Intent Declared Summary
In a Financial Sector Assessment Program (FSAP) conducted in 2000, the International Monetary Fund (IMF) assessed Kazakhstan’s observance of the International Association of Insurance Supervisors (IAIS) Principles in effect in 2000. The FSAP was not published but finds detailed mention in an Update for that FSAP conducted by the IMF in 2004. The main recommendations of the 2000 FSAP were for Kazakhstan to adopt a new insurance legislation consistent with international best practices, upgrade supervision to meet the requirements of the new legislation, strengthen implementation and enforcement practices, and develop an actuarial profession. According to the IMF's 2004 FSAP Update, the Kazakhstani authorities had made good progress in updating insurance legislation. The 2004 FSAP Update also found that the Insurance Law, (which has since been amended on several occasions), complied with international best practices and gave sufficient powers to the Agency of the Republic of Kazakhstan on Regulation and Supervision of Financial Markets and Financial Organizations (FSA) to regulate the insurance industry. However, the 2004 IMF report raised questions on the FSA’s enforcement capacity to fully meet the legislative requirements, due particularly to a shortage of staff and resources. The Update did not rate the individual principles since the IAIS had promulgated revised, more stringent Insurance Core Principles (ICPs) in 2003. Nonetheless, as noted in the FSA’s 2008 annual report, the FSA conducted a self-assessment on Kazakhstan’s compliance with the 2003 ICPs, and concluded that Kazakhstan fully observes 17 ICPs; largely observes 8 IAIS principles; partly observes 2 principles relating to group-wide supervision and fraud; and does not observe one principle (Principle 28 on money-laundering). Further, as the annual report asserts, the FSA has made significant progress in insurance legislation since the IMF’s 2004 FSAP update in order achieve compliance with the ICPs. A 2010 report by the European Bank for Reconstruction and Development also attests that the insurance regulatory framework in Kazakhstan “almost meets” the IAIS standards, although it does point out the weakness in the operational independence and enforcement capacity of the FSA.
General Overview
The Agency of the Republic of Kazakhstan on Regulation and Supervision of Financial Markets and Financial Organizations (FSA) is the integrated financial supervisory authority established under the 2003 Law on Government Regulation and Supervision of the Financial Market and Financial Organizations No. 474-II (hereafter referred to as "FSA Law"). It replaced the National Bank of Kazakhstan (NBK) as the insurance sector supervisor when it became operational in 2004. However, the IAIS still lists the NBK as a member on its website. since May 2008. According to the 2008 annual report of the FSA, the insurance sector, which saw significant growth in recent years in tandem with the boom in the banking sector, has experienced some stagnation in its growth in 2008. However the sector, per the report, was less vulnerable to the influence of the financial crisis in comparison to other sectors in the financial market. The report states that the FSA aims to continue its improvement of “legal conditions for regulation and supervision of insurance organizations” (p. 74).
In 2000, the International Monetary Fund (IMF) conducted a Financial Sector Assessment Program (FSAP) of Kazakhstan's observance of the 17 Insurance Supervisory Principles (with Principle 2 relating to Licensing divided into three sub-principles) developed by the International Association of Insurance Supervisors (IAIS) in 1997. The 2000 FSAP, which was not published but finds mention in the 2004 IMF FSAP Update for Kazakhstan, concluded that four principles related to licensing (Sub-principle 2.1), fit and proper criteria (Sub-principle 2.2), capital adequacy and solvency (Principle 8), and confidentiality (Principle 17) were fully observed. Kazakhstan was also broadly compliant with three principles relating to financial reporting, on-site inspections, and sanctions. On the other hand, Kazakhstan only partially observed principles on assets, liabilities, market conduct, and the organization of the insurance supervisor, and was non-compliant with principles relating to changes in control, corporate governance, and internal controls. At the time of the 2000 assessment, three principles related to derivatives and off-balance sheet items, cross-border business operations, as well as reliance on other jurisdictions for licensing, were not applicable, and there was insufficient information to assess compliance with the principles on reinsurance, and coordination and cooperation. The main recommendations of the 2000 FSAP were to adopt a new insurance legislation consistent with international best practices, upgrade supervision to meet the requirements of the new legislation and the demands of the new industry environment, employ risk-based supervision, strengthen supervisory capacity and resources for effective implementation and enforcement, and develop an actuarial profession.
