THE RESOLUTION OF BOARD OF THE AGENCY OF THE REPUBLIC OF KAZAKHSTAN ON REGULATION AND DEVELOPMENT OF THE FINANCIAL MARKET

of September 12, 2022 No. 69

About modification and amendments in some regulatory legal acts of the Republic of Kazakhstan concerning counteraction of legalization (washing) of income gained in the criminal way and to financing of terrorism in the financial market

Board of the Agency of the Republic of Kazakhstan on regulation and development of the DECIDES: financial market

1. Approve the List of regulatory legal acts of the Republic of Kazakhstan concerning counteraction of legalization (washing) of income gained in the criminal way and to financing of terrorism in the financial market to which changes and additions, according to appendix to this resolution are made.

2. To provide to department of methodology and prudential regulation of the financial organizations in the procedure established by the legislation of the Republic of Kazakhstan:

1) together with Legal department state registration of this resolution in the Ministry of Justice of the Republic of Kazakhstan;

2) placement of this resolution on official Internet resource of the Agency of the Republic of Kazakhstan on regulation and development of the financial market after its official publication;

3) within ten working days after state registration of this resolution submission to Legal department of data on execution of the action provided by the subitem 2) of this Item.

3. To impose control of execution of this resolution on the supervising vice-chairman of the Agency of the Republic of Kazakhstan on regulation and development of the financial market.

4. This resolution becomes effective after ten calendar days after day of its first official publication.

It is approved Financial monitoring agency of the Republic of Kazakhstan

Appendix

to the Resolution of Board of the Agency of the Republic of Kazakhstan on regulation and development of the financial market of September 12, 2022 No. 69

The list of regulatory legal acts of the Republic of Kazakhstan concerning counteraction of legalization (washing) of income gained in the criminal way and to financing of terrorism in the financial market to which changes and additions are made

1. Bring in the resolution of Board of the Agency of the Republic of Kazakhstan on regulation and development of the financial market of March 22, 2020 No. 18 "About approval of Requirements to Rules of internal control for the purpose of counteraction of legalization (washing) of income gained in the criminal way and to financing of terrorism for banks of the second level, branches of nonresident banks of the Republic of Kazakhstan and the National operator of mail" (it is registered in the Register of state registration of regulatory legal acts at No. 20160) the following changes and amendment:

state heading in the following edition:

"About approval of Requirements to Rules of internal control for the purpose of counteraction of legalization (washing) of income gained in the criminal way, to financing of terrorism and financing of distribution of weapons of mass destruction for banks of the second level, branches of nonresident banks of the Republic of Kazakhstan and the National operator of mail";

state Item 1 in the following edition:

"1. Approve the enclosed Requirements to Rules of internal control for the purpose of counteraction of legalization (washing) of income gained in the criminal way, to financing of terrorism and financing of distribution of weapons of mass destruction for banks of the second level, branches of nonresident banks of the Republic of Kazakhstan and the National operator of mail.";

in Requirements to Rules of internal control for the purpose of counteraction of legalization (washing) of income gained in the criminal way and to financing of terrorism for the banks of the second level, branches of nonresident banks of the Republic of Kazakhstan and the National operator of mail approved by the specified resolution:

state heading in the following edition:

"Requirements to Rules of internal control for the purpose of counteraction of legalization (washing) of income gained in the criminal way, to financing of terrorism and financing of distribution of weapons of mass destruction for banks of the second level, branches of nonresident banks of the Republic of Kazakhstan and the National operator of mail";

1, of 2, 3 and 4 to state Items in the following edition:

"1. These Requirements to Rules of internal control for the purpose of counteraction of legalization (washing) of income gained in the criminal way, to financing of terrorism and financing of distribution of weapons of mass destruction for banks of the second level, branches of nonresident banks of the Republic of Kazakhstan and the National operator of mail (further – Requirements) are developed according to the paragraph the second Item 3-2 of article 11 of the Law of the Republic of Kazakhstan "About counteraction of legalization (washing) of the income received in the criminal way and to terrorism financing" (further – the Law on POD/FT) and extend to banks of the second level, branches of nonresident banks of the Republic of Kazakhstan and the National operator of mail (further – bank).

