Financial Intelligence Unit Functions in Kyrgyzstan: A Mixed Bag, Says Report

The Financial Action Task Force (FATF) has released a report evaluating the implementation of anti-money laundering and combating terrorist financing measures in Kyrgyzstan. The assessment highlights both positive and negative aspects of the country’s financial intelligence unit (FIU) functions.

Progress Made in Establishing a Functional FIU

According to the report, Kyrgyzstan has made progress in establishing a functional FIU, which is responsible for collecting, analyzing, and disseminating financial intelligence to prevent and combat money laundering and terrorist financing. The country has implemented key measures such as:

Customer due diligence requirements: Financial institutions are required to conduct customer due diligence to verify the identity of their customers.
Record-keeping rules: Financial institutions are required to maintain records of their transactions and activities.

Areas for Improvement

Despite progress, the report highlights several areas where Kyrgyzstan needs to improve:

Risk assessment and targeting procedures: The country’s risk assessment and targeting procedures need to be enhanced to prevent terrorist financing and other high-risk activities.
Cooperation with international partners: Cooperation with international partners needs to be strengthened to improve information sharing and joint investigations.
Implementation of United Nations Security Council resolutions: Implementation of United Nations Security Council resolutions related to counter-terrorism requires improvement.

Compliance with FATF Standards

The report graded Kyrgyzstan’s FIU functions as follows:

Customer due diligence (LC): Compliance is largely satisfactory.
Record-keeping (LC): Compliance is largely satisfactory.
Correspondent banking (LC): Compliance is largely satisfactory.
Money or value transfer services (LC): Compliance is largely satisfactory.
Wire transfers (PC): Partial compliance exists.
Reliance on third parties (NC): Non-compliance exists.

Key Findings

Customer due diligence requirements and record-keeping rules for financial institutions are largely compliant with FATF standards.
Regulation and supervision of financial institutions is largely compliant, but there are concerns about the effectiveness of supervisors’ powers to investigate and take enforcement action against suspicious transactions.
Risk assessment and targeting procedures need to be enhanced to prevent terrorist financing and other high-risk activities.
Cooperation with international partners needs to be strengthened to improve information sharing and joint investigations.
Implementation of United Nations Security Council resolutions related to counter-terrorism requires improvement.

Recommendations

To address the identified areas for improvement, the report recommends:

Enhance risk assessment and targeting procedures to prevent terrorist financing and other high-risk activities.
Strengthen cooperation with international partners to improve information sharing and joint investigations.
Improve implementation of United Nations Security Council resolutions related to counter-terrorism.
Continue to strengthen the regulation and supervision of financial institutions, including giving supervisors adequate powers to investigate and take enforcement action against suspicious transactions.