Financial Crime World

Combating the Financing of Terrorism in Kazakhstan: A Mixed Bag of Compliance

The Financial Action Task Force (FATF) has recently assessed Kazakhstan’s efforts to combat the financing of terrorism (CFT), with a mixed bag of compliance ratings. According to the FATF Mutual Evaluation 2023, Kazakhstan has made significant progress in implementing the technical requirements of the CFT Recommendations, but there are still areas where improvement is needed.

Areas of Compliance

The report highlights several areas where Kazakhstan has achieved full compliance:

  • Assessing Risk and Applying a Risk-Based Approach (R.1): Kazakhstan has implemented a risk assessment framework to identify and mitigate terrorist financing risks.
  • National Cooperation and Coordination (R.2): The country has established effective coordination mechanisms between law enforcement agencies, financial institutions, and other relevant authorities.
  • Reporting of Suspicious Transactions (R.20): Kazakhstan has implemented a robust reporting system for suspicious transactions.

Additionally, Kazakhstan has made significant progress in implementing measures to prevent money laundering and terrorist financing through its financial institutions:

  • Customer Due Diligence (R.10): Financial institutions have implemented effective customer due diligence procedures.
  • Record Keeping (R.11): Institutions are maintaining accurate and detailed records of transactions and activities.
  • Internal Controls (R.18): Kazakhstan’s financial institutions have established internal controls to prevent money laundering and terrorist financing.

Areas for Improvement

However, the report also identifies several areas where Kazakhstan requires improvement:

  • Targeted Financial Sanctions Related to Terrorism and Terrorist Financing (R.6): The country has not fully implemented targeted financial sanctions related to terrorism and terrorist financing.
  • Prevention of Misuse of New Technologies (R.15): Kazakhstan has not yet put in place measures to prevent the misuse of new technologies for CFT purposes.
  • Regulation and Supervision of Financial Institutions and DNFBPs (R.26 and R.28): The country’s efforts to regulate and supervise financial institutions and designated non-financial businesses and professions have been deemed partially compliant.

Key Measures Not Implemented

The FATF report also highlights several areas where Kazakhstan has failed to implement key measures:

  • Confiscation and Provisional Measures for Terrorist Financing Offenses (R.4): The country lacks effective confiscation and provisional measures for terrorist financing offenses.
  • Powers of Law Enforcement and Investigative Authorities in Relation to CFT (R.31): Kazakhstan’s law enforcement and investigative authorities lack sufficient powers to effectively investigate and prosecute CFT-related crimes.

Transparency Concerns

Furthermore, the report identifies a significant concern regarding transparency:

  • Lack of Transparency and Beneficial Ownership Information for Legal Persons and Arrangements (R.24 and R.25): Kazakhstan’s lack of transparency and beneficial ownership information for legal persons and arrangements has been identified as a major concern.

Conclusion

While Kazakhstan has made some progress in implementing the CFT Recommendations, there is still much work to be done to ensure full compliance with international standards. The FATF report provides a roadmap for Kazakhstan’s future efforts to improve its CFT regime, and it is hoped that the government will take swift action to address the identified shortcomings.