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ASTANA FINANCIAL SERVICES AUTHORUTYUNDERSTANDING ANTI-MONEYLAUNDERING, COUNTER - TERRORISTFINANCING COMPLIANCEREQUIREMENTS

SESSIONOBJECTIVEAn overview of AstanaInternational Financial Centre(AIFC) Anti-Money Launderingand Counter - Terrorist Financing(AML/CTF) Regulations andRequirements

A Centre Participant should exercise due care toensure that it does not provide services to, orotherwise conduct business with, a personengaged in money laundering, terrorist financingor the financing of weapons of mass destruction.

MONEYLAUNDERINGMoney laundering is the process ofmaking illegally-gained proceeds(i.e., "dirty money") appear legal(i.e., "clean"). Typically, it involves threesteps: placement, layering, andintegration. First, the illegitimate fundsare furtively introduced into thelegitimate financial system. Then, themoney is moved around to createconfusion, sometimes by wiring ortransferring through numerous accounts.Finally, it is integrated into the financialsystem through additional transactionsuntil the "dirty money" appears "clean.“United States Treasury Department

FINANCING OFTERRORISMTerrorism financing refers to activitieswhen any person by any means,directly or indirectly, unlawfully andwillfully, provides or collects funds withthe intention that they should be usedor in the knowledge that they are to beused, in full or in part, in order to carryout an act of terrorism.International Convention for theSuppression of the Financing ofTerrorism

ANTI-MONEY LAUNDERING,COUNTER - TERRORIST FINANCINGLEGISLATIVE AND REGULATORY ACTS(AML ACTS)

The Law of the Republic ofKazakhstan on Counteractinglegalisation (laundering) ofproceeds obtained throughcriminal means and financing ofterrorism (AML Law)The Criminal Code of the Republicof KazakhstanAstana International FinancialCentre Anti-Money Laundering,Counter - Terrorist Financing andSanctions RulesThe Resolution of the Government ofthe Rep. of Kazakhstan “On approvalof the Rules for the provision byreporting entities of data andinformation on transactions subject tofinancial monitoring and the signs ofdetermining a suspicious transaction”The Order of the Minister ofFinance “On approval of the List ofdocuments required for customerdue diligence by entities offinancial monitoring”The Order of the Minister of Finance“On approval of the list of the offshorezones for the purposes of the Law ofthe Republic of Kazakhstan onCounteracting legalization (laundering)of proceeds obtained through criminalmeans and financing of terrorism”The Order of the Minister ofFinance “On approval of therequirements to financialmonitoring entities on trainingand education of employees”

Offences andpunishmentsCriminal Codeof theRepublic ofKazakhstanArticle 218.MoneyLaundering A fine A custodialsentenceand/or Confiscationof assetsArticle 258.Financing ofTerrorism A custodiansentence and Confiscationof assets.

AstanaFinancialServicesAuthority Financial Services Capital Market Activities Ancillary Services

AstanaFinancialServicesAuthority Regulation Control Supervision

Aml ActsApply To Authorised Firm Authorised MarketInstitution Designated Non-FinancialBusinesses and Professionals Registered Auditor

MoneyLaunderingReportingOfficerImplementationof AMLrequirementsAppropriatelevel ofSeniorityComplianceOversightIndependenceto act in theRole

A Centre Participants AML/CTF obligations

MAJOR AML/CTF COMPONENTSMoneyLaunderingReportingOfficerKnow mersTransactionsAML RegulationsRisk-basedapproachKnow yourcustomerConstantsanctionsscreening:customerand UBOCDDEnhancedCDDOn-goingCDDRecord keepingTraining and awarenessReview and assessment ofAML systems and controlsKnow esholdtransactionmonitoringand ansactionsInvestigationReporting tothe FIUReporting tothe AFSA

Risk-basedApproachIdentify AMLRisksAssess therisksEstablish andmaintainproceduresMitigate andmanage therisks

Continuous processRiskmanagementRegular reviewRecord keeping

Business riskassessmentRisk-basedApproachCustomer riskassessment

A Centre Participant must: (a)undertake a risk-basedassessment of every customer (b)assign the customer arisk rating proportionate tothe customer's moneylaundering risksThe customer risk assessmentmust be completed prior toundertaking Customer DueDiligence for new customers,and where, for an existingcustomer, there is a materialchange in circumstances.

Customer Due DiligenceHigh riskMediumriskLow riskEnhanced Due DiligenceStandard Due DiligenceSimplified DueDiligence

A Centre Participantmust apply CustomerDue Diligence measureswhen it is establishing abusiness relationshipwith a customerafter establishing abusiness relationshipwith a customer

Identity ofthe customerBeneficialownersSources offundsSources ofwealthCustomerDue Diligence

CustomerIdentificationInformationFor A NaturalPerson Full name (including any alias) Date of birth Nationality Legal domicile Current residential address (not a P.O. box)

CustomerIdentificationInformationFor a LegalPerson Full business name and any trading name Registered or business address Date of incorporation or registration Place of incorporation or registration A copy of the certificate of incorporation orregistration A valid commercial or professional licence The identity of the directors, partners, trusteesor equivalent persons with executive authorityof the legal person A certified copy of the trust deed to ascertainthe nature and purpose of the trust anddocumentary evidence of the appointment ofthe current trustees

