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Evaluating Anti-Money Laundering and Combating Financing of Terrorism Regulations in the Kyrgyz Republic

The Kyrgyz Republic has made significant strides in addressing technical compliance deficiencies related to anti-money laundering (AML) and combating financing of terrorism (CFT) regulations. This evaluation report highlights various legislative developments and improvements that have contributed to this progress.

Key Developments and Improvements

The following key points outline the notable changes and advancements made by the Kyrgyz Republic:

Bearer Shares Exclusion

  • The Civil Code has excluded the concept of “bearer shares,” which are securities that are not registered but rather represent ownership through possession.
  • This exclusion aligns with international best practices and enhances transparency in the financial sector.

National Bank Regulation

  • A new Constitutional Law on the National Bank of the Kyrgyz Republic has been adopted, outlining its legal status, objectives, and functions.
  • The National Bank exercises supervision over banks and other financial institutions, ensuring their compliance with banking regulations and CFT/ML legislation.

Bank Compliance Audit

  • Audits assess a bank’s compliance with banking regulations and CFT/ML legislation.
  • Enforcement measures can be applied for violations of these requirements, promoting accountability and maintaining the integrity of the financial system.

Gambling Regulation

  • Law No. 50 allows the operation of gambling facilities in the Kyrgyz Republic, outlining procedures for creating and operating them, as well as licensing and state control.
  • This regulation ensures that gambling activities are conducted in a transparent and accountable manner, minimizing the risk of money laundering and terrorist financing.

Customs Cooperation

  • The Protocol on Amendments to the Treaty on Combating Legalization (Laundering) of Criminal Proceeds and the Financing of Terrorism Involving Transportation of Currency and (or) Cash (Financial) Instruments across the Border of the Customs Union has been ratified.
  • This protocol enables customs authorities to take CFT/ML measures, enhancing cooperation and information exchange between law enforcement agencies.

Information Exchange

  • The Agreement on Information Exchange in the Field of Combating Legalization (Laundering) of Criminal Proceeds and the Financing of Terrorism Involving Transportation of Currency and (or) Cash (Financial) Instruments across the Border of the Customs Union has been ratified.
  • This agreement facilitates cooperation and information exchange between law enforcement agencies, supporting efforts to combat money laundering and terrorist financing.

Gambling Taxation

  • Amendments to the Code of Offenses and the Tax Code have introduced liability for gambling operators and a taxation procedure.
  • This reform ensures that gambling activities are subject to appropriate taxation, generating revenue for the government and promoting fairness in the financial sector.

Conclusion

The Kyrgyz Republic has made significant progress in addressing technical compliance deficiencies identified in the MER, resulting in an upgraded rating (R.8) from “NC” to “PC”. These developments demonstrate the country’s commitment to improving its AML/CFT framework and enhancing transparency in the financial sector.