FATF AML Deficiency List
US Dept of State Money Laundering assessment
Corruption Index (Transparency International & W.G.I.)
World Governance Indicators (Average Score)
Non - Compliance with FATF MER Recommendations
Uzbekistan is not on the FATF List of Countries that have been identified as having strategic AML deficiencies
Compliance with FATF Recommendations
The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Uzbekistan was undertaken by the Financial Action Task Force (FATF) in 2010. According to that Evaluation, Uzbekistan was deemed Compliant for 7 and Largely Compliant for 18 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for 2 of the 6 Core Recommendations.
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.
The effectiveness of Uzbekistan’s efforts to comply with international AML/CFT standards is hindered by corruption, the susceptibility of law enforcement to political influence, and the ease with which well-connected individuals bypass existing AML regulations. The government has made some improvements in legislation, but its refusal to share data regarding prosecutions makes judging progress difficult, with the best guess that the overall trend is largely one of staying in place.
Key recommendations include increasing transparency regarding AML/CFT data and statistics, reducing turnover in key technical positions, improving implementation and enforcement of laws related to public disclosure, and lowering the barriers to working-level cooperation with international partners.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 26
World Governance Indicator – Control of Corruption 14
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 a landlocked country with more than 60% of the population living in densely populated rural communities. Since its independence in September 1991, the government maintained its Soviet-style command economy with subsidies and tight controls on production and prices. Despite ongoing efforts to diversify crops, Uzbekistani agriculture remains largely cantered on cotton; Uzbekistan is the world's fifth largest cotton exporter and sixth largest producer. Uzbekistan's growth has been driven primarily by state-led investments, and export of natural gas, gold, and cotton provides a significant share of foreign exchange earnings. In 2015, Russia’s Gazprom announced it would reduce its natural gas imports from Uzbekistan but Tashkent continues to export natural gas to China and Chinese investments in the country have substantially increased.
While aware of the need to improve the investment climate, the government continues to intervene in the business sector and has not addressed the impediments to foreign investment in the country. In the past, Uzbekistani authorities have accused US and other foreign companies operating in Uzbekistan of violating Uzbekistani laws and have frozen and seized their assets. At the same time, the Uzbekistani Government has actively courted several major US and international corporations, offering financing and tax advantages.
In 2003, the government accepted Article VIII obligations under the IMF, providing for full currency convertibility. However, strict currency controls and tightening of borders have lessened the effects of convertibility and have also led to some shortages that have further stifled economic activity. Recently, lower global commodity prices and economic slowdown in neighbouring Russia and China have been hurting Uzbekistan's trade and investment and worsening its problem of currency shortage.
Agriculture - products:
cotton, vegetables, fruits, grain; livestock
textiles, food processing, machine building, metallurgy, mining, hydrocarbon extraction, chemicals
Exports - commodities:
energy products, cotton, gold, mineral fertilizers, ferrous and nonferrous metals, textiles, foodstuffs, machinery, automobiles
Exports - partners:
Switzerland 25.8%, China 17.6%, Kazakhstan 14.2%, Turkey 9.9%, Russia 8.4%, Bangladesh 6.9% (2015)
Imports - commodities:
machinery and equipment, foodstuffs, chemicals, ferrous and nonferrous metals
Imports - partners:
China 20.8%, Russia 20.8%, South Korea 12%, Kazakhstan 10.8%, Turkey 4.6%, Germany 4.4% (2015)
Investment Climate - US State Department
Uzbekistan has a long entrepreneurial heritage, and with a population of over 31.5 million has the potential to become the largest economy in Central Asia. Its overall investment climate demonstrated some improvement in recent years – the government has simplified business registration procedures, introduced some additional tax incentives for investors, improved private property protection legislation and streamlined customs regulations.
Concerns remain. The greatest concerns facing foreign and private investors are access to currency conversion, frustrating bureaucratic processes, an onerous system of taxation, an overregulated banking system, and punitive customs laws and procedures. In addition, expropriations and politically motivated inspections of businesses have damaged Uzbekistan’s reputation as an investment destination and sharpened a critical element of risk in its business climate.
The government has been directing almost all foreign investments into export-oriented industries. Over 75 percent of Foreign Direct Investment (FDI) traditionally was consumed by the oil and gas industry, which generate 26 percent of the country’s export earnings. But with low oil prices, a number of large international investors became more cautious and suspended their projects in the country.
As a result of continued decline of the regional economic environment in 2015, Uzbek exports and remittances declined by 9 percent and 50 percent respectively.. In order to generate additional sources of foreign currency inflow, the government initiated ambitious privatization programs. However, the government has yet to demonstrate its will to achieve real improvements in the overall investment climate of Uzbekistan.
Department on struggle against tax currency crimes and legalization of criminal incomes at the GPO (FIU)
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