EnhancedCustomerDue DiligenceVerificationApproval of SeniorManagement

Ensure transactions consistency with thecustomer and its business Enquire background and purpose ofOn-goingCustomerDueDiligencetransactions Study complex and unusual transactions Study transactions wit no apparent orvisible economic or legitimate purpose Review and update CDD information Review the AML risk of the customer

PoliticallyExposedPerson Increase the degree andnature of monitoring of thebusiness relationship Approval of seniormanagement to commence abusiness relationship with thecustomer

ProhibitionsIn failure to conduct CDD do notcarry out a transactionopen an account or otherwise provide a serviceotherwise establish a business relationship orcarry out a transactiondo terminate or suspend any existing businessrelationship with the customer return any monies or assets received from thecustomer make a SAR if necessaryIn failure to identify beneficial owners do notestablish a business relationship with a customer

Do not establish or maintain abusiness relationship with aShell BankProhibitionsDonottipoffthecustomer that he is or mightbe the subject of a suspicion

SanctionsScreening1. Committee on financialmonitoring of the Ministryof Finance of the Republicof Kazakhstan Lists2. The United NationsSecurity Council SanctionsAppropriate stepsaccording to AML Law incase of hits againstSanctions Lists

Links To TheSanctions Lists ndividuals-associa/ solidated-list

Suspend debit operations on banking account of suchorganization or individual, as well as on banking accounts of aclient, the beneficiary owner of which is such individualSteps in caseof hits againstSanctions Lists Suspend the execution of instructions on payment or moneytransfer without the use of the banking account of suchindividual, as well as instructions of a client, the beneficiaryowner of which is such individual Block securities in a system of registers of securities holders andaccounting system of nominal holding of such organization orindividual on separate accounts, as well as on separate accountsof the client, the beneficiary owner of which is such individual; Refuse to conduct other operations with money and (or) otherproperty committed by such organization or individual, or intheir favor, and equally by a client, the beneficiary owner ofwhich is such individual, or in his (her) favor File a report to the FIU

Reporting ObligationsThreshold TransactionSuspicioustransaction/activity

ThresholdTransactionMonitoringSubject to thealgorithms ofthreshold transactionmonitoringprocedures:Transaction type(article 4 of AML Law)Transaction amount

Transaction amountTransaction frequencySuspiciousTransactionMonitoringSubject to thealgorithms andsensitivity of suspicioustransaction monitoringprocedures:Transaction purposeCustomer behavior andprofileTransactioncounterparty

Screen transactions forsuspicious indicatorsHow toidentify aSuspicion?Ask the customerappropriate questionsIf the activity is consistentwith the customer profile?Evaluate all information: Isthe transaction suspicious?

Record keepingFINALPROVISIONSAML TrainingAudit obligationsAFSA AML Return

Frequently Asked Questions

1. Where to find a list of suspicious activity indicators associated with moneylaundering and terrorist financing?The list is approved by the Resolution 1484, however it should not be consideredexhaustive. The Centre Participant should maintain its own list in accordance withthe Participant’s experience and knowledge. The Centre Participant shouldunderstand that the high-risk and non-cooperative countries, countries, commonlyassociated with international crime, high level of corruption, terrorist activities ordrug trafficking, and PEPs might expose the Participant’s business to engaging inmoney laundering or terrorist financing.

2. What questions should be raised to the customer?Ask the customer about the purpose of the transaction and related documents toverify the truth of the statement and to consider whether the transaction amountsatisfies, to a reasonable and legitimate explanation, the activity. Ask the customerabout identities of connected counterparties and information about theirbusinesses. If the customer refuses, hesitates, is unwilling to answer the questions,becomes defensive and non-cooperative, decides to terminate the businessrelationship, this may indicate a suspicion.

3. When to submit a Threshold Transaction Report to the FIU?No later than one business day after the date of the transaction.4. When to submit a Suspicious Transaction Report to the FIU?For the purpose of prevention and suppression of the facts of legitimization(laundering) of incomes received by illegal means, and financing of terrorism, uponrecognition of a transaction as suspicious, the Centre Participant must report onsuch transaction to the FIU immediately before its conduct; the report onsuspicious transactions that may not be suspended shall be provided by the CentreParticipant to the FIU no later than three hours after their commission or withintwenty four hours from the date of detection of such operations. The report ontransaction recognized as suspicious after its commission shall be provided by aCentre Participant to the FIU no later than one business date next to the date ofrecognition of such transaction as suspicious.

5. What to Report in a Transaction Report to the FIU?All reports to the FIU must be submitted in electronic XML format and in a formwith the logical and structural fields formats in accordance with Annex 1 to theRules for the provision by entities of financial monitoring of data and informationon transactions subject to financial monitoring.This form of the report includes the following sections of information: Information on report itself (number, date and etc.); Information about reporting entity; Information about transaction; Information on transaction participant(s).The Centre Participant should write about the reason why the transaction issuspicious in the field of additional information of the form (that is in informationabout transaction section).

6. What a Request on additional information?The Centre participant may receive a request on additional information from theFIU. The number of days during which the Centre participant should answer will begiven in the request itself.See more on:1. http://adilet.zan.kz/rus/docs/P12000014842. http://adilet.zan.kz/rus/docs/V1500011569