EAG-VII FR (2011) 3 rev.1
FIRST MUTUAL EVALIATION OF TAJIKISTAN
Sixth Follow-up Report
on the Implementation of EAG mutual evaluation recommendations
I. INTRODUCTION
1. The purpose of this document is to present EAT Plenary meeting the 6th report of Tajikistan that describes measures taken by Tajikistan to eliminate the shortfalls revealed in the course of mutual evaluation. The EAT Plenary meeting was presented with the first progress report in June 2009, the second progress report in December 2009, the third progress report in June 2010, the fourth progress report in December 2010, the fifth progress report in June 2011, respectively, and Tajikistan was requested to present the next report by November 2011.
2. InaccordancewithCoreandKeyFATFRecommendationsTajikistanreceived “partiallycompliant” evaluationforRecommendation 3 (Confiscationandprovisionalmeasures), Recommendation 4 (Secrecylaws), Recommendation 10 (Recordkeeping) and “non-compliant” forRecommendation 1 (MLoffense), Recommendation 5 (Customerduediligence), Recommendation 13 (Suspicioustransactionreporting), Recommendation 23 (Regulation, supervision and monitoring), Recommendation 26 (the FIU), Recommendation 35 (Conventions), Recommendation 36 (Mutual legal assistance), Recommendation 40 (Other forms of cooperation), Special Recommendation 1 (Implementation of UN instruments), Special Recommendation II (Criminalization of terrorist financing), Special Recommendation III (Freeze and confiscation of terrorist assets), Special Recommendation IV (Report on suspicious transactions), and Special Recommendation V (International cooperation).In accordance with these ratings and paragraph 46 of the Procedure of mutual evaluations EAG (EAG/PLEN(2007)rev.4) Tajikistan is subject to procedure of special monitoring 1 and shall present progress reports with regularity established by the Plenary meeting. Tajikistanreceived “partially complaint” and “non-compliant” evaluations for 44 Recommendations as indicated below.
Partially compliant (PC) / Non-compliant (NC)R.2 (MLoffense – mentalelementandcorporateliability)
R.3 (Confiscation and provisional measure)
R.4 (Secrecy laws)
R.10 (Record keeping)
R.18 (Shell banks) / R.1 (ML offense)
R.5 (Customer due diligence)
R.6 (Politically exposed persons)
R.7 (Correspondent banking)
R.8 (Newtechnologiesandnon face-to-face business)
R.11 (Unusual transactions)
R.12 (DNFBP – R.5, 6, 8-11)
R.13 (Suspicious transactions reporting)
R.14 (Protectionandnotipping-off)
R.15 (Internal controls, compliance and audit)
R.16 (DNFBP – R.13-15 and 21)
R.17 (Sanctions)
R.19 (Otherformsofreporting)
R.20 (Other NFBP)
R.21 (Special attention for higher risk countries)
R.23 (Regulation, supervision and monitoring)
R.24 (DNFBP – relations, supervision and monitoring)
R.25 (Guidelines and feedback)
R.26 (FIU)
R.29 (Supervisors)
R.30 (Resources, integrity and training)
R.31 (National cooperation)
R.32 (Statistics)
R.33 (Legal persons – beneficial owners)
R.35 (Conventions)
R.36 (Mutual legal assistance)
R.37 (Dual criminality)
R.38 (MLA on confiscation and freezing)
R.39 (Extradition)
R.40 (Other forms of cooperation)
SR.I (Implementation of UN instruments)
SR.II (Criminalization of terrorist financing)
SR.III (Freeze and confiscation of terrorist assets)
SR.IV (Suspicioustransactionreporting)
SR.V (International cooperation)
SR.VI (AML/FT requirements for money/value transfer services)
SR.VII (Wire transfer rules)
SR.VIII (Non-profit organizations)
SR.IX (Cross-border declaration and disclosure)
3. Upon the results of discussion of the fifth progress report of Tajikistan in June 2011 several steps were noted that were made by the Republic of Tajikistan on its way to further development of national AML/CFT system. In March 2011 the Law on AML/CFT entered into force, and the National bank issued several regulatory documents and introduced amendments and supplements to current regulatory documents. Thesemeasuresallowedessential improvement of the country position with regards to Core and Key Recommendations. At the same time EAG Secretary noted that efficiency of taken measures cannot yet be evaluated. Thecountrydidnotpresentcomprehensive statistics for several recommendations. With account of discussion on Tajikistan at the meeting of the International Cooperation Review Group(FATF)the EAG Plenary meeting resolved to extend the mode of enhanced monitoring. Thisreportdealswithmeasurestakenonly inrelationtoCore and Key Recommendations.
