC Glossary and Rule 1.2.(a) of the AML Rules.

[5] The new definition of the MLRO envisages options when MLRO function is carried out solely and as a special function delegated by a Compliance Officer. This definition is provided for general understanding, while the official definition can be found in Rule 13.1.1. of the AML Rules.  

[6] Know Your Employee envisages adequate screening procedures to ensure high standards when hiring employees. This definition is provided for general understanding, while the official definition can be found in the Annex 1 to the AML Rules.

[7] Such regimes include unilateral sanctions imposed by the EU, US, and UK. This definition is provided for general understanding, while the official definition can be found in section 8.4. of the AML Practical Guidance.

[8] A Relevant Person must not rely on third parties to provide ongoing monitoring CDD procedures for its customers and counterparties on AML and sanctions matters. More details can be found in Rule 9.1.7 of the AML Rules.

[9] A Suspicious Transaction Report is a report in a prescribed format regarding suspicious activity or suspicious transactions made by Relevant Persons to the Agency of Financial Monitoring. This definition is provided for general understanding, while the official definition can be found in the AIFC Glossary.

[10] A Threshold Transaction Report is a report about a transaction above defined thresholds. This definition is provided for general understanding, while the official definition can be found in the Rule 13.7.2. of the AML Rules.

[i] Practical Guidance to AIFC Anti-Money Laundering and Counter – Terrorist Financing Framework (“Practical Guidance”); Guidance (Requirements) applicable to the Rules of Internal Control for the purposes of counteracting the legalisation (laundering) of proceeds from crime and the financing of terrorism for financial monitoring entities of the Astana International Financial Centre (the Relevant Persons) (“Guidance on the Rules of Internal Control”); Guidance (Requirements) for the purposes of counteracting the legalisation (laundering) of proceeds from crime and the financing of terrorism, applicable to the Customer Due Diligence in cases when the Astana International Financial Centre Participants (the Relevant Persons) establish non-face to face business relations with customers (“Guidance on CDD”).