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Kazakhstan Adopts Risk-Based Approach to Financial Crime Prevention
In a significant move to combat financial crime, the government of Kazakhstan has adopted a risk-based approach to prevent money laundering and terrorist financing.
A New Era for Anti-Money Laundering (AML) in Kazakhstan
The new regulations require relevant persons to identify and assess the risks of money laundering to which their businesses are exposed and establish policies, procedures, systems, and controls to mitigate and manage those risks. This approach is essential to prevent financial crime and allows relevant persons to focus their efforts on areas where the risks are highest.
Factors to Consider
The risk-based approach requires relevant persons to consider various factors when conducting a business risk assessment and customer risk assessments, including:
- The size and nature of their businesses
- The complexity of their activities
- The countries or geographic areas in which they operate
- The products or services offered
- Transactions, delivery mechanisms, channels, and partners
- The development of new products and business practices
Proportionate Response to Money Laundering Risks
The regulations emphasize the importance of a proportionate response to money laundering risks. Relevant persons must take into account the nature, scale, complexity, and money laundering risks of their businesses when developing policies and procedures.
Guidance from the Financial Intelligence Unit
The Financial Intelligence Unit has provided guidance on the risk-based approach, emphasizing its importance as part of a relevant person’s anti-money laundering (AML) compliance culture. The unit expects senior management to be fully committed to the approach and for all employees to cooperate actively.
Implementation Requirements
In implementing the risk-based approach, relevant persons must have in place processes to:
- Identify and assess money laundering risks
- Monitor, manage, and mitigate those risks in a way that is proportionate to their exposure to those risks
The regulations discourage a “tick-box” approach to AML and instead require relevant persons to assess relevant money laundering risks and adopt a proportionate response.
Industry Response
The risk-based approach has been widely welcomed by the financial community in Kazakhstan, which sees it as an important step towards enhancing the country’s anti-money laundering regime. The new regulations are expected to improve the effectiveness of AML controls and reduce the risks of money laundering and terrorist financing in the country.