2. If Requirements do not provide other, the concepts applied in Requirements are used in the values specified in the Law on POD/FT, the Law of the Republic of Kazakhstan "About payments and payment systems" and the Law of the Republic of Kazakhstan "About joint-stock companies".

For the purposes of Requirements the following concepts are used:

1) unusual transaction (transaction) – transaction (transaction) of the client which is subject to obligatory studying according to item 4 of article 4 of the Law on POD/FT taking into account the signs of determination of suspicious transaction determined by the authorized body performing financial monitoring and taking other measures for counteraction of legalization (washing) of income gained in the criminal way, to terrorism financing, financing of distribution of weapons of mass destruction (further - authorized body on financial monitoring) according to Item 2 of article 10 of the Law on POD/FT, and also developed by bank independently;

2) one-time transaction (transaction) – provision of services by bank by carrying out transactions on transfer of money for the bank account of physical person or carrying out payment for benefit of the service provider by means of the equipment (device) intended for acceptance of cash, to cashless payment or money transfer without use of the bank account, to purchase, sale or exchange of cash foreign currency in exchange point, to use of the payment card which is not access facility to the bank account of such client, debt repayment within enforcement proceeding for benefit of state bodies by means of the equipment (device), purchase of the affined ingot gold through exchange points, and also provision by bank of services to not identified owners of electronic money by carrying out transactions on acquisition and use of electronic money;

3) risk management of OD/FT – set of the measures for identification, assessment, monitoring of risks of OD/FT, and also their minimization taken by bank (concerning services (products), clients, and also made by clients of transactions);

4) the client – the physical, legal entity or foreign structure without formation of legal entity receiving services of bank;

5) risks of legalization (washing) of income gained in the criminal way, financings of terrorism and financing of distribution of weapons of mass destruction (further – risks of OD/FT) - risks of deliberate or inadvertent involvement of bank in processes of legalization (washing) of income gained in the criminal way, financings of terrorism and financing of distribution of weapons of mass destruction (further – OD/FT) or other criminal activities;

6) digital asset – the property created in electronic and digital form using means of cryptography and computer calculations, which is not the financial instrument and also electronic and digital form of the certificate of property rights;

7) threshold transaction - transaction of the client with money and (or) other property which according to Item 1 of article 4 of the Law on POD/FT is subject to financial monitoring;

8) business relations – the relations on provision by bank to the client of services (products) relating to financial activities and financial services.

3. Internal control for the purpose of counteraction of legalization (washing) of income gained in the criminal way, to financing of terrorism and financing of distribution of weapons of mass destruction (further – POD/FT) is performed by bank for the purpose of:

1) ensuring accomplishment by bank of requirements of the Law on POD/FT;

2) maintenance of system effectiveness of internal control of bank at the level sufficient for risk management of OD/FT and the integrated risks (operational, reputation);

3) exceptions of involvement of bank, his officials and workers in processes of OD/FT.

4. Within the organization of internal control for the purpose of POD/FT the rules of internal control including requirements to carrying out internal audit of bank of efficiency evaluation of internal control by service for the purpose of POD/FT are developed and accepted by governing body or executive body of bank. Rules of internal control are performed by bank taking into account results of assessment of degree of exposure of services of bank to risks of OD/FT, the size, nature and complexity of bank.

Rules of internal control include programs, the stipulated in Article 11 Laws on POD/FT which are developed by bank independently according to Requirements and are the internal document of bank or set of such documents approved by governing body or executive body of bank.";

5, 6 and 7 to state Items in the following edition:

"5. According to the procedure, established by internal documents of bank, in bank person responsible for realization and observance of rules of internal control in bank (further – the ranking officer), from among leading employees of bank is designated or other heads of bank there is not lower than the level of head of the relevant structural division of bank, and also workers or division of bank which competence questions POD/FT enter (further – division on POD/FT) are determined.

6. Requirements to the ranking officer are:

1) availability of the higher education;

2) availability of length of service to positions of the division manager of the bank connected with implementation of banking and (or) other activities, at least 1 (one) year or length of service in the field of POD/FT at least 2 (two) years or length of service in the field of provision and (or) regulation of financial services at least 3 (three) years;

3) availability of faultless goodwill according to the Law of the Republic of Kazakhstan "About banks and banking activity in the Republic of Kazakhstan".

