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FATF Statement re AML Strategic Deficiencies
Date: 16 February 2012
In October 2011, Kyrgyzstan made a high-level political
commitment to work with the FATF and EAG to address its
strategic AML/CFT deficiencies. The FATF has determined that
certain strategic AML/CFT deficiencies remain. Kyrgyzstan should
continue to work on implementing its action plan to address these
deficiencies, including by: (1) adequately criminalising money
laundering and terrorist financing (Recommendation 1 and
Special Recommendation II); (2) establishing and implementing an
adequate legal framework for identifying, tracing and freezing
terrorist assets (Special Recommendation III); (3) establishing and
implementing adequate measures for the confiscation of funds
related to money laundering (Recommendation 3); (4)
establishing effective CDD measures for all financial institutions
(Recommendation 5); and (5) implementing an adequate and
effective AML/CFT supervisory programme for all financial sectors
(Recommendation 23). The FATF encourages Kyrgyzstan to
address its deficiencies and continue the process of implementing
its action plan.
____________________________________________________________
Sanctions:
None applicable
____________________________________________________
Offshore Jurisdiction Blacklists:
Information unavailable.
____________________________________________________
US State Department Money Laundering Report - 2011:
The Kyrgyz Republic is not a regional financial center. A
significant percentage of the country’s GDP comes from
remittances from abroad, posing a money laundering vulnerability.
Corruption, organized crime and a large shadow economy also
make the country vulnerable to money laundering and terrorist
financing. Narcotics trafficking, tax and tariff evasion, and
corruption related to the performance of official duties or
government contracts are the major sources of laundered
proceeds. Money laundering primarily occurs through trade-
based fraud and bulk cash carriers.
DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY
TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS
TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US
CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN
THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE
U.S.: NO
CRIMINALIZATION OF MONEY LAUNDERING:
“All serious crimes” approach or “list” approach to predicate
crimes: All serious crimes
Legal persons covered: criminally: NO civilly: NO
CRIMINALIZATION OF TERRORIST FINANCING:
Ability to freeze terrorist assets without delay: NO
UN lists of designated terrorists or terrorist entities distributed to
financial institutions: YES
(Please refer to the Department of State’s Country Reports on
Terrorism, which can be found here: http://www.state.
gov/s/ct/rls/crt/)
KNOW-YOUR-CUSTOMER RULES:
Covered entities: Banks, credit institutions, stock brokerages,
foreign exchange offices, casinos, insurance companies, notaries,
tax consultants/auditors, realtors, the state’s property agency,
trustees, jewelry stores and dealers
Enhanced due diligence procedures for PEPs: Foreign: YES
Domestic: NO
SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:
Covered entities: Banks, credit institutions, stock brokerages,
foreign exchange offices, casinos, insurance companies, notaries,
tax consultants/auditors, realtors, the state’s property agency,
trustees, jewelry stores and dealers
Number of STRs received and time frame: Not available
Number of CTRs received and time frame: Not available
MONEY LAUNDERING CRIMINAL
PROSECUTIONS/CONVICTIONS:
Prosecutions: None -- 2008 - 2010
Convictions: None -- 2008 - 2010
Assets forfeited: criminally: None - 2008 - 2010 civilly: None -
2008 - 2010
RECORDS EXCHANGE MECHANISM:
With U.S.: NO
With other governments/jurisdictions: YES
The Kyrgyz Republic is a member of the Eurasian Group on
Combating Money Laundering and Financing of Terrorism, a
Financial Action Task Force (FATF)-style regional body. Its most
recent mutual evaluation can be found here: http://www.
eurasiangroup.org/mers.php
ENFORCEMENT AND IMPLEMENTATION ISSUES AND
COMMENTS:
The government has adopted anti-money laundering/counter-
terrorist financing legislation and established a Financial
Intelligence Service. However, the lack of political will and inter-
agency cooperation, resource constraints, inefficient financial
systems and corruption hamper efforts to effectively combat
money laundering and terrorist financing.
