Kazakhstan Financial Institutions Face Scrutiny as Government Steps Up Regulation
The Kazakhstani government has taken significant steps to strengthen the regulation of financial institutions in the country, introducing new measures to ensure stability and transparency in the sector.
New Measures to Ensure Stability and Transparency
According to a recent report from the Agency for Regulation of Financial Market (ARFM), the government has introduced stricter rules on banking activities. These include:
- Requiring banks to obtain an appropriate permit before engaging in certain transactions
- Increasing oversight of non-resident banks operating in Kazakhstan, requiring them to obtain accreditation from the agency before opening branches in the country
Amendments to Law on Banks and Banking
The law on banks and banking has been amended to prohibit banks from engaging in activities that do not fall under the category of banking activity, including:
- Acquiring interests or shares in legal entities
- Founding or participating in non-profit organizations
- Transacting in securities
Strengthening Financial Sector
Kazakhstan’s financial sector has faced challenges in recent years. In 2009, the country introduced Islamic banking regulations, allowing for the operation of Islamic banks alongside conventional banks.
According to industry insiders, the introduction of alternative forms of financing may encourage a reduction in interest rates on banking services in Kazakhstan.
New Roles and Responsibilities
The ARFM has been authorized to:
- Grant consent to the acquisition of the status of a major shareholder (either individual or corporate) of a bank or bank holding company
- Regulate joint-stock companies, which are the legal form of organization for banks in Kazakhstan
Prohibitions and Requirements
The law also prohibits:
- Legal entities incorporated in tax havens blacklisted by Kazakhstan competent authorities from owning and/or using and/or disposing of voting shares in Kazakhstan resident banks
- Banks from maintaining inaccurate records of transactions or failing to provide information on their activities to regulatory bodies
Goals and Objectives
The measures are seen as an effort to strengthen confidence in Kazakhstan’s financial sector and ensure that it is better equipped to withstand economic shocks.
Related Stories
- Kazakhstani Government Introduces New Measures to Regulate Islamic Banking
- Kazakhstan Moves to Strengthen Financial Sector with Introduction of Alternative Forms of Financing
- ARFM Authorizes Non-Resident Banks to Operate in Kazakhstan Subject to Accreditation