Since the 2000 assessment, the Kazakhstani authorities had made good progress in updating insurance legislation, according to the IMF's 2004 FSAP Update. The Law on Insurance Activities No. 126-II (hereafter referred to as "Insurance Law"), (thereafter amended on numerous occasions), complied with international best practices and "gives sufficient powers to regulate the activity of all insurance and reinsurance companies, insurance brokers, and other professional participants of insurance market" (p. 53), the IMF observed. Further, the Actuarial Society of Kazakhstan had 50 members as of the date of the Update and 30 of them were licensed actuaries. The 2004 IMF Update, nevertheless, still highlighted deficiencies in the areas of enforcement and implementation, supervisory resources and training, and effective utilization of actuaries. Notably, the IMF report remarked that it was unclear to what extent the FSA had enforcement capacity to fully meet the legislative requirements, due particularly to a lack of staff and formal training in the FSA's insurance department. Additionally, the IMF also advised the regulator to increase contacts between industry associations, policyholders, and brokers to foster consumer protection and initiate policy changes to open avenues for greater insurance penetration in the Kazakhstan markets.
According to its 2008 annual report, the FSA has made “significant progress in insurance legislation” (p. 71) since the IMF’s 2004 FSAP update in order to bring the country in compliance with the ICPs. Amendments to the insurance legislative Acts include, but are not limited to, the enhancement of prudential regulation to align it with the EU directives; expansion of the list of enforcement measures against insurance market entities; requirements for insurance/reinsurance firms to have risk management systems in place; stipulation of accumulation insurance provisions; classification of insurance risks; introduction of ‘mortgage insurance’ category; improvement in the insurance payment guarantee system; minimum requirements for insurance agents; and an expansion in the classes of life insurance. The 2003 Law on Joint Stock Companies No. 415-II (amended through 2009) and the Civil Code also contain articles on insurance. Per information in the 2008 FSA annual report, a Technical Agency was also set up within the FSA in 2008 and one of the issues it focused on was to “see if the supervision methodology employed by the Agency complies with the standards and principles of international organizations of financial market regulators (Basel Committee on Banking Supervision, IOSCO, IAIS, IOPS)” (p. 18), so that improvements in supervisory practices and methodology could be recommended.
In its 2008 annual report, the FSA mentions the results of a self assessment it conducted to evaluate the country’s compliance with the 2003 ICPs. The self-assessment, as referred to in the annual report, concludes that Kazakhstan’s regulatory regime for insurance supervision has improved remarkably, and that the country fully observes 17 ICPs, largely observes 8 ICPs, partly observes 2 ICPs, but does not observe one, ICP 28, which deals with anti-money laundering and combating the financing of terrorism. The FSA acknowledges that there is no regulation directly addressing the legal requirements for ICP 28, and notes that requirements will have to be developed to ensure that insurers prevent money laundering and financing of terrorism. As for the principles that were adjudged largely compliant, the annual report expresses the willingness of the authorities to amend the Law on insurance activity “concerning the creation of a legal framework for professional associations of insurance market participants to ensure compliance with technical and ethical standards, corporate governance codes, etc” (p. 71). In addition, the FSA plans to further its efforts to enhance its financial and operational independence and to conduct regular market analysis with a futuristic approach. As regards partly observed principles, the self assessment finds that group wide supervision should be improved, and insurers are urged to “take timely measures to prevent, identify, correct, and prevent the facts of fraud” (p. 71). The self assessment mentions that the FSA plans to conduct a repeat assessment. The 2009 US Department of Commerce (DoC) Country Commercial Guide for US companies report states that the Insurance Law, through its amendment in 2006, eliminated “participation restrictions for foreign legal entities in insurance and re-insurance organizations in Kazakhstan” (p. 48). According to a 2010 European Bank for Reconstruction and Development (EBRD) report for Kazakhstan, “the legislative framework for insurance almost meets the IAIS standards” (p. 23). The report, however, raises concerns about the regulator, the FSA’s independence and enforcement capacity and notes that the insurance market remains small.
The FSA 2008 annual report mentions that as of January 1, 2009, there were 44 licensed insurance, and/or reinsurance entities in the insurance market; this includes 36 in the general insurance sector, and 8 in the life insurance sector. The report further states that the assets of Kazakhstan’s insurance sector entities amounted to Kazakhstan Tenge (KZT) 268.8 billion as of January 1, 2009, rising 20 percent from January 1, 2008. The 2008 report attributes this growth to the establishment of four new insurance companies.