Key reporting issues that need to be resolved: auto dealers and
real estate developers are not included in the list of entities
required to report large dollar transactions. Additionally, the
statutory threshold amount that triggers mandatory reporting
remains high: $25,000.
The Government of the Kyrgyz Republic should continue to
strengthen legislation as it relates to money laundering and
financial crimes that support terrorist organizations, both within
financial institutions and within those activities that circumvent
financial institutions. In addition, the Kyrgyz Republic must
increase and enhance training in money laundering and terrorist
financing investigative techniques.
The banking system is at risk for money laundering, as oversight
of the banking sector is generally weak. Two serious deficiencies
include the lack of a ‘tipping off’ law to prohibit the disclosure of
the reporting of suspicious or unusual activity to an individual who
is the subject of such a report, or to a third party; and the lack of
a “safe harbor” defense to banks and/or other covered entities
and their employees who provide otherwise confidential banking
data to authorities in pursuit of authorized investigations.
____________________________________________________
US State Dept Narcotics Report 2012 (introduction):
The Kyrgyz Republic is a key transit country for the trafficking of
Afghan opiates to Europe, the Russian Federation, and China.
Afghan opiates pass through its borders with Tajikistan,
Uzbekistan, and Kazakhstan. The Kyrgyz Republic faces serious
problems in monitoring its borders due to the topography of the
country, of which 94 percent is mountainous. The drug abuse
situation in the Kyrgyz Republic is also cause for serious concern.
One hundred thousand hectares of wild-growing cannabis in the
country serve as a raw product source for local criminals for
production of marijuana and hashish. There is also evidence of
more intensive cultivation of cannabis for profit by criminal
elements. There is a moderately high level of drug addiction in the
country, which amounts to more than 1 percent of the population.
Given the government’s limited financial resources and recent
political upheaval, the drug and crime situation in the Kyrgyz
Republic has the potential to affect the stability not only of the
country, but also of the region.
The Government of the Kyrgyz Republic recognizes that the drug
trade is a serious threat to its own stability and is continuing
efforts to focus on secondary and tertiary drug-related issues
such as money laundering, drug-related street crime, and
corruption within its own ranks. In 2010, the government re-
established the Drug Control Agency (renamed the State Drug
Control Service) as the sole government body responsible for
fighting narcotics trafficking. The Kyrgyz Republic is a party to the
1988 UN Drug Convention. The Kyrgyz Republic is also a party to
the UN Convention against Transnational Organized Crime and to
the UN Convention against Corruption.
For Full report, click here
____________________________________________________
US State Dept Trafficking in Persons Report 2011
(introduction):
(Tier 2)
The Kyrgyz Republic (or Kyrgyzstan) is a source, transit and, to a
lesser extent, a destination country for men, women, and children
subjected to conditions of forced labor, and for women subjected
to forced prostitution. Kyrgyz men, women, and children are
subjected to bonded labor in China and to conditions of forced
labor in the Czech Republic, Turkey, Kazakhstan, and Russia,
specifically in the agricultural, forestry, construction, and textile
industries. Women from the Kyrgyz Republic are subjected to
forced prostitution in the United Arab Emirates (UAE),
Kazakhstan, China, South Korea, Turkey, Greece, Cyprus,
Thailand, Germany, and Syria. Some men and women from
Uzbekistan, Tajikistan, and Turkmenistan transit the Kyrgyz
Republic as they migrate to Russia, the UAE, and Turkey, where
they are subsequently subjected to forced labor and forced
prostitution. A recent NGO study estimated that over 60,000
Kyrgyz citizens are victims of trafficking, both within the country
and abroad.
The Government of the Kyrgyz Republic does not fully comply
with the minimum standards for the elimination of trafficking;
however, it is making significant efforts to do so, despite
widespread civil unrest during much of the reporting period. The
government continued to provide in-kind assistance to two NGO-
run trafficking shelters which helped significantly more victims
than in previous years. The Kyrgyz government also monitored
migration and foreign employment data to better understand its
trafficking problem. The government also increased the number of
trafficking prosecutions, although fewer convicted offenders
received time in prison. However, despite continued reports of
corruption, the government did not investigate or prosecute any
officials suspected of being complicit in human trafficking
offenses, nor did they convict or criminally punish any complicit
government officials.
