KAZAKHSTAN: ANTI-MONEY LAUNDERING LAW SIGNED

UNCLAS SECTION 01 OF 02 ASTANA 001508 SENSITIVE SIPDIS STATE FOR INL/AAE, INL/C, SCA/CEN E.O. 12958: N/A TAGS: PGOV SNAR KCRM KZ SUBJECT: KAZAKHSTAN: ANTI-MONEY LAUNDERING LAW SIGNED ASTANA 00001508 001.2 OF 002 REFTEL: 08 ASTANA 2119 ¶1. (U) Sensitive but unclassified. Not for public Internet. ¶2. (U) SUMMARY: On August 28, President Nazarbayev signed the long-awaited law on anti-money laundering (AML),which will enter into force in March 2010. The law should increase the effectiveness of measures aimed at combating money laundering and terrorist financing by creating the Financial Monitoring Committee, Kazakhstan's Financial Intelligence Unit (FIU). The law will also regulate financial monitoring, terrorist financing, and law-enforcement activities. END SUMMARY. AML LAW SIGNED ¶2. (U) On August 28, President Nazarbayev signed the much-anticipated anti-money laundering law, which will come into force six months after publication, i.e. in March 2010. The law describes preventive measures the government will undertake to combat money laundering and terrorism financing, and establishes the Financial Monitoring Committee, Kazakhstan's Financial Intelligence Unit (FIU),which will become operational in March 2010. NEW FINANCIAL MONITORING REQUIREMENTS ¶3. (U) According to the law, a wide range of organizations will be subject to financial monitoring, including but not limited to banking organizations, pension funds, insurance companies, law firms, independent legal experts, notary companies, audit firms, and postal services providers. The law requires these organizations to develop internal control systems to prevent money laundering and terrorism financing, and to report suspicious transactions. Banks are generally well prepared for the new AML law due to existing internal compliance and due diligence procedures. A NEW LAW ENFORCEMENT ASSET ¶4. (U) One of the most significant aspects of the new law is the establishment of the Financial Monitoring Committee. This new institution is expected to enhance the ability of law enforcement to investigate financial crimes and prevent terrorist financing. Once the law comes into effect in March 2010, all law enforcement agencies in Kazakhstan will be able to search the new FIU's extensive database. A LONG TIME COMING ¶5. (U) It took more than four years for the lower chamber of parliament (the Majilis) to approve the draft AML law and send it to the Senate. During that time, the law was subjected to numerous revisions, as comments from various lawmakers and external advisors, including the World Bank, were taken into account. In April 2008, a Committee for Financial Monitoring was established, and former Senator Mussiraly Utebayev was named chairman in October 2008 [reftel]. Until that time, very little progress on the draft law was made. The law was finally approved by the Senate on June 17, but was signed by the President only after the Constitutional Council determined that it was in compliance with the Constitution. FIU PLANS ¶6. (SBU) On September 4, Utebayev told INL Officer that his committee must meet an ambitious schedule if the FIU is to be operational when the law enters into force. In particular, he said his committee is working to develop an effective information system, define the scope of financial monitoring activities, adopt bylaws and regulations to implement the law, and train personnel. ¶7. (SBU) COMMENT: In the year since Utebayev became chairman of the Kazakhstani FIU, he has proven himself an effective and far-sighted ASTANA 00001508 002.2 OF 002 leader, capable of developing an operational, sufficiently-funded FIU. His authority and personal connections with President Nazerbayev ensured the final passage of the AML law. He asserts that his study tour to the United States also played a vital rule in the adoption of the law and significant progress on the FIU information system. Implementation will be the next test and will require continued U.S. engagement. But, establishment of the new FIU will offer the government a powerful new tool for preventing crimes whose effects can extend well beyond the borders of Kazakhstan and providing solid evidence when prosecutions are appropriate. END COMMENT. HOAGLAND