II. REVIEW OF TAJIKISTAN PROGRESS FROM JUNE 2011
4. This section highlights the most significant measures taken by Tajikistan since June 2011 with the aim of elimination of deficiencies revealed in the course of mutual evaluation.
Overall context
5. For the reporting period Tajikistan has adopted the following regulatory documents:
Law “On securities market” (No.179 of June 19, 2011);
Instruction No. 190 “On the procedure of provision services with the use of bank payment cards” (of May 20, 2011);
Recommendations “On identification and verification of client and beneficial owner” (Regulation of the Board of the National Bank No. 199 of October 14, 2011);
Recommendations “On identification and presentation of suspicious transactions during risk evaluation” (Regulation of the Board of the National Bank No. 121 of June 20, 2011);
Instruction No. 123/ff “On internal procedures of the Department of financial monitoring of the National Bank of Tajikistan” (of July 8, 2011);
Corerecommendations (R.5)
Recommendation 5
6. TheRepublicofTajikistan presented the text of the Order No. 190, Recommendations approved by the National Bank Boards on client identification and detection of suspicious transactions during risk evaluation. Itshallbenotedthatthesemeasuresweretakenfollowingthedevelopmentofthe Law on AML/CFT adopted in March 2011 and provide details of its provisions related to CDD. AnnexestoRecommendationsonclientidentification contain specific information that financial institutions shall receive from their client – physical or legal entity or individual entrepreneur, as well as information received with the purpose of detection and identification of a beneficial owner. Recommendationsondetectionofsuspicioustransactionsdescribespecificgroupsofrisks that financial institutions may be guided by while taking measures aimed at intense check of their clients. Withaccountofmeasurestakenearlier (FR (2011) 1) itcanbeestablishedthatthe regulatory basis for measures aimed at client identification is created and time is needed to evaluate the efficiency of the work done.
Key Recommendations (R.26, R.40)
Recommendation 26
7. The Republic of Tajikistan presented Instruction “On internal procedures of the Department of financial monitoring of the National Bank of Tajikistan” approved by the Order of the Chairman of the Board of the National Bank of Tajikistan following the Regulations on the Department of financial monitoring (hereinafter – DFM) approved by the Decree of the President of the Republic of Tajikistan. Previous progress reports (PR (2010) 7, PR (2011) 1) expressed concerns that Regulation on DFM lacked the procedure for taking decision on submission of FIU analysis results to law enforcement bodies as well as information on persons authorized to decide on such submission. Presented Instruction contains provisions on specifics of DFM activity in accordance with which procedures of working with reports on suspicious transactions (RST) and instructions to reporting organizations were established. Instructions for reporting organizations were presented by Tajikistan in this report and in the fifth progress report. Instructions determine persons responsible for taking a decision on submission of information to law enforcement bodies. In accordance with Chapter 7, Clause 25 “Head of DFM provides case materials administering Deputy Chairman of the Board of the National Bank and then delivers them with the note “CONFIDENTIAL” to a secretary… [who] ensures delivery of the official letter to a corresponding law enforcement body…”. In this regard it is worth emphasizing that all FIU core functions should be strictly under the FIU control and responsibility and while this is clearly the case with the receiving, requesting and analytical functions, the mentioned Instruction requires that the FIU dissemination function is shared with the Deputy Chairman of the National Bank. Although according to the Tajik authorities this didn’t cause any delays or other problems in practice, the fact that the FIU case materials are disseminated to the competent law enforcement authorities via another authority may raise the issue of the operational independence of the Tajik FIU with regard to its dissemination function.
8. Tajikistan presented the following RST statistics. During the reporting period FIU received 7 RST and 2018 reports on operations above the threshold amount. Presently there is no statistics regarding investigations initiated by law enforcement bodies on the basis of FIU materials.
9. During the reporting period DFM sent 12 requests to financial institutions and received the same amount of responses.
Recommendation 40
10. TajikistanpresentedthefollowingstatisticsonexchangeofinformationwithotherFIUduringthereportingperiod. 10 requests from FIU were received, and 5 of them were responded.
11. In July 2011 the Agreement on Eurasian group for countering legalization of proceeds from crime and terrorist financing was signed by Heads of delegations of EAG countries. Presently this agreement is under internal state reconciliation procedure. During this period reconciliation procedure has also been started for Agreements on cooperation between the Department of financial monitoring of the National Bank of Tajikistan and the State Committee of financial monitoring of Ukraine, Committee for financial monitoring of the Ministry of Finance of the Republic of Kazakhstan, Federal service of financial monitoring of the Russian Federation, Department of financial monitoring under the Ministry of Finance of Turkmenistan.
III. RECOMMENDATIONS AND CONCLUSIONS
12. Presently the Republic of Tajikistan actively improve its AML/FT system, including in accordance with the plan of activities approved by the Prime-Minister and considered at meetings of the “Europe-Eurasia” subgroup of the Working Group for international cooperation review of FATF.
