UNDERSTANDING ANTI-MONEY LAUNDERING, COUNTER - TERRORIST FINANCING COMPLIANCE REQUIREMENTS
ASTANA FINANCIAL SERVICES AUTHORUTY
SESSION OBJECTIVE
An overview of Astana International Financial Centre (AIFC) Anti-Money Laundering and Counter - Terrorist Financing (AML/CTF) Regulations and Requirements
A Centre Participant should exercise due care toensure that it does not provide services to, orotherwise conduct business with, a personengaged in money laundering, terrorist financingor the financing of weapons of mass destruction.
MONEY LAUNDERING
Money laundering is the process of making illegally-gained proceeds (i.e., "dirty money") appear legal (i.e., "clean"). Typically, it involves three steps: placement, layering, and integration. First, the illegitimate funds are furtively introduced into the legitimate financial system. Then, the money is moved around to create confusion, sometimes by wiring or transferring through numerous accounts. Finally, it is integrated into the financial system through additional transactions until the "dirty money" appears "clean.“
United States Treasury Department
FINANCING OF TERRORISM
Terrorism financing refers to activities when any person by any means, directly or indirectly, unlawfully and willfully, provides or collects funds with the intention that they should be used or in the knowledge that they are to be used, in full or in part, in order to carry out an act of terrorism.
International Convention for the Suppression of the Financing of Terrorism
ANTI-MONEY LAUNDERING, COUNTER - TERRORIST FINANCING
LEGISLATIVE AND REGULATORY ACTS (AML ACTS)
The Law of the Republic of Kazakhstan on Counteracting
legalisation (laundering) of proceeds obtained through
criminal means and financing of terrorism (AML Law)
The Criminal Code of the Republic of Kazakhstan
Astana International Financial Centre Anti-Money Laundering,
Counter - Terrorist Financing and Sanctions Rules
The Resolution of the Government of the Rep. of Kazakhstan “On approval
of the Rules for the provision by reporting entities of data and
information on transactions subject to financial monitoring and the signs of
determining a suspicious transaction”
The Order of the Minister of Finance “On approval of the List of documents required for customer
due diligence by entities of financial monitoring”
The Order of the Minister of Finance “On approval of the list of the offshore zones for the purposes of the Law of
the Republic of Kazakhstan on Counteracting legalization (laundering) of proceeds obtained through criminal
means and financing of terrorism”
The Order of the Minister of Finance “On approval of the
requirements to financial monitoring entities on training and education of employees”
Offences and punishments
Criminal Code of the Republic of Kazakhstan
• A fine
• A custodial sentence and/or
• Confiscation of assets
Article 218. Money
Laundering
• A custodian sentence and
• Confiscation of assets.
Article 258. Financing of
Terrorism
Astana Financial Services Authority
• Financial Services
• Capital Market Activities
• Ancillary Services
Astana Financial Services Authority
• Regulation
• Control
• Supervision
Aml Acts Apply To
• Authorised Firm
• Authorised Market Institution
• Designated Non-Financial Businesses and Professionals
• Registered Auditor
Money Laundering Reporting Officer
Implementation of AML
requirements
Appropriate level of
Seniority
Compliance Oversight
Independence to act in the
Role
A Centre Participants AML/CTF obligations
MAJOR AML/CTF COMPONENTS
AML Regulations
Risk-based approach
Record keepingTraining and awareness
Review and assessment of AML systems and controls
Money Laundering Reporting
Officer
Know your business
Know your customer
Specious transactions
Know your transactions
Products
Delivery channels
Geography
Customers
Transactions
CDD
Enhanced CDD
Sanctions screening:
counterparty
Threshold transaction monitoring
and reporting
Suspicious transaction monitoring
Constant sanctions screening: customer and UBO
Investigation
Reporting to the FIU
Reporting to the AFSA
On-going CDD
Risk-based Approach
Identify AML Risks
Assess the risks
Establish and maintain
procedures
Mitigate and manage the
risks
Risk management
Record keeping
Regular review
Continuous process
Risk-based Approach
Business risk assessment
Customer risk assessment
A Centre Participant must:
• (a) undertake a risk-based assessment of every customer
• (b) assign the customer a risk rating proportionate to the customer's money laundering risks
The customer risk assessment must be completed prior to undertaking Customer Due
Diligence for new customers, and where, for an existing
customer, there is a material change in circumstances.
