US embassy cable - 05ALMATY4353

UNCLAS ALMATY 004353 
 
SIPDIS 
 
STATE FOR INL PRAHAR, MCCOWAN, AND HOOKER; EUR/ACE (MLONGI); 
EUR/CACEN (JMUDGE) 
 
E.O. 12958: N/A 
TAGS: SNAR, ASEC, KCOR, KCRM, PREL, KZ, Money Laundering, Law Enforcement 
SUBJECT: KAZAKHSTAN: DECISION ON ANTI-MONEY LAUNDERING LAW 
POSTPONED UNTIL MARCH 2006 
 
 
1. Summary: The anti-money laundering and counter terrorism 
financing law under consideration in the Mazhilis (lower 
house of Parliament) will not be passed by the end of 2005 
as was previously planned, and was deferred until March 
2006.  The draft law generated questions from legislators 
about the legitimacy of the connection between money 
laundering and terrorism financing.  We have heard that 
representatives of the Parliament's Committee on Economic 
Reform and Regional Development, as well as Transparency 
International, World Bank and local commercial banks, also 
felt that the law had several shortcomings.  This contrasts 
with the positive opinion of the law held by the Procurator 
General's Office (PGO).  Parliamentarians decided to study 
the law until March before making any decisions.  End 
Summary. 
 
2. The draft law on "Combating Legalization (Laundering) of 
Illegitimate Proceeds and Financing of Terrorism" was 
presented to the government on August 10, 2005 and forwarded 
to parliament in late September.  On December 7, a 
representative of the Procurator General's Office informed 
post that the decision on the draft by the Mazhilis was 
postponed until March 2006. 
 
3. The draft anti-money laundering law generated many 
questions among parliamentarians.  According to the local 
press, some parliamentarians did not see any connection 
between money laundering and terrorism financing, an 
integral part of the bill.  In a recent newspaper article 
one legislator expressed a view that terrorism financing was 
included into the draft merely to push it through the 
Parliament.  (Note: A series of seminars and round tables 
were organized by the international community, including 
INL, to educate financial institutions as well as 
parliamentarians on AML in general and the draft law in 
particular.  These events were intended to increase 
awareness about international standards and requirements of 
the Financial Action Task Force on Money Laundering (FATF) 
among legislators and future implementers of the law.  End 
Note.) 
 
4. Despite the efforts of the Procurator's Office and the 
international community to draft an adequate law, we have 
heard reservations from representatives of the Parliament's 
Committee on Economic Reform and Regional Development, as 
well as Transparency International, World Bank and local 
commercial banks.  The PGO did not share this viewpoint. 
The Director of Transparency International, for example, 
pointed out that Kazakhstani Financial Intelligence Unit 
(FIU) will be a financial monitoring agency created under 
the PGO.  At the same time the PGO has oversight over all 
state agencies, including the future FIU.  In other words, 
the PGO will be overseeing its own monitoring activities. 
Also according to the local press, many parliamentarians 
believe that the draft will not be passed without 
significant changes. 
 
5. The PGO official said that parliamentarians decided to 
take more time to study the law before making any decisions. 
They plan to meet once a week before March 2006 to discuss 
the draft in detail.  The PGO has approached INL regarding 
possible training on anti-money laundering for the 
parliamentarians, employees of the PGO, the National Bank 
and the Agency on Regulation and Oversight of the Financial 
Market and Financial Organization of Kazakhstan.  We intend 
to provide this in the coming months.  (Note: To fill this 
requirement, INL has several training sessions scheduled in 
the coming months. End Note.)  The PGO has told us that, as 
the main drafter of the law, it intends to work closely with 
the Parliament to ensure its passage in March. 
 
 
ORDWAY