The Principles
IIICP 1 Conditions for effective insurance supervision
According to the IMF's 2004 FSAP Update, the Insurance Law, (which was amended several times, including in 2009), complies with international best practices and "gives sufficient powers to regulate the activity of all insurance and reinsurance companies, insurance brokers, and other professional participants of insurance market" (p. 53). Per the same report, the 2003 Law on Joint Stock Companies No. 415-II and the Civil Code both contain articles on insurance. The new integrated financial supervisory authority, the FSA, was established under the 2003 FSA Law, replacing the NBK. Despite the information provided above, the available sources do not directly address Kazakhstan's compliance with this principle as revised in 2003 by the IAIS.
IIICP 2 Supervisory objectives
According to the FSA 2008 annual report, the FSA’s supervisory objectives are broadly “to ensure financial stability of the financial market and financial organizations, and maintain confidence in the financial system in general; to ensure appropriate level of protection of interests of financial services consumers; and leveling off the field for operations of financial organizations with the aim to maintain bona-fide competition in the financial market.
IIICP 3 Supervisory authority
ICP 1 of 2000 on Organization of an Insurance Supervisor was found to be partially observed in 2000, according to the IMF's 2004 FSAP Update. Under the FSA Law, the FSA is given legal powers to "license, supervise, audit compliance of insurance companies and professionals, and impose penalties in instances of non-compliance" (p. 110). Per the IMF's 2004 FSAP Update, the Insurance Law complies with international best practices and "gives sufficient powers to regulate the activity of all insurance and reinsurance companies, insurance brokers, and other professional participants of insurance market" (p. 53). The IMF report further noted that the FSA was characterized by "a high degree of operational independence" (p. 34), and was subordinate to the President of Kazakhstan. While the FSA is financed from the NBK's budget, it is neither accountable to nor dependent on the NBK. The IMF report recommended ensuring the FSA's full budgetary autonomy. However, according to the IMF's 2004 FSAP Update, "the FSA's insurance department is understaffed and has no formal training program" (p. 51). The 2008 FSA self-assessment indicates that Kazakhstan largely observes this principle and states that Kazakhstan needs to ensure that it secures financing for the FSA “without undermining its independence of political, governmental and departmental bodies” (p. 71). For example, the FSA can slowly transition itself to self-financing or receive partial financing from financial market participants. In addition, the self assessment broadly mentions efforts to strengthen the “legal framework for professional associations of insurance market participants, in order to exercise control over compliance with technical and ethical standards, corporate governance codes, etc.” (p. 71). Per the 2010 EBRD Strategy for Kazakhstan report, Kazakhstan’s Insurance legal framework almost meets the IAIS standards. However, it notes that the FSA is not fully independent, and needs to strengthen its enforcement capacity. Despite the information provided above, the available sources do not directly address Kazakhstan's compliance with this principle as revised in 2003 by the IAIS.
IIICP 4 Supervisory process
There is insufficient information publicly available addressing Kazakhstan's compliance with this principle as revised in 2003 by the IAIS.
IIICP 5 Supervisory cooperation and information sharing
ICP 16 of 2000 on Coordination and cooperation was not assessed in 2000 due to lack of information, according to the IMF's 2004 FSAP Update. In 2004 there was still insufficient information to assess the extent to which the FSA cooperates with supervisors in other jurisdictions. On the other hand, as noted in the IMF's 2004 FSAP Update, ICP 17 on Confidentiality was already found to be fully observed in 2000. According to the 2008 FSA annual report, the FSA is focused on establishing supervisory cooperation with other financial supervisory regulators. The report further states that in 2008, the FSA actively established cooperation and concluded international agreements with foreign supervisory bodies, particularly because of the “broader advent of foreign capital to domestic financial services market and by participation of domestic financial organizations in the authorized capital of financial organizations in foreign countries, including the creation of subsidiary financial organizations, opening of branches and representative offices” (p. 78). The FSA report states further that the FSA has pending Memoranda of Understandings (MoUs) with several countries. Amongst them are Mongolia, Austria, Germany, and Armenia. However, the available sources do not directly address Kazakhstan's compliance with this principle as revised in 2003 by the IAIS.
