Kazakhstan Takes Steps to Combat Money Laundering

Introduction

In an effort to bring its laws into compliance with international standards, Kazakhstan has introduced reforms aimed at combating money laundering. The new legislation defines the legal basis of state efforts to counteract the laundering of illegally acquired funds and the role of non-state entities in financial monitoring.

History of Reforms

• In 2004, the International Monetary Fund (IMF) observed that Kazakhstan’s legal framework did not meet international standards.
• In response, a subsequent Act on counteracting the legalization (laundering) of illegally derived funds and financing terrorism was adopted in 2009 and implemented in 2010.

New Legislation

Definition of Money Laundering

According to Article 193 of the Criminal Code, money laundering is defined as the performance of financial transactions or other transactions with monetary funds or property acquired by illegal means.

Penalties for Money Laundering

The law sets out a maximum penalty of up to three years imprisonment for those found guilty of money laundering.

Reforms and Challenges

• Implementation: Experts have criticized the initial process of criminalization, stating that it was “empty” legislation due to a lack of commitment to implementation.
• Financial Intelligence Unit: The absence of a financial intelligence unit to coordinate the process has been raised as an area of concern.
• Non-Suspicious Transaction Reporting Rules: Experts have raised questions about the manageability of non-suspicious transaction reporting rules.

Enforcement

• Between 2006 and 2011, only 531 cases were registered under Kazakhstan’s anti-money laundering regime.
• Despite this low number, experts say that more needs to be done to effectively enforce these laws and prevent the illegal flow of funds.

Government Response

“The legal reforms we have introduced will help to bring Kazakhstan in line with international standards on combating money laundering,” said a government spokesperson. “We are committed to creating a robust financial system that is attractive to investors and protects the integrity of our economy.”

Conclusion

The reforms are seen as an important step forward in Kazakhstan’s efforts to combat money laundering, but experts say that more needs to be done to effectively enforce these laws and prevent the illegal flow of funds. By excluding illegitimate finance from the mainstream economy, Kazakhstan aims to create a more secure and transparent environment for business.