The Central Bank’s supervision will extend to financial groups, in addition to individual financial institutions.
“Elchi” reports that this is reflected in the proposed amendments to the law “On the Central Bank of the Republic of Azerbaijan,” discussed at today’s session of the Milli Majlis.
According to the draft, Article 48-1 (Prevention of Money Laundering and Terrorist Financing) is proposed to be presented in a new edition.
The draft was prepared based on the FATF’s 26th and 27th Recommendations in the report of the European Council’s Committee of Experts on the Evaluation of Anti-Money Laundering and Counter-Terrorist Financing Measures (MONEYVAL) on the 5th round of evaluation of the system for combating money laundering and terrorist financing (AML/CFT) in the Republic of Azerbaijan.
According to the draft, the Central Bank’s supervision will extend to financial groups, in addition to individual financial institutions. Consolidated, i.e., group-wide, supervision will be carried out over financial groups including banks, local and foreign insurance companies engaged in life insurance business, reinsurers and insurance intermediaries, investment companies, investment funds and their managers, as well as representative offices of foreign investment funds. The risk profiles of financial institutions and financial groups in the area of money laundering and terrorist financing, including risks of non-compliance with legal requirements, will be periodically assessed.
When a financial institution is reorganized, beneficial owners change, or changes occur in the types of activities, customer group, or geographical scope of operations, the risk profile will be reassessed. A re-evaluation will also be conducted if the intensity or amount of operations increases by 40 percent or more compared to the previous calendar year.
The Central Bank will determine the periodicity and intensity of supervisory measures, taking into account the risk profile, policies, internal rules, control mechanisms, and procedures of the financial institution or financial group. In this regard, country-level risks of money laundering, terrorist financing, and proliferation of weapons of mass destruction and its financing will also be considered.
When determining the periodicity and intensity of supervision, the characteristics of financial institutions and financial groups, the diversity and number of financial institutions, as well as the extent of their authority granted by normative acts within the framework of a risk-based approach will be assessed.
The Central Bank will have the right to request documents and information from financial institutions or financial groups on the basis of a written inquiry for the purpose of implementing supervisory measures. The requested documents and information must be submitted within the period specified in the Central Bank’s inquiry. As a result, the Central Bank’s powers for risk-based supervision and information requests regarding financial institutions and financial groups will be defined more clearly and comprehensively.
After discussions, the issue was put to a vote and adopted in the third reading.