IIICP 6 Licensing
The 2000 ICP 2 on Licensing was found to be fully observed in 2000, according to the IMF's 2004 FSAP Update, with the exception of reliance on other jurisdictions, which was not applicable to Kazakhstan. Since 2000, as stated in the IMF's 2004 FSAP Update, licensing provisions for insurance companies and brokers are provided under the new Insurance Law. Furthermore, a special regulation has been adopted, which contains requirements related to the documents and information required in the licensing procedure. Licenses are granted by the FSA's Qualification Committee. With regard to reliance on other jurisdictions, a special requirement has been introduced into the new legislation which states that "the founder of an insurance or reinsurance organization, who is a nonresident of the Republic of Kazakhstan, must submit a document from the appropriate insurance supervision agency of its own country" (p. 54). Despite the information provided above, the available sources do not directly address Kazakhstan's compliance with this principle as revised in 2003 by the IAIS.
IIICP 7 Suitability of persons
As noted in the IMF's 2004 FSAP Update "supervisors are expected to apply "fit and proper" tests to major shareholders and managers, to request a business plan, pro forma financials, and projections of solvency conditions" (p. 54). However, the IMF does not directly address Kazakhstan's compliance with this principle as revised in 2003 by the IAIS.
IIICP 8 Changes in control and portfolio transfers
According to the IMF's 2004 FSAP Update, the 2000 ICP 3 on Changes in control was not observed in 2000. The IMF report noted that although legislation had been improved, rules regarding changes in controls were still "incomplete" (p. 55). Furthermore, requirements concerning the transfer of control are identical to those required for initial licensing of companies. However, the available sources do not directly address Kazakhstan's compliance with this principle as revised in 2003 by the IAIS.
IIICP 9 Corporate governance
As stated in the IMF's 2004 FSAP Update, the 2000 ICP 4 on Corporate Governance was not observed in 2000. Following the 2000 assessment, Kazakhstan established standards addressing the role and responsibilities of the board of directors of insurance companies. Under the 2003 Law on Joint Stock Companies (JSCs), JSCs in Kazakhstan are organized under a two-tier system, and apply the "one share/one vote" principle. In its 2006 report on Commercial Laws, the EBRD came to the conclusion that corporate governance legislation in Kazakhstan was rated among "high compliance" countries. The FSA 2008 self assessment indicates that Kazakhstan largely observes this principle. It also mentions efforts to strengthen “the legal framework for professional associations of insurance market participants in order to exercise control over compliance with technical and ethical standards, corporate governance codes, among others” (p. 71). Per the 2008 FSA annual report, the FSA plans to improve corporate governance standards, among other issues. However, as of January 2010, there is no information available as to whether this has been done.
IIICP 10 Internal control
According to the IMF's 2004 FSAP Update, the ICP on Internal control was not observed in 2000. Since 2000, improvements have been made in the legislation to regulate the internal audit requirements, and Kazakhstan has established an internal audit and a system for internal control of the management. Furthermore, a special regulation related to internal audit procedures was being drafted. The IMF report noted that there was a lack of requirements for investment and liquidity management. Despite this information, the available sources do not directly address Kazakhstan's compliance with this principle as revised in 2003 by the IAIS.
IIICP 11 Market analysis
The 2008 FSA self-assessment in the annual report of the same year indicates that Kazakhstan largely observes this principle. It also states that there will be efforts towards “conducting regular analysis of the insurance market’s condition, with future development trends taken into account” (p. 71).
IIICP 12 Reporting to supervisors and off-site monitoring
The 2000 ICP 12 on Financial Reporting was found to be broadly observed in 2000, according to the IMF's 2004 FSAP Update. Insurance companies were required to comply with the International Financial Reporting Standards (IFRSs) beginning in 2003. Evidence showed that only the larger insurance companies were able to apply IFRSs. According to the IMF's 2004 FSAP Update, there are only four actuaries available in the FSA to monitor both the insurance and pension sectors. Per the 2008 FSA annual report, the FSA uses regulatory reports, reports of examinations, auditor’s reports, and other sources of official information on supervised entities when conducting its off-site supervision and “drawing up conclusions on financial condition of an insurance organization” (p. 54). The report further states that in 2008, the FSA checked supervised entities’ compliance with current legislation requirements, while identifying the risks in their activities. The FSA made 173 conclusions on financial conditions, while 513 stress tests and early warning tests were performed after the results of off-site supervision. Despite the information provided above, the available sources do not directly address Kazakhstan's compliance with this principle as revised in 2003 by the IAIS.
