The Astana Financial Services Authority (AFSA) has issued the Consultation Paper № AFSA-P-CE-2022-0004 to seek suggestions on the proposed amendments to the AIFC Banking Business Framework. The proposals in the consultation paper will be of interest to current and potential AIFC participants who are interested in exercising business activities in or from the AIFC, especially in the capacity of a Credit Provider. The proposed amendments ensure effective and fair prudential regulation of Credit Providers considering their differences from Banks. Additionally, this Consultation Paper envisages provisions of captive finance activities from the AIFC, which involve subsidiaries that typically finance purchases of equipment from their parent entity. 

Full content of the consultation paper may be found via these links:

https://aifc.kz/legal-framework/afsa-/

https://afsa.orderly.kz/articles/consultation-paper-on-proposed-amendments-to-the-aifc-banking-business-framework

All comments should be in writing and sent to the address indicated below or by email:

Policy and Strategy Division

Astana Financial Services Authority (AFSA)

55/17 Mangilik El, building C3.2, Kazakhstan

Email: [email protected]

The deadline for providing comments is 8 August 2022

When sending your comments, please indicate in a subject line: “Consultation Paper # AFSA-P-CE-2022-0004”. You may, if relevant, identify the organisation you represent when providing your comments. The AFSA reserves the right to publish, including on its website, any comments you provide, unless you expressly request otherwise. Comments supported by reasoning and evidence will be given more weight by the AFSA.

Amendments to the AIFC General Rules regarding requirements for obtaining a license to carry on legal services come into effect as of 1 July 2022. In addition, new concepts of “Legal Adviser” and “AIFC Legal Services Board” were introduced to the Glossary.

As per the new amendments, firms wishing to obtain the AFSA legal services license are required to register at least one employee with the AIFC Legal Services Board as a legal adviser.

On 3 May 2023, this requirement will also apply to existing registered AIFC participants who had obtained the AFSA legal services license prior to July 1, 2022.

These amendments are a part of the legal framework aimed at implementing a regulatory regime for legal services in the AIFC. The AIFC Legal Services Regulations were passed on May 3, 2022, and amendments were made to the AIFC General Rules, the AIFC Conduct of Business, and the Glossary, regarding obtaining and maintaining the AFSA license to provide legal services in the AIFC.

You can find more information via the following link: https://aifc.kz/legal-services-regulation/

Reference: 

The Astana Financial Services Authority (AFSA) is the independent regulator of the Astana International Financial Centre (AIFC), which is established in accordance with the Constitutional Law of the Republic of Kazakhstan “On the Astana International Financial Centre” for the purposes of regulating financial services and related activities in the AIFC. AFSA administers the AIFC Regulations and Rules and is responsible for the authorisation, registration, recognition and supervision of financial firms and market institutions in the AIFC.

Over 1,400 firms from 64 countries are registered in the AIFC. These firms provide banking, insurance, investment, professional and other services. The range of financial services offered at the AIFC is comparable to the list of services available in long-established financial centers of the world, such as London, Hong Kong, Singapore, Dubai and others. www.afsa.kz 

The Astana International Financial Centre (AIFC) is an independent jurisdiction that started operations in 2018. In accordance with the Development Strategy until 2025, the key focus of the AIFC is to consolidate as a universal platform connecting the countries of the EAEU, Central Asia and the Caucasus. www.aifc.kz

The official launch ceremony of the pilot project has involved representatives of the National Bank of the Republic of Kazakhstan, the Financial Monitoring Agency of the Republic of Kazakhstan, the Ministry of Digital Development, Innovation and Aerospace Industry of the Republic of Kazakhstan, the Astana International Financial Center (AIFC) and the Association of Financiers of Kazakhstan. Banks involved in the project, including the Eurasian Bank, Halyk Bank, Altyn Bank, the AIFC crypto exchanges, as well as recognised world and Kazakhstan crypto stakeholders also attended the event.

Deputy Chairman of the AIFC Management Board Kairat Kaliyev moderated the panel session dedicated to the launch of the project.                           

The rules of interaction between the AIFC crypto exchanges and Kazakhstan’s second-tier banks (STBs) were set out by a special working group within the efforts to develop crypto-industry and blockchain technologies.The Ministry of Digital Development, Innovation and Aerospace Industry of the Republic of Kazakhstan is a government body which is actively engaged in digital technologies. According to its First Deputy Minister Zhaslan Madiyev, Kazakhstan has abundant opportunities to become a crypto-hub.