13. Tajikistan should promote it work on addressing deficiencies related to Law Recommendations (R.1, SR.II) as well as to mechanisms for freezing terrorists assets (SR.III).
14. A comprehensive analysis regarding elimination of shortfalls from the day of the report on mutual evaluation will be prepared by June 2012, in one year after the new procedures of EAG mutual evaluation will enter into force (PLEN (2007) 4 ed.5).
15. In this regard it seems appropriate to request the Republic of Tajikistan to present the next follow-up report at the 16th EAG Plenary meeting.
EAG Secretariat
November 11, 2011
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EAG-VII FR (2011) 3 rev.1/ANN.1
Annex
To letterNo.______
of «___» ______2011
Resume on implementation of measures taken by the Republic of Tajikistan in the period till October 19, 2011
1. On June 17m 2011 the Prime-Minister of the Republic of Tajikistan O.G.Okilov approved the Plan of activities on bringing the legislation of the Republic of Tajikistan in compliance with the Recommendations of the Financial Action Task Force (FATF), No. 2/107.
2. Recommendation 5 (Customerduediligence);
а) The Law of the Republic of Tajikistan of June 9, 2011, No.179 “On securities market” was adopted, in accordance with its Articles 6, 7, 8, 9, 10, and 11 an Authorized state body was determined, its functions and rights to regulate securities market were determined in Article 12 “Introduction of Unified state register of securities in the Republic of Tajikistan”, and Article 29 determined the procedure for transfer of rights to securities.
b) Instruction No. 190 “On the procedure for provision of services with the use of bank payment cards” was adopted by the Regulation of the Board of the National Bank of Tajikistan of May 20, 2011, No. 100. This Instruction was registered by the Ministry of Justice of the Republic of Tajikistan on June 30, 2011, No. 616.
Chapter 1, Clause 1 states: “Issuer and acquirer shall observe the requirements to countering legalization of proceeds from crime and terrorist financing in accordance with the legislation of the Republic of Tajikistan”. (bringing of the legislation in compliance with FATF recommendations).
c) Recommendations “On identification and verification of client and beneficial owner” were approved by the Regulation of the Board of the National Bank of Tajikistan of October 14, 2011, No. 199;
d) Recommendations “On identification and presentation of suspicious transactions during risk evaluation” were approved by the Regulation of the Board of the National Bank of Tajikistan of June 20, 2011, No. 121.
3. Recommendation 11 (Unusual transactions) and Recommendation 18 (Shell banks);
The Ministry of Justice of the Republic of Tajikistan registered on September 26, 2011 with No.624 “Rules of transactions and operation with off-shore zones subjects”.
4. Recommendation 26 (FIU)
In accordance with the Order of the Chairman of the Board of the National Bank of Tajikistan of July 8, 2011, No. 123/ff the Instruction “On internal procedures of the Department of financial monitoring of the National Bank of Tajikistan” was adopted.
5. Recommendation 31 (Nationalcooperation);
The draft of the Regulation and composition of interdepartmental commission with engagement of representatives of responsible ministries and departments was prepared. The Chairman of the Board of the National Bank of Tajikistan was proposed as the Head of interdepartmental commission.
6.Recommendation 40 (Other forms of cooperation).
On December 9, 2010 the President of the Republic of Tajikistan signed the Decree of the Republic of Tajikistan “On the draft Agreement of Eurasian group for countering legalization of proceeds from crime and terrorist financing”.
On June 16, 2011 at the EAG Plenary meeting the Agreement on Eurasian group for countering legalization of proceeds from crime and terrorist financing was signed by Heads of EAG countries delegations.
Presently this agreement is under the procedure of internal state reconciliation.
During this period reconciliation procedure has also been started for Agreements on cooperation between the Department of financial monitoring of the National Bank of Tajikistan and the State Committee of financial monitoring of Ukraine, Committee for financial monitoring of the Ministry of Finance of the Republic of Kazakhstan, Federal service of financial monitoring of the Russian Federation, Department of financial monitoring under the Ministry of Finance of Turkmenistan.
Agreement drafts were also sent to FIU of Pakistan, India and Afghanistan.
With the purpose of establishment of bilateral cooperation the Department of financial monitoring during the reporting period sent requests to FIU of Cyprus, Great Britain and Kyrgyzstan with regards to specific cases.
