Suspicious Activities and Threshold Transactions for AIFC

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Understanding Suspicious Activities and Threshold Transactions for Companies in AIFC Jurisdiction

Companies that are subject to financial monitoring are required to report suspicious activities and threshold transactions to the Financial Monitoring Agency of the Republic of Kazakhstan (FMA RoK) in accordance with the Law of the Republic of Kazakhstan of August 28, 2009, No. 191-IV “On Counteraction of Legitimization (Laundering) of Incomes Received by Illegal Means, and Financing of Terrorism” (AML/CFT Law) and the Rules of the Astana International Financial Centre on Anti-Money Laundering, Countering the Financing of Terrorism, and Sanctions (AML Rules).

What are Threshold Transactions/Suspicious Activities?

Threshold transactions refer to transactions that exceed the amounts established by Article 4 of the AML/CFT Law, as well as other types of transactions described in the same article.

Threshold Transactions Table

	Amount (equal to or greater than)	Description	Form
1	KZT 1,000,000 and by its nature this transaction	winnings based on the results of betting, gambling in gambling establishments and lottery	Cash
2	KZT 5,000,000 or equals the amount in foreign currency equivalent to KZT 5,000,000 or more	crediting or transferring money to a client’s bank account by an individual, legal entity, or foreign structure without forming a legal entity, having, respectively, registration, place of residence, or location in an offshore zone, as well as holding an account with a bank registered in an offshore zone, or client’s transactions with money and (or) other property with the specified category of persons	Cash or Cashless
3	KZT 5,000,000 or equals the amount in foreign currency equivalent to KZT 5,000,000 or more	transfers of money abroad to accounts (in deposits) opened to the anonymous owner receipt of money from abroad from an account (deposit) opened to the anonymous owner	Cash or Cashless
4	KZT 7,000,000 or equals the amount in foreign currency equivalent to KZT 7,000,000 or more	transactions with shares and shares of mutual investment funds, with the exception of repo transactions on the organized market through open trading	Cash or Cashless
5	KZT 10,000,000 or equals the amount in foreign currency equivalent to KZT 10,000,000 or more	buying, selling and exchanging foreign currency through exchange points	Cash
6		withdrawing money from a bank account or crediting money to the client’s bank account, as well as receiving cash from the client or issuing cash to the client	Cash
7		transactions committed by legal entities that have passed less than three months since the state registration	Cash
8		making an insurance payment or receiving an insurance premium	Cash
9		transactions for the provision of services, including contract, transportation, transport expedition, storage, commission, trust management of property, with the exception of safe deposit boxes, cabinets and premises	Cash
10		receiving money on a check or bill of exchange	Cash
11		import into the Republic of Kazakhstan or export from the Republic of Kazakhstan of cash currency, documentary bearer securities, bills of exchange, checks, with the exception of import or export carried out by the National Bank of the Republic of Kazakhstan, banks and the National Postal Operator	Cash
12		making, transferring voluntary pension contributions to a unified accumulative pension fund and/or a voluntary accumulative pension fund, as well as making pension payments from a unified accumulative pension fund and/or a voluntary accumulative pension fund through voluntary pension contributions	Cash
13	KZT 45,000,000 or equals the amount in foreign currency equivalent to KZT 45,000,000 or more	receipt or provision of property under a financial lease agreement	Cash or Cashless
14		transactions with bonds and government securities, except for repo transactions on the organized market by open trading	Cash or Cashless
15		acquisition (sale) of cultural property, import into the Republic of Kazakhstan or export of cultural property from the Republic of Kazakhstan	Cash
16	KZT 50,000,000 or equal to the amount in foreign currency equivalent to KZT 50,000,000 or more	transaction made by the client who received a loan under the programs of financing of business entities at the expense of the National Fund of the Republic of Kazakhstan within the framework of bond loans of entities of the quasi-public sector	Cash or Cashless
17	in foreign currency is equal to or exceeds KZT 100,000,000	transaction refers to cross-border payment and transfer of money from a bank account or to a client’s bank account	Cashless
18	KZT 50,000,000 or equals the amount in foreign currency equivalent to KZT 50,000,000 or more	transaction with immovable property, the result of which is the transfer of ownership of such property	Cash or Cashless

According to Article 1 of the AML/CFT Law, suspicious transactions are considered to be any client transaction (including attempted transactions, transactions in progress, or already completed transactions) in relation to which there are suspicions that the funds and/or other assets used for its execution are derived from criminal activities, or the transaction itself is aimed at money laundering, financing of terrorism, or other criminal activities.

The list of suspicious activities are provided in Article 4 of the AML/CFT Law, however, it should be noted that this list is non-exhaustive, due to the constant change in the methods of money laundering and terrorist financing. The definition of typologies, schemes and methods of money laundering and financing of terrorism is carried out by the FMA RoK, and information about them is distributed to the subjects of financial monitoring through the official Internet resource. It is also recommended to follow the publications of international organizations involved in combating money laundering and terrorist financing (UN, FATF, OECD, etc.) and familiarize yourself with the international consolidated sanctions lists in order to be aware of new typologies and schemes of money laundering and terrorist financing.