“In pursuance of the instruction of the Head of State given earlier, the Ministry is working on a draft law “On digital assets” initiated by Members of the Majilis of the Republic of Kazakhstan. This bill will take into account all the pros and cons of the pilot project and create the most favorable regulatory conditions for the development of a comprehensive digital ecosystem. In our country, there is a rapid development of human capital in this area. We are also actively starting to attract blockchain technologies and are also going to use blockchain in public services,” said Zhaslan Madiyev.

The interaction between the AIFC crypto exchanges and Kazakhstan’s STBs is a pilot project designed to provide an appropriate regulatory framework for further development of Kazakhstan’s potential as a regional crypto hub. The project will operate in pilot mode throughout 2022. It will involve crypto exchanges licensed by AFSA to operate as Digital Assets Trading Facilities, in cooperation with second-tier banks.

According to Gabit Lesbekov, Head of Liaison Office for Entities Subject to Financial Monitoring at the Financial Monitoring Agency of the Republic of Kazakhstan, digital technologies are new and decentralised technologies, and thus pose high money-laundering risks, while the banking sector is an active anti-money laundering stakeholder.

“We receive 95% of the information on all questionable transactions from second-tier banks.  They are the most involved participants, and they have a built-in and high-quality anti-money laundering compliance system. The only thing they need is to understand the specifics of digital technologies. We believe that there will be no difficulties for banks to carry out operations, while observing all our standards. We hope that this pilot project will give an impetus to further development of the crypto industry and to increase the investment attractiveness of Kazakhstan,” said Gabit Lesbekov.

The positive side of the pilot project is the organisation of trading of digital assets in the Republic of Kazakhstan in a regulated field, which ensures proper protection of the rights of retail and professional investors. In case of successful implementation of the pilot project, changes will be made both to the national legislation and to the AIFC acts.

According to the CEO of AFSA Nurkhat Kushimov, when launching crypto exchanges government agencies and regulators cooperated in a highly coordinated manner, which was the key to success.

“The banking industry complements the crypto industry with good quality compliance, methods, and counteraction systems. Crypto exchanges and banks should show maximum efficiency. Digital assets are a young industry, but we are ready to constantly work with colleagues and exchange opinions. We need to ensure proper regulation, but we also must not miss out on this market. We need to work to ensure that major players are in Kazakhstan, and we should attract new world-class stakeholders. We should become a hub that attracts both Kazakhstan and overseas miners. Their involvement in our financial ecosystem will help provide additional investments, liquidity and imports for the growth of Kazakhstan’s economy,” said AFSA CEO Nurkhat Kushimov.

Reference:

The Astana Financial Services Authority (AFSA) is the independent regulator of the Astana International Financial Centre (AIFC), which is established in accordance with the Constitutional Law of the Republic of Kazakhstan “On the Astana International Financial Centre” for the purposes of regulating financial services and related activities in the AIFC. AFSA administers the AIFC Regulations and Rules and is responsible for the authorisation, registration, recognition and supervision of financial firms and market institutions in the AIFC.

Over 1,400 firms from 64 countries are registered in the AIFC. These firms provide banking, insurance, investment, professional and other services. The range of financial services offered at the AIFC is comparable to the list of services available in long-established financial centers of the world, such as London, Hong Kong, Singapore, Dubai and others. www.afsa.kz 

The Astana International Financial Centre (AIFC) is an independent jurisdiction that started operations in 2018. In accordance with the Development Strategy until 2025, the key focus of the AIFC is to consolidate as a universal platform connecting the countries of the EAEU, Central Asia and the Caucasus.

www.aifc.kz

The session “Anti-Money Laundering: Challenges and Benefits for the Accelerated Growth of the Financial Industry” has taken place as part of Astana Finance Days 2022. The panel session was organised by the AIFC Financial Services Authority (AFSA). International and Kazakhstan experts reviewed global trends in the field of combating money laundering, discussed the specifics of compliance with the rules for controlling transfers in cryptocurrency, considered combatting anonymity mechanisms, and ensuring transparency of financial transactions to accelerate the growth of the financial sector and other issues.