For full report click here
____________________________________________________
US State Dept Terrorism Report 2010
Overview: 2010 was a turbulent year for Kyrgyzstan, with the
collapse of the government in April and inter-ethnic clashes in
June, which resulted in the deaths of hundreds in the southern
cities of Osh and Jalalabad. The Provisional Government
successfully organized a Constitutional Referendum in June and
Parliamentary elections in October. Following the elections, a new
government was formed in December. In spite of the changes in
leadership and political system, terrorism remained an important
issue for the Government of Kyrgyzstan.
2010 Terrorist Incidents:
* On November 24, police in Bishkek arrested two persons in a
car parked near the Central Mosque and seized several
improvised explosive devices from the vehicle.
* On November 30 in Bishkek, a bomb exploded outside of the
Sports Palace where the trial of former government officials
arrested following the April 7 violence was taking place. No one
was killed. Two police officers suffered minor injuries.
* On December 25, suspected terrorists parked a vehicle
containing an explosive device outside the Bishkek central police
station. Security officials discovered the vehicle and defused the
bomb before it exploded without injury. The vehicle had been
stolen from American citizens during a home invasion and robbery
on December 24.
Legislation and Law Enforcement: Following the December
terrorist attacks, Kyrgyzstan’s security forces arrested a number
of terrorist suspects. By year’s end, however, none of the
suspects were charged with any crimes. The Kyrgyzstan
government has significantly expanded the number of uniformed
police on the street and increased the number of ID checks of
individuals. Due to the events in April and the subsequent
dissolution of Parliament, Kyrgyzstan did not pass any new
counterterrorism legislation.
Countering Terrorist Finance: Kyrgyzstan is a member of the
Eurasian Group (EAG) on Combating Money Laundering and
Financing of Terrorism, a Financial Action Task Force (FATF)-
style regional body. In November, the EAG Secretariat noted that
Kyrgyzstan was partially compliant with eight and non-compliant
with eight of the FATF’s 16 core anti-money laundering/countering
terrorist finance recommendations. It noted that the Kyrgyz
Republic had achieved major progress in relation to the financial
recommendations since December 2009. The Financial
Intelligence Unit of Kyrgyzstan is a member of the Egmont Group.
In 2010, Kyrgyzstan did not freeze any terrorist assets, including
those called for by UNSCRs 1267 and 1373.
Regional and International Cooperation: As a member state of
both organizations, Kyrgyzstan participated in activities of the
Collective Security Treaty Organization of the Commonwealth of
Independent States and activities of the OSCE.
____________________________________________________
Links:
Worldwide AML Legislation (International Bar Association)
Date: 16 February 2012
In October 2011, Kyrgyzstan made a high-level political
commitment to work with the FATF and EAG to address its
strategic AML/CFT deficiencies. The FATF has determined that
certain strategic AML/CFT deficiencies remain. Kyrgyzstan should
continue to work on implementing its action plan to address these
deficiencies, including by: (1) adequately criminalising money
laundering and terrorist financing (Recommendation 1 and
Special Recommendation II); (2) establishing and implementing an
adequate legal framework for identifying, tracing and freezing
terrorist assets (Special Recommendation III); (3) establishing and
implementing adequate measures for the confiscation of funds
related to money laundering (Recommendation 3); (4)
establishing effective CDD measures for all financial institutions
(Recommendation 5); and (5) implementing an adequate and
effective AML/CFT supervisory programme for all financial sectors
(Recommendation 23). The FATF encourages Kyrgyzstan to
address its deficiencies and continue the process of implementing
its action plan.
____________________________________________________________
Sanctions:
None applicable
____________________________________________________
Offshore Jurisdiction Blacklists:
Information unavailable.
____________________________________________________
US State Department Money Laundering Report - 2011:
The Kyrgyz Republic is not a regional financial center. A
significant percentage of the country’s GDP comes from
remittances from abroad, posing a money laundering vulnerability.
