FATF Status

Uzbekistan is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The last Follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Uzbekistan was undertaken in 2023. According to that Evaluation, Uzbekistan was deemed Compliant for 8 and Largely Compliant for 26 of the FATF 40 Recommendations. It remains Highly effective for 0 and Substantially Effective for 6 with regard to the 11 areas of Effectiveness of its AML/CFT Regime.

US Department of State Money Laundering assessment (INCSR)

Uzbekistan is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes.

Overview

Corruption, lack of interagency cooperation, vulnerability to political influence, staff reshuffling, and lack of technical competence impede Uzbekistan’s efforts to implement anti-money laundering/combating the financing of terrorism (AML/CFT) standards.  The government’s unwillingness to share data makes it difficult to assess AML/CFT progress.  Overall progress on AML/CFT standards is stalled despite legislative improvements.

Uzbekistan should develop a comprehensive AML/CFT strategy, based on a national risk assessment, that facilitates information sharing on investigations and prosecutions, encourages confiscation of proceeds from money laundering/terrorist financing (ML/TF) crimes, and strengthens the financial intelligence unit’s (FIU) technical capacity.

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                          33

World Governance Indicator – Control of Corruption             25

Uzbekistan is one of the most corrupt countries in the world: Corruption is endemic and penetrates all levels of the business, government and social environment. The judiciary is significantly influenced by the presidential administration and foreign companies regularly experience expropriations. In addition, abuse of office, kickbacks and favoritism regularly occur during court proceedings, making dispute settlement mechanisms very inefficient. The anti-corruption legal framework is deficient and lacks regulations on conflicts of interest, gifts and hospitality, facilitation payments, public procurement, and whistleblower protection. Uzbekistan's Criminal Code, which forbids major forms of corruption including active and passive bribery, abuse of office, and extortion is poorly enforced. High-level government officials act with impunity, and the presidential family is currently involved in high-profile international corruption investigations. For further information - GAN Integrity Business Anti-Corruption Portal

Uzbekistan is an emerging lower-middle income economy in the middle of Central Asia. An unprecedented reform program launched in 2017 has made the country’s previously isolated and highly centralized economy more friendly to private investors and resilient to external factors. The Government of Uzbekistan (“the government” or “the GOU”) declares that its goal is to overcome underemployment and poverty including through improving the business environment. The prospects for economic transformation and the huge potential of the domestic market with a population of over 36 million are attracting increasing attention from U.S. companies.

Investors can benefit from the availability of raw materials and labor resources, direct access to the markets of all Central Asian countries, and various incentives and preferences, in some cases even including state subsidies. However, despite the ever-improving legal framework, support from the host country government continues to be an important prerequisite for business success due to weak enforcement of contracts and court decisions in the event of business disputes. Local authorities generally welcome investments that are in line with their development programs, in which infrastructure and export-oriented projects dominate.

The country historically has close trade and investment ties with Russian and China. Russia’s unprovoked and unjustified full-scale invasion of Ukraine in February 2022 and the subsequent sanctions measures imposed by the international community decreased the inflow of foreign direct investment (FDI) in 2022 by about 27% to $8 billion, of which the manufacturing industry accounted for 48% and the energy industry – 12%. Uzbekistan is not a member of either the Eurasian Economic Union (EAEU) or the Collective Security Treaty Organization (CSTO) and stays in compliance with U.S. and EU regulations. The decline in investment inflows from Russia was offset by a growing inflow of remittances. Although Russia continues to be Uzbekistan’s largest economic partner, its destructive policies are motivating the GOU and local businesses to explore new markets and develop transportation corridors that bypass sanctioned jurisdictions.

Large private investors entered the industrial, chemical, banking, tourism, and aviation sectors during the reporting period. The energy deficit caused by declining supplies of hydrocarbons and inefficient infrastructure boosted green energy development. 1000 MW in solar energy projects have already been implemented, and more are in the tender stage, attracting the interest of investors from Saudi Arabia, the United Arab Emirates, China, Japan, and Korea. The GOU’s declared goal is to generate 25-30% of its electricity from renewable energy sources by 2030 and reach net zero carbon emissions by 2050.

At the same time, in 2022 relatively little progress was made in development of long-awaited legislation on the capital/securities market, which is critical to unlock the inflow of capital from portfolio investments. Data localization requirements slowed the development of the ICT sector, although the GOU’s goal of reaching $1 billion in business process outsourcing exports in the next five years appears feasible. Intellectual property rights enforcement remains weak. Many sales of state assets to private owners did not meet international transparency standards. The GOU continues to prohibit certain expressions of speech and/or religious practice, which may impose some risks for doing business responsibly, but there are no records of foreign citizens being detained for such violations, and investors have not expressed any concerns on that matter. The leadership of Uzbekistan repeatedly declared its commitment to advance the policy of reforms. If such policies continue to advance the interests of honest private investors, Uzbekistan has the potential to become a powerful regional economy.

Country Links

Department on struggle against tax currency crimes and legalization of criminal incomes at the GPO (FIU)

Central Bank of the Republic of Uzbekistan