The definition of such activities depends on several factors, including:

Geographic Risk: includes FATF black list and gray list countries; offshore jurisdictions; sanctioned countries and others.
Client Business Risk: refers to activities that are inconsistent with the client’s business activities; legal entities registered less than three months ago, etc.
Client type risk: includes politically exposed person (foreign and local); legal entities with a high turnover of cash; individuals and entities included in the UN Security Council Consolidated Sanctions List, sanctions lists, lists of entities and individuals associated with the financing of terrorism and extremism, as well as lists related to the financing of the proliferation of weapons of mass destruction and others.
Amount of transactions: includes transactions that exceed the expected return, the splitting of a transaction into several parts, the amount of which is equal to or greater than the threshold transaction, and other abnormal transactions.
Customer behavior: includes failure to provide information about counterparties or recipients, failure to provide the purpose of the transaction, failure to provide the necessary documents to complete the transaction, and other unusual behavioral factors.
Counterparties in transactions: includes an assessment of the risk associated with counterparties, such as their reputation, connections with criminal organizations, history of previous transactions and other factors.

When identifying suspicious activity, companies should take into account the above factors and take appropriate measures to further analyze and identify possible suspicions.

Subjects of financial monitoring should draw up their own list of risk factors based on their experience, business and knowledge and reflect them in their AML/CFT policies.

Who submits the report?

Under the AML Rules, Money Laundering Reporting Officer (MLRO), Deputy MLRO, and AML employee working under the direction of the MLRO are the persons who are responsible to provide the reports.

How to submit a report?

Suspicious activities and threshold transaction reports are sent to the FMA RoK in accordance with the Order of the Chairman of the Agency of the Republic of Kazakhstan on financial monitoring dated February 22, 2022 No. 13 on the approval of the rules for the submission by financial monitoring entities of data and information on transactions subject to financial monitoring, and signs of identifying a suspicious transaction (Order).

There are two ways to send the report:

– FMA RoK web portal using manual input technology https://websfm.kz

– XML format, following the established format specified in Appendix 2 of the Order. Electronic filing in this format is carried out through the Internet telecommunication network of the Banking Settlement Center of the National Bank of the Republic of Kazakhstan.

When filling out the report, you must provide the following information:

Date and time of the suspicious activities/threshold transaction.
The status of the transaction/activity (completed or not completed).
Reason for filing a report (threshold transaction, suspicious transaction, etc. in accordance with Chapter 1 of the Order).
Information about the legal entity submitting the report.
Information about the transaction/activity:
1. Transaction number (assigned in the internal register of the subject of financial monitoring).
2. Transaction type code (the digital code of the type of transaction is indicated according to the directory on this platform).
3. Number of participants in the transaction (the number of participants in the transaction is indicated, excluding the subject of financial monitoring).
4. Transaction currency.
5. The transaction amount in the transaction currency.
6. Transaction amount in tenge.
7. Reason for the transaction (the code of the type of transaction is indicated in accordance with the directory of codes for the types of participants and transactions with money and (or) property).
Information about the participants in the transaction/activity.
1. The role in the transaction/activity of the participants in the transaction/activity (sender, recipient, etc.).
2. Whether the transaction/activity participant is a client of the subject filling out the report.
3. Residence of participants.
4. Organizational form of participant in the transaction/activity (LLP, individual entrepreneur, individual, etc.).
5. The bank of the transaction participant.
6. Location of the bank branch.
7. Name of the bank.
8. Bank/branch code (for example, BIC for residents and SWIFT BIC).
9. Client account number.
10. Bank location.
11. Founders of a participant (for legal entities) – data on all founders of a participant in a transaction/activity with a participation share of at least 10 percent shall be indicated.
12. Organizational form of the founder of the participant.
13. Name/full name of the participant (not client).
14. Residence of the founder of the participant in the transaction.
15. The actual address of the founder of the participant.

In the “Additional information” field of the section of the subject of financial monitoring, it is necessary to explain in detail the reasons why the transaction/activity is considered suspicious.

When must the report be submitted?

In accordance with the requirements of Article 13 of the AML/CFT Law, a report on suspicious activity/threshold transactions in electronic format must be submitted to the FMA RoK:

1. if a transaction is recognized as suspicious, immediately report such a transaction before it is carried out.
2. reports of suspicious transactions that cannot be suspended are provided no later than three hours after their completion
3. suspicious activities reports and threshold transactions within twenty-four hours of the discovery of such transactions.

Actions after sending a message to FMA RoK

Upon receipt of a message from the FMA RoK, within twenty-four hours, it decides to conduct a transaction or refuse to conduct a transaction and electronically notifies the subjects of financial monitoring of this decision. If the FMA RoK requests additional information, the subject of financial monitoring is obliged to provide assistance and the necessary data. If the company does not receive a decision to suspend or not suspend a suspicious transaction within 24 hours after providing the information, the transaction can be carried out if there are no other legal grounds preventing its execution.

The Financial Services Regulatory Authority (AFSA) must be notified in writing of such transactions as soon as possible after the notification is sent to the FMA RoK.

All reports, messages, as well as receipts received on the FMA RoK portal after the message was sent, must be stored in electronic form for six years from the date of receipt.