IIICP 13 On-site inspection
The 2000 ICP 13 on On-site inspection was found to be broadly observed in 2000, according to the IMF's 2004 FSAP Update. Since 2000, the FSA has established internal rules and directives in order to carry out on-site inspections. Furthermore, both on-site and off-site reporting are used in the supervision of insurance companies. According to the 2008 FSA report, the FSA scheduled 14 on-site inspections of supervised entities’ activities in the insurance sector included 11 full inspections and 3 targeted inspections. The FSA’s targeted inspections are conducted to focus on supervised entities’ compliance with prudential normative requirements, verify the legitimacy of replacing financial reports, and to respond to inquiries from law enforcement bodies. With respect to full examinations, special attention is placed on correcting deficiencies in entities’ policies and procedures, including accounting policies. This is to prevent violations in supervised entities’ book keeping. However, the available sources do not directly address Kazakhstan's compliance with this principle as revised in 2003 by the IAIS.
IIICP 14 Preventive and corrective measures
According to the 2008 FSA self assessment, this principle is partly observed. The assessment further states that Kazakhstan legislation is looking to improve the supervision of financial groups, and also develop requirements that will ensure the prevention of fraud. Apart from the above, there is insufficient information publicly available addressing Kazakhstan's compliance with this principle as revised in 2003 by the IAIS.
IIICP 15 Enforcement or sanctions
The 2000 ICP 14 on Sanctions was found to be broadly observed in 2000, according to the IMF's 2004 FSAP Update. Under the new Insurance Law, the FSA has enhanced and adequate powers to impose sanctions by "issuing compliance orders, imposing fines, license revocation or suspension, redemption of stock, and dismissal of officers from official duties" (p. 110). Furthermore, sanctions apply to insurance companies, reinsurance companies, and brokers. According to the 2008 FSA annual report, the FSA enforced a number of corrective actions against supervised entities for non-compliance with regulatory requirements that govern insurance activity in 2008. The measures include 36 letters of commitment, 56 written instructions, 11 written warnings, and 42 concluded agreements. The report further states that administrative penalties in the form of fines were also imposed on 11 supervised entities for failing to submit timely reports. The 2010 EBRD report states that, Kazakhstan is almost meets all of the IAIS requirements, however, the FSA needs to further strengthen its enforcement capacity. However, the available sources do not directly address Kazakhstan's compliance with this principle as revised in 2003 by the IAIS.
IIICP 16 Winding-up & exit from the market
There is insufficient information publicly available addressing Kazakhstan's compliance with this principle as revised in 2003 by the IAIS.
IIICP 17 Group-wide supervision
According to the 2008 FSA self assessment, as mentioned in the annual report of the same year, Kazakhstan partly observes this principle. The self-assessment notes that Kazakhstan needs to strengthen its legislation regarding the supervision of financial groups.
IIICP 18 Risk assessment and management
Although the 2008 FSA self assessment does not directly address Kazakhstan’s compliance with this principle, it does mention that the FSA has put in place requirements to ensure that insurance organizations have risk management systems.
IIICP 19 Insurance activity
The 2000 ICP 10 on Reinsurance was not assessed by the IMF in 2000 due to lack of information, according to the IMF's 2004 FSAP Update. Under the new regulations, "an insurance or reinsurance organization in Kazakhstan can transfer the insurance risks it has undertaken for reinsurance outside Kazakhstan with a reinsurance organization that is not a Kazakhstan resident, directly, through a resident insurance broker, or nonresident broker, provided that these reinsurance organizations and insurance brokers have a specified rating" (p. 60). The 2008 FSA self-assessment in the annual report of the same year indicates that Kazakhstan largely observes this principle. It also states that Kazakhstan plans to amend its Law on Insurance Activities, in particular its provisions on insurance activity, so as to create “a legal framework for professional associations of insurance market participants in order to exercise control over compliance with technical and ethical standards, corporate governance codes, etc.” (p. 71).
IIICP 20 Liabilities
The 2000 ICP 7 on Liabilities was found to be partially observed in 2000, according to the IMF's 2004 FSAP Update. While provisions for "unexpired risks" were still uncertain, technical reserves and mathematical provision were established following the 2000 assessment. However, the IMF does not directly address Kazakhstan's compliance with this principle as revised in 2003 by the IAIS.
IIICP 21 Investments
The 2000 ICP 6 on Assets was found to be partially observed in 2000, according to the IMF's 2004 FSAP Update. The IMF report noted that Kazakhstan adopted "a special regulation that deals with the appropriate matching of assets and liabilities for the investment policy of insurance companies" (p. 57). However, the IMF does not directly address Kazakhstan's compliance with this principle as revised in 2003 by the IAIS.
