Financial Crime World

Tajikistan’s Progress and Shortcomings in Preventing Money Laundering and Terrorist Financing

Introduction

Tajikistan has made significant strides in preventing money laundering (ML) and terrorist financing (TF), however, there are still several shortcomings that need to be addressed.

Preventive Measures

Overview of Financial Institutions’ Understanding of ML/TF Risks

Almost all financial institutions in Tajikistan have a general understanding of ML/TF risks, thanks to the National Risk Assessment report and training activities organized by the Financial Monitoring Department (FMD). However, only credit institutions adopt ML/TF risk mitigation measures by implementing enhanced customer due diligence (CDD) measures and transactions monitoring.

Implementation of Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) Measures

  • Banks and Non-Bank Credit Institutions: Banks and non-bank credit institutions demonstrate a more comprehensive understanding of AML/CFT responsibilities. They apply AML/CFT internal control procedures, including ongoing training and internal control audits.
  • Designated Non-Financial Businesses and Professions (DNFBPs): DNFBPs such as notaries and real estate agents lack a good understanding of their AML/CFT responsibilities and do not apply enhanced CDD measures.

Reporting Obligations

The majority of threshold and suspicious transaction reports are submitted by banks and some non-bank credit institutions. However, DNFBPs understand their reporting obligations but failed to send any reports to the FMD.

Identification of Beneficial Owners

Financial institutions primarily carry out the identification of beneficial owners based on customer-provided information or publicly accessible data.

Supervision

Overview of Supervisory Regime

Tajikistan’s supervisory regime is largely commensurate with the scale and scope of the country’s financial sector, applying to all types of financial institutions except leasing companies. However, notaries, independent legal professionals, and real estate agents are not subject to supervision.

Licensing and Supervision Regime

  • Credit Institutions: The licensing and supervisory regime for credit institutions does a good job of preventing persons convicted of economic crimes from holding a controlling interest or management function in such entities.
  • DNFBPs Registration and Licensing: Although the mechanisms in place allow authorities to block criminals from entering the market, they fail to safeguard it against their associates.

Implementation of Risk-Based Approach

The country plans to implement a risk-based approach to AML/CFT supervision in the financial sector based on the findings of the national risk assessment and approved National Concept. However, not all financial sector supervisors are involved in this work, and no RBA supervision is exercised in the DNFBP sector.

Enforcement of Sanctions

Sanctions for non-compliance with AML/CFT requirements are regularly applied against credit institutions but not used against DNFBPs.

Conclusion

While Tajikistan has made significant progress in preventing ML/TF, there are still several shortcomings that need to be addressed. Implementing a risk-based approach and exercising RBA supervision across all sectors will help strengthen the country’s AML/CFT framework. Ensuring compliance with reporting obligations and enhancing the understanding of AML/CFT responsibilities among DNFBPs is crucial for effective prevention of ML/TF in Tajikistan.