The speakers of the session included AFSA Deputy CEO and Chief Regulatory Officer Gareth Ling, Executive Secretary of the Eurasian group on combating money laundering and financing of terrorism (EAG) Sergey Teterukov, XReg Consulting Partner Ernest Lima, Senior APAC Policy Advisor at Elliptic Tung Li, and Risk Strategy Specialist for the Customer Risk Intelligence group of Refinitiv Renata Galvao.

As a destination for international business, the AIFC strictly adheres to the standards of the FATF (Financial Action Task Force on Money Laundering), and the AIFC’s effective regulatory system allows it to combat these risks through international financial services regulation standards.

“The beneficial ownership transparency movement is currently in the spotlight around the world, while the AIFC has integrated ultimate beneficial owner disclosure rules from the outset to prevent illicit financial flows from flowing through the AIFC,” said AFSA Deputy CEO Gareth Ling. – The ability to conduct business transparently and without reputational risks is key for international companies. The AIFC is a place where companies can apply high standards of conduct with confidence”.

This year, the Eurasian Group on Combating Money Laundering and the Financing of Terrorism (EAG) will conduct a second round of mutual assessment of the technical compliance of the legislation of the Republic of Kazakhstan with international standards for combating money laundering and the financing of terrorism (AML / CFT).

Reference:

The Astana Financial Services Authority (AFSA) is the independent regulator of the Astana International Financial Centre (AIFC), which is established in accordance with the Constitutional Law of the Republic of Kazakhstan “On the Astana International Financial Centre” for the purposes of regulating financial services and related activities in the AIFC. AFSA administers the AIFC Regulations and Rules and is responsible for the authorisation, registration, recognition and supervision of financial firms and market institutions in the AIFC.

Over 1,400 firms from 64 countries are registered in the AIFC. These firms provide banking, insurance, investment, professional and other services. The range of financial services offered at the AIFC is comparable to the list of services available in long-established financial centers of the world, such as London, Hong Kong, Singapore, Dubai and others. www.afsa.kz 

The Astana International Financial Centre (AIFC) is an independent jurisdiction that started operations in 2018. In accordance with the Development Strategy until 2025, the key focus of the AIFC is to consolidate as a universal platform connecting the countries of the EAEU, Central Asia and the Caucasus. www.aifc.kz

A panel session “Rise of Digital Assets: New Opportunities, Risks and Regulation” has taken place within the Regulatory Landscape Forum at Astana Finance Days 2022. The panel session’s speakers included non-executive independent member of the Board of Astana Financial Services Authority (AFSA) and Head of Regulatory Affairs at Fnality International Daniel Heller, Head of Operations at Bitfinex Securities Jesse Knutson, Law Professor at University of Hong Kong Douglas Arner, Director at Binance for Asia Gleb Kostarev and Chief Executive Officer of AFSA Nurkhat Kushimov.

The session participants have discussed global regulatory trends concerning digital assets, discussed the issues of “balancing” the management of risks and support for FinTech innovations, ensuring protection of retail investors and maintaining financial stability amid volatility of digital assets. The speakers also shared views about the role of big crypto players as gatekeepers of crypto community.

To support financial innovation in 2018 AFSA launched FinTech Lab regulatory sandbox. Companies licensed within the sandbox have an opportunity to test innovative financial services in a controlled environment. At the moment, there are six crypto-exchanges, one crypto-broker and one tokenised investment exhange in the sandbox.

“Creating balanced regulatory conditions for the crypto market allows to manage the risks of the industry without impeding its further development”, said Chief Executive Officer of AFSA Nurkhat Kushimov.

Reference:

The Astana Financial Services Authority (AFSA) is the independent regulator of the Astana International Financial Centre (AIFC), which is established in accordance with the Constitutional Law of the Republic of Kazakhstan “On the Astana International Financial Centre” for the purposes of regulating financial services and related activities in the AIFC. AFSA administers the AIFC Regulations and Rules and is responsible for the authorisation, registration, recognition and supervision of financial firms and market institutions in the AIFC.

Over 1,400 firms from 64 countries are registered in the AIFC. These firms provide banking, insurance, investment, professional and other services. The range of financial services offered at the AIFC is comparable to the list of services available in long-established financial centers of the world, such as London, Hong Kong, Singapore, Dubai and others. www.afsa.kz 

The Astana International Financial Centre (AIFC) is an independent jurisdiction that started operations in 2018. In accordance with the Development Strategy until 2025, the key focus of the AIFC is to consolidate as a universal platform connecting the countries of the EAEU, Central Asia and the Caucasus. www.aifc.kz

Panel session “Development of Financial Services in Central Asia” has taken place at the annual financial conference Astana Finance Days 2022. The session speakers shared views on how joint efforts can make Central Asia more attractive to investors and increase profitability when introducing new financial products and discussed the potential of the FinTech industry through commercial and social perspectives. 