Customer Due Diligence
High risk
Medium risk
Low risk
Enhanced Due Diligence
Standard Due Diligence
Simplified Due Diligence
A Centre Participant must apply Customer
Due Diligence measures
when it is establishing a business relationship
with a customer
after establishing a business relationship
with a customer
Customer Due Diligence
Identity of the customer
Beneficial owners
Sources of funds
Sources of wealth
Customer Identification Information
For A Natural Person
✓Full name (including any alias)
✓Date of birth
✓Nationality
✓Legal domicile
✓Current residential address (not a P.O. box)
Customer Identification Information For a Legal
Person
✓Full business name and any trading name✓Registered or business address✓Date of incorporation or registration✓Place of incorporation or registration✓A copy of the certificate of incorporation or
registration✓A valid commercial or professional licence✓The identity of the directors, partners, trustees
or equivalent persons with executive authorityof the legal person✓A certified copy of the trust deed to ascertain
the nature and purpose of the trust anddocumentary evidence of the appointment ofthe current trustees
Enhanced Customer Due Diligence
Verification
Approval of Senior Management
On-going Customer
Due Diligence
Ensure transactions consistency with the
customer and its business
Enquire background and purpose of
transactions
Study complex and unusual transactions
Study transactions wit no apparent or
visible economic or legitimate purpose
Review and update CDD information
Review the AML risk of the customer
Politically Exposed Person
➢Increase the degree and nature of monitoring of the business relationship
➢Approval of senior management to commence a business relationship with the customer
Prohibitions
In failure to conduct CDD do not
carry out a transaction
open an account or otherwise provide a service
otherwise establish a business relationship orcarry out a transaction
do
✓ terminate or suspend any existing businessrelationship with the customer
✓ return any monies or assets received from thecustomer
✓ make a SAR if necessary
In failure to identify beneficial owners do not
establish a business relationship with a customer
Prohibitions
Do not establish or maintain abusiness relationship with aShell Bank
Do not tip off thecustomer that he is or mightbe the subject of a suspicion
Sanctions Screening
1. Committee on financial monitoring of the Ministry of Finance of the Republic
of Kazakhstan Lists
2. The United Nations Security Council Sanctions
Appropriate steps according to AML Law in
case of hits against Sanctions Lists
Links To The Sanctions Lists
• http://kfm.gov.kz/ru/the-list-of-organizations-and-individuals-associa/
• https://www.un.org/sc/suborg/en/sanctions/un-sc-consolidated-list
Steps in case of hits against
Sanctions Lists
➢ Suspend debit operations on banking account of such organization or individual, as well as on banking accounts of a client, the beneficiary owner of which is such individual
➢ Suspend the execution of instructions on payment or money transfer without the use of the banking account of such individual, as well as instructions of a client, the beneficiary owner of which is such individual
➢ Block securities in a system of registers of securities holders and accounting system of nominal holding of such organization or individual on separate accounts, as well as on separate accounts of the client, the beneficiary owner of which is such individual;
➢ Refuse to conduct other operations with money and (or) other property committed by such organization or individual, or in their favor, and equally by a client, the beneficiary owner of which is such individual, or in his (her) favor
➢ File a report to the FIU
Reporting Obligations
Threshold TransactionSuspicious
transaction/activity
Threshold Transaction Monitoring
Subject to the algorithms of
threshold transaction monitoring procedures:
Transaction type(article 4 of AML Law)
Transaction amount
Suspicious Transaction Monitoring
Subject to the algorithms and
sensitivity of suspicious transaction monitoring
procedures:
Transaction amount
Transaction frequency
Transaction purpose
Customer behavior and profile
Transaction counterparty
How to identify a Suspicion?
Screen transactions for suspicious indicators
Ask the customer appropriate questions
If the activity is consistent with the customer profile?
Evaluate all information: Is the transaction suspicious?
FINAL PROVISIONS
Record keeping
AML Training
Audit obligations
AFSA AML Return
Frequently Asked Questions
1. Where to find a list of suspicious activity indicators associated with money laundering and terrorist financing?
The list is approved by the Resolution 1484, however it should not be consideredexhaustive. The Centre Participant should maintain its own list in accordance withthe Participant’s experience and knowledge. The Centre Participant shouldunderstand that the high-risk and non-cooperative countries, countries, commonlyassociated with international crime, high level of corruption, terrorist activities ordrug trafficking, and PEPs might expose the Participant’s business to engaging inmoney laundering or terrorist financing.
2. What questions should be raised to the customer?
Ask the customer about the purpose of the transaction and related documents toverify the truth of the statement and to consider whether the transaction amountsatisfies, to a reasonable and legitimate explanation, the activity. Ask the customerabout identities of connected counterparties and information about theirbusinesses. If the customer refuses, hesitates, is unwilling to answer the questions,becomes defensive and non-cooperative, decides to terminate the businessrelationship, this may indicate a suspicion.