Corruption, organized crime and a large shadow economy also
make the country vulnerable to money laundering and terrorist
financing. Narcotics trafficking, tax and tariff evasion, and
corruption related to the performance of official duties or
government contracts are the major sources of laundered
proceeds. Money laundering primarily occurs through trade-
based fraud and bulk cash carriers.
DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY
TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS
TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US
CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN
THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE
U.S.: NO
CRIMINALIZATION OF MONEY LAUNDERING:
“All serious crimes” approach or “list” approach to predicate
crimes: All serious crimes
Legal persons covered: criminally: NO civilly: NO
CRIMINALIZATION OF TERRORIST FINANCING:
Ability to freeze terrorist assets without delay: NO
UN lists of designated terrorists or terrorist entities distributed to
financial institutions: YES
(Please refer to the Department of State’s Country Reports on
Terrorism, which can be found here: http://www.state.
gov/s/ct/rls/crt/)
KNOW-YOUR-CUSTOMER RULES:
Covered entities: Banks, credit institutions, stock brokerages,
foreign exchange offices, casinos, insurance companies, notaries,
tax consultants/auditors, realtors, the state’s property agency,
trustees, jewelry stores and dealers
Enhanced due diligence procedures for PEPs: Foreign: YES
Domestic: NO
SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:
Covered entities: Banks, credit institutions, stock brokerages,
foreign exchange offices, casinos, insurance companies, notaries,
tax consultants/auditors, realtors, the state’s property agency,
trustees, jewelry stores and dealers
Number of STRs received and time frame: Not available
Number of CTRs received and time frame: Not available
MONEY LAUNDERING CRIMINAL
PROSECUTIONS/CONVICTIONS:
Prosecutions: None -- 2008 - 2010
Convictions: None -- 2008 - 2010
Assets forfeited: criminally: None - 2008 - 2010 civilly: None -
2008 - 2010
RECORDS EXCHANGE MECHANISM:
With U.S.: NO
With other governments/jurisdictions: YES
The Kyrgyz Republic is a member of the Eurasian Group on
Combating Money Laundering and Financing of Terrorism, a
Financial Action Task Force (FATF)-style regional body. Its most
recent mutual evaluation can be found here: http://www.
eurasiangroup.org/mers.php
ENFORCEMENT AND IMPLEMENTATION ISSUES AND
COMMENTS:
The government has adopted anti-money laundering/counter-
terrorist financing legislation and established a Financial
Intelligence Service. However, the lack of political will and inter-
agency cooperation, resource constraints, inefficient financial
systems and corruption hamper efforts to effectively combat
money laundering and terrorist financing.
Key reporting issues that need to be resolved: auto dealers and
real estate developers are not included in the list of entities
required to report large dollar transactions. Additionally, the
statutory threshold amount that triggers mandatory reporting
remains high: $25,000.
The Government of the Kyrgyz Republic should continue to
strengthen legislation as it relates to money laundering and
financial crimes that support terrorist organizations, both within
financial institutions and within those activities that circumvent
financial institutions. In addition, the Kyrgyz Republic must
increase and enhance training in money laundering and terrorist
financing investigative techniques.
The banking system is at risk for money laundering, as oversight
of the banking sector is generally weak. Two serious deficiencies
include the lack of a ‘tipping off’ law to prohibit the disclosure of
the reporting of suspicious or unusual activity to an individual who
is the subject of such a report, or to a third party; and the lack of
a “safe harbor” defense to banks and/or other covered entities
and their employees who provide otherwise confidential banking
data to authorities in pursuit of authorized investigations.
____________________________________________________
US State Dept Narcotics Report 2012 (introduction):
The Kyrgyz Republic is a key transit country for the trafficking of
Afghan opiates to Europe, the Russian Federation, and China.
Afghan opiates pass through its borders with Tajikistan,
Uzbekistan, and Kazakhstan. The Kyrgyz Republic faces serious
problems in monitoring its borders due to the topography of the
country, of which 94 percent is mountainous. The drug abuse
situation in the Kyrgyz Republic is also cause for serious concern.
