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Kazakhstan Banks to Enhance Due Diligence on Foreign Entities and Beneficial Owners

In a move to strengthen its anti-money laundering (AML) measures, the Republic of Kazakhstan has introduced new regulations requiring banks to conduct enhanced due diligence on foreign entities and beneficial owners.

Enhanced Due Diligence Requirements

Under the new rules, banks are required to:

  • Verify business relations with customers, including foreign entities, and examine their operations on an ongoing basis
  • Obtain information on the source of funding for carried-out operations
  • Check the reliability of customer identification data

The regulations also provide a list of suspicious transaction criteria, which include:

  • Transactions involving persons registered in countries that do not comply with the Financial Action Task Force (FATF) recommendations
  • Transfers of significant amounts to non-residents without a business relationship

Foreign Entity Founders and Beneficial Owners

The founders of foreign entities are required to provide:

  • Full names
  • Residences

Beneficial owners must also be identified and verified.

Bank Restrictions on Jurisdictions

Kazakh banks may terminate business relations with financial institutions from countries that do not comply with or properly implement FATF recommendations. A list of such jurisdictions is publicly available.

Reporting Obligations

Banks are required to report:

  • Monthly reports on issued loans and receivables accounted for as part of bank assets and customer assets
  • Monthly reports on customer accounts

Protection of Clients’ Information

Banks have a general obligation not to disclose banking secrecy, which includes information on customers, their operations, and relations with banks related to the acceptance of banking services. Banking secrecy may be disclosed without consent in certain circumstances, such as during a criminal investigation.

Russian Sanctions Impact

The banking regulations in Kazakhstan have not been amended due to Russian sanctions. However, there may have been practical adjustments in completing various procedures.

Source: European Center for Not-for-Profit Law Stichting and PILnet.