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Senate Discusses Payment System Development as Part of Fighting Shadow Economy

by February 25, 2020 General

The Senate of the Republic of Kazakhstan hosted a meeting with representatives of state authorities on the Issues of the Development of Payment Systems in Kazakhstan in View of the Anti Money Laundering, Disinvestment and Shadow Economy.

The event was attended by deputies of the Senate of the Republic of Kazakhstan, representatives of the Ministry of Finance of the Republic of Kazakhstan, leaders of the National Bank of the Republic of Kazakhstan and the Association of Financiers of Kazakhstan.

The Chairperson of the Committee on Finance and Budget Olga Perepechina in her opening speech noted that the payment systems were currently one of the key elements of the financial system. However, there are always two sides to every coin. The advanced financial technology is used by dishonest people in financing illegal operations, hiding incomes and withdrawing capital abroad, she said.

Deputy Chairperson of the National Bank of the Republic of Kazakhstan Yeszhan Birtanov reported at the meeting and provided general details about payment systems and challenges in this area. In 2019, banks conducted transactions for the amount of 793 trillion tenge via the payment systems, of which 762 trillion tenge (96%) via the payment systems of the National Bank and 31 trillion tenge (4%) via some private payment systems, he said.

Gabit Lesbekov, Deputy Chairperson of the Financial Monitoring Committee, noted that for the period since 2015, the local branches of the National Bank had reported 436 cases to the local financial investigating authorities (FIS) concerning non refund of large amounts in national and foreign currency from abroad for over 554 million US dollars.

Based on the results of the consideration of these requests, FIS registered 321 crimes under Article 235 of the Criminal Code of the Republic of Kazakhstan. Subsequently, 47 criminal cases were completed, of which 4 were sent to court and 43 were terminated for non rehabilitating reasons, he emphasized.

Also, in her report, the Chairperson of the Council of the Association of Financiers of Kazakhstan, Yelena Bakhmutova, noted that the financial institutions in Kazakhstan faced the fact that a large number of transactions were sent to FMC based on a threshold limit; large resources of analysts were distracted, while only a small part might have certain suspicious signs. The wealth of information prevents the effective identification of truly significant issues. At the same time, financial institutions spend a large amount of resources to analyze client transactions to find any suspicious signs and prevent money laundering and terrorism financing, she said.

In the discussion of reports, Deputy Sergey Plotnikov raised the issue of capital outflows and the negative balance of international transfers. Over the past year, 2.6 million transactions were sent abroad for a total amount of 655 billion tenge. From abroad, we received 1.6 million transactions worth 344 billion tenge.

Senator Olga Perepechina particularly emphasized the introduction of the instant payment system and how beneficial it would be for business entities. Experts said that the system involved making payments via a mobile application and via QR codes and it would be an alternative to the current payment system. The main problem is that all payments are currently processed in the international payment systems, such as Visa, Mastercard, said Y. Birtanov.

Senator Baktybay Chelpekov drew attention to the development of entrepreneurship and asked about the possibility of reducing the fee for entrepreneurs to pay for goods with bank cards, since the fee is too high for the merchants. Small and medium sized businesses are not afraid of POS terminals or cash registers they don’t want to pay too much. They are not trying to escape from transparency, they are escaping from that interest.

Deputy Nurlan Kylyshbayev emphasized the need to raise digital and financial literacy of the population and entrepreneurs. The entrepreneurs of small and medium and micro business entities should show their interest. In the regions, entrepreneurs are not aware of all the advantages and possibilities of non cash payments. The villages have a completely different system people receive money paid to their cards, withdraw it from ATMs and spend only in cash.

According to experts, this situation can be resolved by searching for alternatives and opportunities for using non cash payments in the countryside.

Summing up the meeting, Senator Olga Perepechina noted that despite the fact that some efforts had been taken to combat money laundering, disinvestment and shadow economy, there was not enough coordination between the regulatory authorities in this area. We focus on large transactions, on the identification of illegal operations, such as terrorism financing, smuggling, shadow schemes to withdraw stolen capital abroad, we are looking for large amounts. However, our business community should also be in the full glare. It is still true that many retail outlets fail to print out receipts sometimes, and this is a shadow turnover, summarized O. Perepechina

Source: Mazhilis of the Parliament of the Republic of Kazakhstan