One hundred thousand hectares of wild-growing cannabis in the
country serve as a raw product source for local criminals for
production of marijuana and hashish. There is also evidence of
more intensive cultivation of cannabis for profit by criminal
elements. There is a moderately high level of drug addiction in the
country, which amounts to more than 1 percent of the population.
Given the government’s limited financial resources and recent
political upheaval, the drug and crime situation in the Kyrgyz
Republic has the potential to affect the stability not only of the
country, but also of the region.
The Government of the Kyrgyz Republic recognizes that the drug
trade is a serious threat to its own stability and is continuing
efforts to focus on secondary and tertiary drug-related issues
such as money laundering, drug-related street crime, and
corruption within its own ranks. In 2010, the government re-
established the Drug Control Agency (renamed the State Drug
Control Service) as the sole government body responsible for
fighting narcotics trafficking. The Kyrgyz Republic is a party to the
1988 UN Drug Convention. The Kyrgyz Republic is also a party to
the UN Convention against Transnational Organized Crime and to
the UN Convention against Corruption.
For Full report, click here
____________________________________________________
US State Dept Trafficking in Persons Report 2011
(introduction):
(Tier 2)
The Kyrgyz Republic (or Kyrgyzstan) is a source, transit and, to a
lesser extent, a destination country for men, women, and children
subjected to conditions of forced labor, and for women subjected
to forced prostitution. Kyrgyz men, women, and children are
subjected to bonded labor in China and to conditions of forced
labor in the Czech Republic, Turkey, Kazakhstan, and Russia,
specifically in the agricultural, forestry, construction, and textile
industries. Women from the Kyrgyz Republic are subjected to
forced prostitution in the United Arab Emirates (UAE),
Kazakhstan, China, South Korea, Turkey, Greece, Cyprus,
Thailand, Germany, and Syria. Some men and women from
Uzbekistan, Tajikistan, and Turkmenistan transit the Kyrgyz
Republic as they migrate to Russia, the UAE, and Turkey, where
they are subsequently subjected to forced labor and forced
prostitution. A recent NGO study estimated that over 60,000
Kyrgyz citizens are victims of trafficking, both within the country
and abroad.
The Government of the Kyrgyz Republic does not fully comply
with the minimum standards for the elimination of trafficking;
however, it is making significant efforts to do so, despite
widespread civil unrest during much of the reporting period. The
government continued to provide in-kind assistance to two NGO-
run trafficking shelters which helped significantly more victims
than in previous years. The Kyrgyz government also monitored
migration and foreign employment data to better understand its
trafficking problem. The government also increased the number of
trafficking prosecutions, although fewer convicted offenders
received time in prison. However, despite continued reports of
corruption, the government did not investigate or prosecute any
officials suspected of being complicit in human trafficking
offenses, nor did they convict or criminally punish any complicit
government officials.
For full report click here
____________________________________________________
US State Dept Terrorism Report 2010
Overview: 2010 was a turbulent year for Kyrgyzstan, with the
collapse of the government in April and inter-ethnic clashes in
June, which resulted in the deaths of hundreds in the southern
cities of Osh and Jalalabad. The Provisional Government
successfully organized a Constitutional Referendum in June and
Parliamentary elections in October. Following the elections, a new
government was formed in December. In spite of the changes in
leadership and political system, terrorism remained an important
issue for the Government of Kyrgyzstan.
2010 Terrorist Incidents:
* On November 24, police in Bishkek arrested two persons in a
car parked near the Central Mosque and seized several
improvised explosive devices from the vehicle.
* On November 30 in Bishkek, a bomb exploded outside of the
Sports Palace where the trial of former government officials
arrested following the April 7 violence was taking place. No one
was killed. Two police officers suffered minor injuries.
* On December 25, suspected terrorists parked a vehicle
containing an explosive device outside the Bishkek central police
station. Security officials discovered the vehicle and defused the
bomb before it exploded without injury. The vehicle had been
stolen from American citizens during a home invasion and robbery
on December 24.
