The money laundering and terrorist financing risk assessment is Kyrgyzstan's priority

The State Financial Intelligence Service under the Government of Kyrgyzstan (hereinafter "SFIS") has begun preparations for the assessment of the money laundering and terrorist financing risks faced by Kyrgyzstan (hereinafter "the national risk assessment").

This work is being carried out in compliance with Article 11 of RK Law "On Combating Money Laundering and Terrorist Financing" No. 87 of August 6, 2018, and RK Government Resolution No. 606 dated December 25, 2018.

Following the mutual evaluation of Kyrgyzstan's AML/CFT system, the Eurasian Group on Combating Money Laundering and Financing of Terrorism recommended Kyrgyzstan to take the following priority measures:

1) to initiate a more thorough and in-depth national risk assessment with full participation of all stakeholders, paying attention to ML/TF methods used in practice;

2) to develop a national strategy, set priorities and introduce the risk-based AML/CFT supervision that takes into account the identified ML/TF risks.

President of Kyrgyzstan S Sh. Jeenbekov, at the January 18 meeting with SFIS Chairman G S. Anarbaev, called for the intensification of the efforts to eliminate the shortcomings identified in the mutual evaluation.

To this end, SFIS has held talks with representatives of the European Union and agreed to conduct a national risk assessment and develop a national strategy in the first half of 2019. This work will be carried out with technical support from the EU Action against Drugs and Organized Crime project.

From February 4 to 8, 2019, SFIS hosted meetings with representatives of 21 Kyrgyz government agencies, including law enforcement and regulatory authorities. Participants discussed issues related to the national risk assessment and development of a national strategy with account for the best standards and practices in this area. 

SFIS expressed its support for the EU Regional Project Coordinator's initiative to invite the international expert Todor Kolarov (Bulgaria), who made presentations and outlined the main steps for conducting a national risk assessment and developing a national strategy.

The meetings ended with the adoption of the decision to study the guidance papers used by foreign countries and international organizations and develop a national risk assessment methodology.

In their speeches during the meetings, SFIS senior staff and representatives of government agencies highlighted the importance of conducting a national risk assessment and developing a national strategy.

G S. Anarbaev, SFIS chairman:

"Kyrgyzstan is currently subject to the EAG enhanced follow-up process, meaning that the issues of conducting a national risk assessment and developing a national strategy take priority for Kyrgyzstan.

The use of the risk-based approach to strengthen the AML/CFT national system has become the focus of attention around the world in recent years.

The national risk assessment enables countries to identify the key shortcomings in their AML/CFT system, set priorities for further improvements in this system and efficiently allocate the available human and financial resources.

At the same time, many countries, including Kyrgyzstan, experience difficulties in selecting or developing a national risk assessment methodology.

Although conducting a national risk assessment remains a difficult task, the development of a systemic approach to data gathering and analysis can help overcome many challenges, enabling us to obtain important and necessary for the NRA information.

To this end, the interagency working group should, first and foremost, develop and approve a national risk assessment guidance, taking into account international best practices and the views of all stakeholders."

Ch T. Kenenbaev, SFIS state secretary:

"Pursuant to Article 11, paragraph 2 of part 2, of RK Law "On Combating Money Laundering and Financing of Terrorism" No. 87 of August 6, 2018, entities engaged in the fight against money laundering and terrorist financing shall apply the risk-based approach in the manner stipulated by the RK Government.

Pursuant to part 1 of Article 4 of the said Law, these entities include financial institutions, non-financial businesses, supervisors, and financial intelligence and law enforcement agencies.

In this regard, the proper identification and understanding of the ML/TF risks allows entities to apply effective AML/CFT measures commensurate with the risks identified.

The national risk assessment will help identify the ML/TF threats, vulnerabilities and typologies, as well as assess the volumes of criminal proceeds and other factors undermining the financial security and stability of Kyrgyzstan.

The national risk assessment will be conducted with the involvement of representatives of the business community and non-profit organizations.

The NRA findings will feed into the development of an action plan (strategy) to mitigate the identified ML/TF risks, to be used as a guidance for applying the risk-based approach."

K T. Belegenov, prosecutor of the Office of Intelligence Gathering and Investigation Supervision, RK General Prosecutor's Office:

"Kyrgyzstan, as a member of the Eurasian Group on Combating Money Laundering and Financing of Terrorism, has to comply with international standards embodied in the 40 FATF Recommendations.

According to FATF Recommendation 1, countries should conduct an ongoing assessment of the money laundering and terrorist financing risks, as such an assessment will help identify the most frequently used money laundering and terrorist financing methods, detect weak spots in the national anti-money laundering and terrorist financing system, develop specific measures and allocate resources needed to mitigate the risks identified. 

In this regard, a national risk assessment will be highly appropriate and beneficial to Kyrgyzstan's law enforcement agencies."

B K. Akkaziev, researcher at Kyrgyzstan's National Institute for Strategic Studies:

"The national AML/CFT system helps strengthen national security and stability of the financial sector.

For this reason, it is important to have a deep understanding of the factors conducive to the emergence of money laundering and terrorist financing risks in the country. 

The national risk assessment will enable authorities to identify the main areas of illegal financial activities that need special attention, and detect the biggest vulnerabilities in the national AML/CFT system."

T Kolarov, international expert:

"At the meeting, we clarified the purpose of the national risk assessment, how to conduct it and what key factors one needs to pay attention to. The findings of the national risk assessment depend on good organization and hard work. According to the FATF Recommendations, when assessing risk, it is important to use qualitative and quantitative indicators derived from statistics and expert opinions.

There is no one-size-fits-all approach to conducting a nation risk assessment available at the moment. Instead, we have the FATF national risk assessment guidance. Still, the FATF recommends each country to develop its own methodology."

In conclusion, it should be noted that the interagency meeting was organized and held with assistance from the EU Action against Drugs and Organized Crime project. 

According to the regional project coordinator, José Mate, there are plans to use the project capabilities to provide expert support in conducting a national risk assessment and developing a national strategy.

State Financial Intelligence Service under the Government of Kyrgyzstan