IIICP 22 Derivatives and similar commitments
The 2000 ICP 9 on Derivative and off-balance sheet items was not applicable at the time of the 2000 assessment, as stated in the IMF's 2004 FSAP Update. Under the amended Insurance Law, this principle is now relevant, and financial reports should contain information on derivative and off-balance sheet items. However, the IMF does not directly address Kazakhstan's compliance with this principle as revised in 2003 by the IAIS.
IIICP 23 Capital adequacy and solvency
The 2000 ICP 8 on Capital adequacy and solvency was found to be fully observed in 2000, according to the IMF's 2004 FSAP Update. Since 2000, efforts have been made by the Kazakhstani authorities to transpose European Union (EU) standards into national legislation. Furthermore, capital requirements are in line with EU directives on solvency, the IMF notes. However, the IMF does not directly address Kazakhstan's compliance with this principle as revised in 2003 by the IAIS.
IIICP 24 Intermediaries
The 2000 ICP 11 on Market Conduct was found to be partially observed in 2000, according to the IMF's 2004 FSAP Update. Since 2000, "insurance companies are required to submit for approval by the FSA, rules concerning conditions for each type of insurance they conduct" (p. 61). Furthermore, insurance companies are required to carry out their activities in strict compliance with approved rules, the IMF notes. However, the IMF does not directly address Kazakhstan's compliance with this principle as revised in 2003 by the IAIS.
IIICP 25 Consumer protection
In its 2004 FSAP Update, the IMF noted that a special division dealing with customer service was established within the FSA, to allow customers to file a written complain about the insurance company's violation of legislation or other regulations. However, the IMF does not directly address Kazakhstan's compliance with this principle as revised in 2003 by the IAIS.
IIICP 26 Information, disclosure & transparency towards the market
There is insufficient information publicly available addressing Kazakhstan's compliance with this principle as revised in 2003 by the IAIS.
IIICP 27 Fraud
According to the 2008 FSA self-assessment as referred to in its annual report of the same year, Kazakhstan partly observes this principle. The self-assessment notes that Kazakhstan needs to enhance its requirements that oblige insurers to “take timely measures to prevent, identify, correct, and prevent the facts of fraud” (p. 71).
NCICP 28 Anti-money laundering/ Combating the Financing of Terrorism
Due to the low penetration of the market (below 1 percent), the insurance sector was not at high risk of attracting money laundering activities in 2000, as noted in the IMF's 2004 FSAP Update. The IMF, however, warned that as the industry grew, however, anti-money laundering (AML) and combating the financing of terrorism (CFT) laws and regulations would be necessary to detect illegal activities in the insurance sector. Therefore, AML/CFT obligation needed to apply to insurance companies, reinsurance companies, and insurance brokers. The IMF report did note that AML/CFT legislation was in preparation. According to the 2008 FSA self assessment report, Kazakhstan’s insurance regulatory regime still does not observe this principle. The assessment acknowledges that the FSA has to “develop requirements for having insurers prevent the instances of illicit income laundering and financing of terrorism” (p. 71). The assessment further states that the FSA has to ensure closer cooperation with supervisory bodies of other countries in order to reduce fraud, and also register and submit reports to local law enforcement agencies. Per the same report, measures have been put in place to ensure the above. This includes: (1) requirements issued for insurance companies to have risk management systems in place; (2) the creation of a database on the statistics of car owners’ civil liability insurance; (3) the intention to create a collective database of insurance statistics for all types of insurance; and (4) the FSA plans to be vested with a new function to exercise control over financial monitoring entities compliance with the requirements of the draft law ‘On counteracting the legalization/laundering of illicit income and financing terrorism’. The Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG) website reports in this context that some progress has been made in Kazakhstan’s AML/CFT regime. Kazakhstan adopted the AML/CFT law in September 2009; due to come into effect on March 9, 2010. In April 2008, the Committee on Financial Monitoring, Kazakhstan’s financial intelligence unit, was established within the Ministry of Finance and is entrusted with implementing AML/CFT policies. At the time of the 2004 IMF FSAP, the FSA was the consolidated regulator of the financial sector and was responsible for the enforcement, audit and penalties for non-compliance by banks and insurance and securities companies/professionals with AML/CFT obligations. There currently does not seem to be any publically available information on how, if at all, the establishment of the FIU has affected the scope of the FSA’s duties.