3. When to submit a Threshold Transaction Report to the FIU?
No later than one business day after the date of the transaction.
4. When to submit a Suspicious Transaction Report to the FIU?
For the purpose of prevention and suppression of the facts of legitimization(laundering) of incomes received by illegal means, and financing of terrorism, uponrecognition of a transaction as suspicious, the Centre Participant must report onsuch transaction to the FIU immediately before its conduct; the report onsuspicious transactions that may not be suspended shall be provided by the CentreParticipant to the FIU no later than three hours after their commission or withintwenty four hours from the date of detection of such operations. The report ontransaction recognized as suspicious after its commission shall be provided by aCentre Participant to the FIU no later than one business date next to the date ofrecognition of such transaction as suspicious.
5. What to Report in a Transaction Report to the FIU?
All reports to the FIU must be submitted in electronic XML format and in a formwith the logical and structural fields formats in accordance with Annex 1 to theRules for the provision by entities of financial monitoring of data and informationon transactions subject to financial monitoring.
This form of the report includes the following sections of information:
▪ Information on report itself (number, date and etc.);
▪ Information about reporting entity;
▪ Information about transaction;
▪ Information on transaction participant(s).
The Centre Participant should write about the reason why the transaction issuspicious in the field of additional information of the form (that is in informationabout transaction section).
6. What a Request on additional information?
The Centre participant may receive a request on additional information from theFIU. The number of days during which the Centre participant should answer will begiven in the request itself.
See more on:
1. http://adilet.zan.kz/rus/docs/P1200001484
2. http://adilet.zan.kz/rus/docs/V1500011569
7. How to submit a Transaction Report to the FIU?
Transaction reports can be made in one of the following ways:
• by web-based portal of the FIU, technology of manual input WEB-CFM;
• by the designated software of the FIU, technology of manual inputARM-CFM;
• any other software, provided that it supports the predefined XMLformat, and structural and logical rules of the reports.
8. How to obtain an access to the web portal of the FIU?
To register and send the reports through the web portal of the FIU, the CentreParticipant needs to obtain an electronic digital signature of the NationalCertification Authority of the Republic of Kazakhstan and have an internetconnection.
A video tutorial on how to register and fill the reports on the web portal of the FIUcan be found on the FIU official website.
See more on:
1. http://kfm.gov.kz/ru/to-help-sps/sdvo/web-sps.html
2. http://www.pki.gov.kz/index.php/ru/poluchenie-klyuchej-etsp?id=129
3. http://kfm.gov.kz/ru/to-help-sps/video-gallery/video-tutorial-on-registration-and-filling-of-for.html
9. Where a designated software of the FIU can be downloaded?
The designated ARM-SFM software of the FIU can be downloaded from the FIUofficial website.
See more on:
1. http://kfm.gov.kz/en/to-help-sps/sdvo/awp-sps.html
10. How to work with the designated software of the FIU?
While using the designated ARM-SFM software or any other software, which
supports pre-defined XML format of the reports, a Centre Participant needs to
obtain an electronic digital signature, to work in the transport system FASTi, from
the Republican State Enterprise on the Right of Economic Management the
“Kazakhstan Interbank Settlement Center of the National Bank of the Republic of
Kazakhstan” Certification Authority and install a special transport software VIDO
(or use a designated API) and cryptographic software Tumar CSP.
The Centre Participant needs to configure all the needed software so to be able to
generate and send reports to the FIU and receive notifications and requests on
additional information from the FIU.
See more on:
1. http://www.kisc.kz/english/ca/general.html
2. http://www.kisc.kz/fasti/vido.html
3. https://ca.kisc.kz/webra/res-open/devinfo.htm
4. http://www.kisc.kz/english/fasti/index.html
11. What if the FIU rejects my report?
The FIU while accepting the reports verifies if the form has been filled withaccordance with structural and logic controls.
If the report has been rejected by the FIU, the Centre Participant must send a fixedreport, while preserving the same number of the report and the same date whichwas filed initially, no later than one business day after the Centre Participantreceives an electronic notification of rejection.
See more on the defined XML formats of notification of acceptance, notification onrejection and requests for additional information from the FIU:
1. http://adilet.zan.kz/rus/docs/P1200001484
2. http://adilet.zan.kz/rus/docs/V1500011569
For more information please contact us:
Address8 Kunayev Street, Astana, Kazakhstan
Financial Conduct [email protected]