Dirty Dancing

Kyrgyzstan undertook to combat criminal money laundering and financing of terrorism.

Is Kyrgyzstan a big laundry?

Kyrgyzstan may fall short to combat financing of terrorism and money laundering. Laden with Bin Laden Kyrgyzstan is called the laundry for money of terrorist and extremist organizations, some sources say. At last the attempts to launder dirty assets have been cotentiously made. Nur Omarov, the head of the Association of Politicians in Kyrgyzstan, was the first  to make the like statements. He did name some definite amounts.

Nur Omarov said that some Wahhabi crime groups intended to allocate $5 bln to implement projects targeting at the islamization of Kyrgyzstan. The amount was likely to come from Saudi Arabia. Besides, the politician pinpointed that the presidential top team had been pursuing islamization policy for an indefinite time but for quite different reasons.

The actual situation turned out to be more serious, than one could suppose. According to the financial intelligence unit, even notorious Al-Qaeda labeled a terrorist organization put the eye on Kyrgyzstan.

The unit was informed about the suspicious transactions owing to close cooperation with financial institutions. Both banks, insurance and leasing companies as well as pawn-shops are obliged to snitch on distrustful clients. According to the current legislation, financial intelligence unit shall monitor each transaction exceeding 1 mln soms. As far as the real estate is concerned, the minimum threshold makes up 4.5 mln soms.

However, the Financial Action Task Force on Money Laundering says it is extremely difficult to trace the real cash flows of the extremist organizations as the Muslim extensively practice 'haval', that is transferring money with mediators.

Kyrgyz Cosa Nostra

Extremists and terrorist crime groups did not break the path of the Kyrgyz offshore. Over ten Russian banks were suspended licenses for setting links with Kyrgyz banks in the last months. The drastic measures were triggered by the obvious violation of the Russian Law on combating money laundering and financing of terrorism.

International organized crime benefited from the openness of the local economy. Even Italian Cosa Nostra allegedly had some authorized representatives in Kyrgyz business circles. However, drug rings operating in Kyrgyzstan pose the main threat. Illegal drug trafficking in Kyrgyzstan is understood to exceed 35 tons. Half of the potion stems from Afghanistan. Some experts do claim that the drug trafficking influences immensely both Kyrgyz politics and economy. The Tulip revolution is attributed to the achievements of the drug rings.

Unofficial data shows that drug rings have been long laundering money in local business markets. Moreover, some drug ringleaders attempt legalizing their incomes by investing various projects, mainly those related to the real estate. With the millions in pockets they are backed by top team officials and law enforcement servicemen. Recently uncovered official power abuses in the Interior Department seem as the tip of the iceberg.

Grey cardinals

Kyrgyzstan undertook to combat criminal money laundering and financing of terrorism. The state joined the Eurasian Group on combating money laundering and financing of terrorism (EAG) -- A number of international organizations like the World Bank and International Monetary Fund gained an observer status in the EAG.

Law on combating money laundering and financing of terrorism has been adopted in the state. The draft project was heatedly debated. The article on 'suspicious transactions and operations' raised a rush of indignation. The lawmakers pondered over the minimum financial threshold.

The one that should be overcome to place the offender under deep control of the financial intelligence. The initial minimum financial threshold made up 500 thousand soms. However, the lawmakers sought for a twofold increase.

The legal base of the state still needs upgrading, the head of the financial intelligence unit claims. The former Parliament hung up the set of draft projects submitted by the financial intelligence unit. The obligation to consider the drafts transferred to the new Parliament. Meanwhile, the financial intelligence unit has elaborated 12 new draft laws.

However, it is too naive to expect the reform to pay off immediately. The Finance Ministry says that over 53 percent of the entrepreneurs are still operating in the shade in Kyrgyzstan. Unfair taxation and pressure on the part of supervisory bodies force the entrepreneurs to hide their incomes and give rise to the illegal practices.

Capital amnesty as well as other efforts undertaken by the state to legalize the economy failed. The experts suppose that non-cash transactions and contraction of the offshore cash volumes could have eased the fight with money laundering and financing of terrorism. Excessive volumes of cash outside the banks nurture corruption, palm-greasing and organized crime. Conversely, lack of confidence in financial institutions hinders evolving of sound non-cash settlement operations and curbing of spaces for 'monetary launders'.

Source:The Times of Central Asia