The panel session’s speakers included Managing Director and Chief Legal Officer at AFSA Ishaq Burney, non-executive independent member of the Board of AFSA and former Secretary General of the International Organisation of Securities Commissions Gregory Tanzer, Director of the Capital Markets Development Department at Ministry of Finance of the Republic of Uzbekistan Sarvarbek Akhmedov, Head of the European Bank for Reconstruction and Development (EBRD) for Kazakhstan Huseyin Ozhan, Acting Chairman of the Board at the Republican Stock Exchange Toshkent Abduazimxuja Abdujabborov and Chief Executive Officer at Astana International Exchange Renat Bekturov.

The session speakers discussed cooperation between Central Asia’s regulatory bodies as a factor facilitating access to cross-border financial services and improving capital flows. With a population of 75.3 mln people, Central Asia is an attractive market for investors. Furthermore, joint efforts of financial regulators can improve the introduction of new financial products.

“Regional cooperation initiatives to develop the financial markets in Central Asia can solve the problems associated with the size of the markets, their low liquidity and supply of suitable securities,” said AFSA Managing Director and Chief Legal Officer Ishaq Burney. “In this sense, the AIFC, and in particular the AFSA, can play a leading role for testing innovative and reliable regulation of developing financial services in the region.”

In 2022 a Joint Declaration was adopted at a high-level meeting involving financial regulators of AIFC’s independent jurisdiction, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan and a number of international financial organisations. The Declaration confirms the possibility of using the potential of the AIFC in order to jointly develop the financial system, support cross-border economic initiatives in the field of financial services, attract investment to the region and strengthen cooperation between regulators.

Reference:

The Astana Financial Services Authority (AFSA) is the independent regulator of the Astana International Financial Centre (AIFC), which is established in accordance with the Constitutional Law of the Republic of Kazakhstan “On the Astana International Financial Centre” for the purposes of regulating financial services and related activities in the AIFC. AFSA administers the AIFC Regulations and Rules and is responsible for the authorisation, registration, recognition and supervision of financial firms and market institutions in the AIFC.

Over 1,400 firms from 64 countries are registered in the AIFC. These firms provide banking, insurance, investment, professional and other services. The range of financial services offered at the AIFC is comparable to the list of services available in long-established financial centers of the world, such as London, Hong Kong, Singapore, Dubai and others. www.afsa.kz 

The Astana International Financial Centre (AIFC) is an independent jurisdiction that started operations in 2018. In accordance with the Development Strategy until 2025, the key focus of the AIFC is to consolidate as a universal platform connecting the countries of the EAEU, Central Asia and the Caucasus. www.aifc.kz

The delegation of the Astana International Financial Centre (AIFC), headed by acting IsDB Governor for Kazakhstan and Chief Executive Officer of the Astana Financial Services Authority (AFSA) Nurkhat Kushimov, has participated in the Islamic Development Bank Group 2022 Annual Meetings in Sharm el-Sheikh. The event was organised with the assistance of the government of the Arab Republic of Egypt.

Heads and representatives of government agencies from 57 IsDB member countries as well as regional and international financial and development institutions, business leaders and the general public participated in the annual event.

IsDB Group Board Meetings, conventions of IsDB Group members, as well as side-events and panel sessions were held within the Annual Meetings. Among many others, issues of sustainable development, Islamic finance, and digitalisation were on the agenda. Acting IsDB Governor for Kazakhstan Mr Kushimov spoke at a special event “Digital Transformation in Financial Services: The Age of Fintech” and focused on the development of FinTech in the AIFC, as well as the proper regulation and supervision of AFSA companies in the area of FinTech.

“From the standpoint of regulation, digital transformation presents a number of challenges, notably the need to prepare innovative legislation and prioritise consumer protection. Nevertheless, we see FinTech as an enabling power that can build bridges between those in business who are financially secure and those who are “unbanked”. In FinTech at AFSA we strive to motivate innovation whilst ensuring that adequate regulation and oversight are in place to bring out the best that FinTech can offer in a safe manner,” said AFSA Chief Executive Officer Mr Kushimov.