Legislation and Law Enforcement: Following the December
terrorist attacks, Kyrgyzstan’s security forces arrested a number
of terrorist suspects. By year’s end, however, none of the
suspects were charged with any crimes. The Kyrgyzstan
government has significantly expanded the number of uniformed
police on the street and increased the number of ID checks of
individuals. Due to the events in April and the subsequent
dissolution of Parliament, Kyrgyzstan did not pass any new
counterterrorism legislation.
Countering Terrorist Finance: Kyrgyzstan is a member of the
Eurasian Group (EAG) on Combating Money Laundering and
Financing of Terrorism, a Financial Action Task Force (FATF)-
style regional body. In November, the EAG Secretariat noted that
Kyrgyzstan was partially compliant with eight and non-compliant
with eight of the FATF’s 16 core anti-money laundering/countering
terrorist finance recommendations. It noted that the Kyrgyz
Republic had achieved major progress in relation to the financial
recommendations since December 2009. The Financial
Intelligence Unit of Kyrgyzstan is a member of the Egmont Group.
In 2010, Kyrgyzstan did not freeze any terrorist assets, including
those called for by UNSCRs 1267 and 1373.
Regional and International Cooperation: As a member state of
both organizations, Kyrgyzstan participated in activities of the
Collective Security Treaty Organization of the Commonwealth of
Independent States and activities of the OSCE.
____________________________________________________
Links:
Worldwide AML Legislation (International Bar Association)
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*Please note that FATF deems that a country has significant aml deficiencies if any
of the 'Core' Recommendations, R1, R5, R10, R13, SRII, or SRIV are rated either
Partially of Non-Compliant. These are marked in red.
For FATF to remove a country from the regular follow-up process, it has to be rated
Compliant or Largely Compliant in the above mentioned Core Recommendations
and the following Key Recommendations: -
R3, R4, R23, R26, R35, R36, R40, SRI, SRIII, SRV
Please also note that any risk assessment should take into consideration all
follow-up reports.
of the 'Core' Recommendations, R1, R5, R10, R13, SRII, or SRIV are rated either
Partially of Non-Compliant. These are marked in red.
For FATF to remove a country from the regular follow-up process, it has to be rated
Compliant or Largely Compliant in the above mentioned Core Recommendations
and the following Key Recommendations: -
R3, R4, R23, R26, R35, R36, R40, SRI, SRIII, SRV
Please also note that any risk assessment should take into consideration all
follow-up reports.
| KYRGYZSTAN |
| KnowYourCountry |
|
|
| Last Updated: 20 May 2012 |
AML News / Update
Extracted from IMF Report: Kyrgyz Republic: Second Review
Under the Three-Year Arrangement Under the Extended Credit
Facility and Request for Modification of Performance Criteria
(May 2012)
With Fund assistance the authorities are preparing an action plan to
strengthen the anti-money laundering and combating the financing of
terrorism (AML/CFT) regime (LOI ¶12). The Fund’s TA will focus on
reviewing the legal framework and assisting the State Financial
Intelligence Service (SFIS) and other relevant agencies in reinforcing
their functions and bilateral coordination. The authorities will submit
amendments to the AML/CFT law and to the relevant provisions of the
Criminal Code to the parliament to strengthen the AML/CFT legal
framework by end-September 2012 (structural benchmark).
Read Report
Extracted from IMF Report: Kyrgyz Republic: Second Review
Under the Three-Year Arrangement Under the Extended Credit
Facility and Request for Modification of Performance Criteria
(May 2012)
With Fund assistance the authorities are preparing an action plan to
strengthen the anti-money laundering and combating the financing of
terrorism (AML/CFT) regime (LOI ¶12). The Fund’s TA will focus on
reviewing the legal framework and assisting the State Financial
Intelligence Service (SFIS) and other relevant agencies in reinforcing
their functions and bilateral coordination. The authorities will submit
amendments to the AML/CFT law and to the relevant provisions of the
Criminal Code to the parliament to strengthen the AML/CFT legal
framework by end-September 2012 (structural benchmark).
Read Report