7. The program of the organization of internal control for the purpose of POD/FT includes, but is not limited:

1) procedure for fixation of data, and also document storages and information received during realization of internal control for the purpose of POD/FT;

2) procedure for informing bank by workers, including the ranking officer, governing body and executive body of bank about the facts of violation of the law which became to them known about POD/FT, and also the rules of internal control allowed by employees of bank;

3) the requirement description on POD/FT of banking conglomerate which includes bank (in the presence);

4) procedure for preparation and representation to governing body and executive body of bank of the management reporting, including on the consolidated basis within banking conglomerate, by results of efficiency evaluation of internal control for the purpose of POD/FT service of internal audit of bank;

5) procedure for decision making by the ranking officer, governing body and (or) executive body of bank or the leading employee of bank about establishment, continuation or the termination of business relations with clients, about suspension or refusal in the carrying out transactions of clients in the cases provided by the Law on POD/FT and (or) contracts with clients, and according to the procedure provided by internal documents of bank;

6) assessment procedure, determinations, documentary fixation and updating of results of risks assessment of OD/FT;

7) the description of functions of division on POD/FT, including the procedure of interaction with other divisions of bank, branches, the affiliated organizations when implementing internal control for the purpose of POD/FT, and also functions, powers of the ranking officer, the procedure of interaction of the ranking officer with governing body and executive body of bank;

8) procedure for observance and implementation of rules of internal control, including procedure for application of additional control measures and procedures for risk management of OD/FT and their decrease, the branches, representations, the affiliated organizations located both in the Republic of Kazakhstan and beyond its limits if it does not contradict the legislation of the state of their location.";

state Items 21 and 22 in the following edition:

"21. For the purpose of implementation of requirements of the Law on POD/FT for proper check of the client (his representative) and the beneficial owner the bank develops the program of identification of clients (their representatives) and beneficial owners.

Identification of the client (his representative) and the beneficial owner consists in holding by bank actions for fixation of information about the client (his representative), to identification of the beneficial owner and fixation of information about him, establishment and fixation of the expected purpose of business relations or one-time transaction (transaction), carrying out on permanent basis of verification of business relations and studying of the transactions performed by the client through bank, including if necessary obtaining and fixation of data on source of financing of the made transactions, and also to obtaining and fixation of other information about the client and their representatives provided by the Law on POD/FT.

In the presence of reasons for doubt whether the physical person which directly or indirectly belongs more than twenty five percent of shares in the authorized capital is or placed (less exclusive and redeemed by society) shares of the client legal entity, foreign structure without formation of legal entity, the beneficial owner, allows recognition by the beneficial owner of the physical person exercising control over the client legal entity, foreign structure without formation of legal entity otherwise or for the benefit of which the client legal entity, by foreign structure without formation of legal entity makes transactions with money and (or) other property.

If as a result of taking measures the beneficial owner of the client legal entity, foreign structure without formation of legal entity is not revealed, recognition by the beneficial owner of sole executive body or the head of collegiate executive body of the client legal entity, foreign structure without formation of legal entity is allowed.

22. The program of identification of the client, his representative and beneficial owner includes, but is not limited:

1) procedure for acceptance of clients on servicing, including the procedure, the bases and terms of adoption by bank of the decision on refusal in establishment of business relations and (or) in carrying out transaction, and also the termination of business relations;

2) procedure for identification of the client (his representative) and the beneficial owner, including feature of procedures of application of the simplified and strengthened measures of proper check of the client;

3) features of carrying out identification in case of establishment of correspondence relations with the foreign financial organizations;

4) the description of the measures directed to identification by bank among clients (their representatives) and beneficial owners who are on servicing or accepted on servicing of public officials, their spouses and close relatives;

5) procedure for application of target financial sanctions, checks of the client (his representative) and the beneficial owner on availability in lists of the organizations and faces tied with financing of terrorism and extremism, financing of distribution of weapons of mass destruction constituted according to Articles 12 (further - the List) and 12-1 (further - the List of FROMU) the Law on POD/FT;

6) procedure for cancellation of target financial sanctions in case of exception of information about the client (his representative) and the beneficial owner from the List and the List of FROMU;

7) features of identification in case of remote establishment of business relations (without personal presence of the client or his representative);

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