During the visit meetings were held with the leadership of the Islamic Development Bank and with companies of the IsDB Group (ICD, ITFC, ICIEC). The discussions focused on issues of strengthening cooperation between the IsDB Group and the Republic of Kazakhstan, the possibility of financing Kazakhstan’s projects, as well as IsDB’s assistance in the development of the industry of Islamic financial services.

In addition, meetings were held with representatives of various banks and companies, including the CEO of the OPEC Fund, the Secretary General of the Islamic Financial Services Board and representatives of other organisations.

Reference:

The Astana Financial Services Authority (AFSA) is the independent regulator of the Astana International Financial Centre (AIFC), which is established in accordance with the Constitutional Law of the Republic of Kazakhstan “On the Astana International Financial Centre” for the purposes of regulating financial services and related activities in the AIFC. AFSA administers the AIFC Regulations and Rules and is responsible for the authorisation, registration, recognition and supervision of financial firms and market institutions in the AIFC.

Over 1,300 firms from 64 countries are registered in the AIFC. These firms provide banking, insurance, investment, professional and other services. The range of financial services offered at the AIFC is comparable to the list of services available in long-established financial centers of the world, such as London, Hong Kong, Singapore, Dubai and others. www.afsa.kz 

The Astana International Financial Centre (AIFC) is an independent jurisdiction that began operations in 2018. In accordance with the 2025 Development Strategy, the key task of the AIFC is to consolidate as a universal platform connecting the countries of the EAEU, Central Asia and South Caucasus. www.aifc.kz

The Islamic Development Bank (IsDB) is an AAA-rated supranational and international development finance institution with 57 member countries that promote socio-economic and sustainable development in IsDB member countries. Its main activities include promoting global development, building partnerships, strengthening global value chains, and advancing science, technology and innovation. 

The Astana Financial Services Authority (AFSA) has suspended the Licence of Sanity Capital Ltd after the firm had breached regulatory requirements in relation to the AFSA’s capital and liquidity requirements. Sanity Capital Ltd also failed to ensure that all mandatory appointments were filled at all times by Approved Individuals or Designated Individuals as required by the AFSA.

Despite Sanity Capital Ltd previously being ordered to resolve the above matters in a timely manner, it has not done so, so AFSA had to take measures.

The AFSA requires companies to comply with the minimum requirements set by the regulator and will not hesitate to take appropriate action against participants who persist in ignoring the regulator’s requirements and failing to present credible plans to meet them.

Deputy CEO of the AFSA Mr Gareth Ling said: “No clients of Sanity Capital Ltd suffered any detriment or were exposed to any undue risks, but this does not mean the AFSA’s minimum requirements to be a “fit and proper” person should be taken any less seriously by firms wishing to remain authorised to provide financial services in or from the AIFC”.

Reference:

The Astana Financial Services Authority (AFSA) is the independent regulator of the Astana International Financial Centre (AIFC), which is established in accordance with the Constitutional Law of the Republic of Kazakhstan “On the Astana International Financial Centre” for the purposes of regulating financial services and related activities in the AIFC. AFSA administers the AIFC Regulations and Rules and is responsible for the authorisation, registration, recognition and supervision of financial firms and market institutions in the AIFC.

Over 1,300 firms from 64 countries are registered in the AIFC. These firms provide banking, insurance, investment, professional and other services. The range of financial services offered at the AIFC is comparable to the list of services available in long-established financial centers of the world, such as London, Hong Kong, Singapore, Dubai and others. www.afsa.kz 

The Astana International Financial Centre (AIFC) is an independent jurisdiction that began operations in 2018. In accordance with the 2025 Development Strategy, the key task of the AIFC is to consolidate as a universal platform connecting the countries of the EAEU, Central Asia and South Caucasus. www.aifc.kz

The Astana Financial Services Authority has held the 2nd Regulatory Townhall in Nur-Sultan in an online format.

A number of topics were on the agenda of the Townhall. Among them are:

• The enhancements to the Recognition and Market Frameworks;
• Policy proposals regarding Banking Business Firms;
• Summary of Regulatory Guidance on Fitness and Propriety;
• Application of Rules on Currency Regulation and
• Proposed Guidance on the use of Security Token Offerings (STO) at the AFSA FinTech Lab.