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EAG-VII FR (2011) 3 rev.1/ANN.2
TAJIKISTAN SIXTH FOLLOW-UP REPORTTABLE(November 2011)
- Measures taken to ensure compliance with core recommendations (R. 1, R. 5, R. 10, R. 13, SR. II, SR. IV)
Recommendation
/Summary of factors underlying rating
/ Outline of activities aimed to correctthe deficiencies after adopting of the mutual evaluation report (December 2008 through June 2011) / Overview of activities undertaken or planned after adopting of the fifth follow-up report (June 2011 through November 2011)1. ML offence / 1.ML criminal offence does not fully correspond to the Vienna and Palermo Conventions, since it doesn’t cover also “the concealment or disguise of the true nature, source, location, disposition, movement or ownership of or rights with respect to property” and the “acquisition, possession or use of property.” / The Criminal Code of the Republic of Tajikistan
“Legalization (Laundering) of Illegally Acquired Monetary Assets or Other Property”
1) conducting property deals or other operations with cash assets or other property, which are known to be obtained by unlawful means, as well as use of such assets or other property for entrepreneurial or other economic activities or their use by other ways
- shall be punishable by a fine equal to a range from 500–1,000 times the minimum salary or a term of imprisonment of up to four years and a fine in the amount of up to two hundred minimum salaries.
2) The same action committed:
a) repeatedly;
b) by a group of persons by previous concert;
c) by a person abusing his official position :
shall be punishable by imprisonment for a term of four to eight years, with or without the forfeiture of property and the right to hold certain positions or be involved in a certain activity for a period of five years.
3) Actions specified in clauses 1 and 2 of this article, committed:
a) by an organized group;
b) on a large scale,
shall be punishable by imprisonment for a term of seven to ten years, with or without the forfeiture of property and the right to hold certain positions or be involved in a certain activity for a period of five years.
Note: 1) A person who participated in legalization of illegal incomes is released from criminal liability if he assisted in exposing the crime and voluntarily handed over illegally obtained incomes.
2) for the purposes of this article, “a large scale” shall mean the illegally obtained cash assets or the property of a value exceeding three thousand minimum salaries.
Also, Pursuant to Executive Order of the President of the Republic of Tajikistan RP No.985 dated May 12, 2008, a Working Group was established to prepare a draft law on amending the Criminal Code of the Republic of Tajikistan.
The draft Law of the Republic of Tajikistan on amending the Criminal Code of the Republic of Tajikistan suggests that the text of article 262 “Legalization (Laundering) of Illegally Acquired Monetary Assets or Other Property” of the Criminal Code of the Republic of Tajikistan should be reworded as follows: “Using or transferring cash assets or other property obtained illegally through banking operations or other activities carried out so as to legalize them, as well as storing, disguising the illegal nature, source, location, and disposition of the property, where this is evident that theproperty was obtained illegally or for the purpose of providing help to an offender, shall be punishable by imprisonment for a term of five to eight years, with or without the forfeiture of property».
General Prosecutor’s Office of the Republic of Tajikistan in order articles 262 and 179,2 of the Criminal Code of RT to comply, has elaborated a draft law “On addenda and amendments to the Criminal Code of the Republic of Tajikistan” in view of proposals of ministries and institutions of the Republic of Tajikistan, based on requirements of Palermo Convention. Currently the draft law is under consideration of the Parliament of RT.
- In accordance with article 262 of the CC of the RT, ML is a crime.
Articles 262 of the CC of the RT to “other activities” implicates “disguising the illegal nature, source, location, and disposition of the property, title to it and other rights to it”, awareness that such property is an illegally obtained income.
2.The Amnesty Law currently in force prohibits the prosecution of Tajik natural and legal persons for property related money laundering offenses. / The Law is currently not in force.
3.ML offence was not effectively implemented in practice since in 9 years there was only one investigation and prosecution under article 262 of the Criminal Code; / In 2008, six criminal cases related to money laundering offenses were instituted and investigated. Upon completion of the preliminary investigation, they were referred to court.
5. Customer due diligence /
- There are only minimal identification requirements, which are insufficient to address CDD requirements.
Instruction No. 112 “On Non-Cash Payments in the Republic of Tajikistan”
8. Payment documents shall comply with the requirements of applicable standards and shall contain:
a) name of the payment document;
b) payment document number, date, month, and year of issuance. The date and the year shall be stated in figures, the month – in words. Payment document filled out using computing machines may state the month in figures;
c) name of the payer, his bank account number;
d) name of the payer’s bank (primary bank), the bank’s number;
e) name of the payee, his bank account number;
f) name of the payee’s bank, the bank’s number;
g) h) purpose of payment. In addition to a description in words,code symbols may be used;
i) amount of payment, in figures and words;
j) signatures of authorized persons of the enterprise and theenterprise’s seal (subject to the presentation of the specimens thereof to the bank) shall be affixed to the first copy retained by the payer’s bank and to the third copy (except checks) sent to the payee’s bank, irrespective of the method of issuing the payment document.