Uzbekistan

CENTRAL AUTHORITY FOR REPORTING

OTHER ANTI-MONEY LAUNDERING REGULATOR(S)

• The Central Bank of Uzbekistan (CBU);
  
  
• The National Security Service (NSS);
  
  
• The Department of Investigation of Economic Crimes within the Ministry of Internal Affairs (MVD);
  
  
• The Department on Tax, Currency Crimes and Legalisation of Criminal Proceeds.

ARE LAWYERS COVERED BY ANTI-MONEY LAUNDERING LEGISLATION?

Lawyers are only indirectly covered by anti-money laundering legislation.

Article 12 of the Law on Anti-Money Laundering and Combating the Financing of Terrorism (“AML/CFT Law”), which lists the covered business and professions, does not include lawyers. Rather, it applies only to:

• Banks, credit unions and other lending organisations;
  
  
• Investment funds, depositaries and other types of investment institutions;
  
  
• Exchange houses;
  
  
• Insurance companies;
  
  
• Leasing and other financial institutions;
  
  
• Post service organisations;
  
  
• Pawnshops;
  
  
• Lottery organisations and gaming houses; and
  
  
• Notarial offices (notaries public).

Nevertheless, lawyers might still be caught by Article 41 of the Law on Narcotic Drugs and Psychotropic Substances (1999), which stipulates that any institution may be closed for performing a financial transaction for the purposes of legalising (laundering) proceeds derived from illicit narcotics trafficking.

LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS.

• Law on Anti-Money Laundering and Combating the Financing of Terrorism, 2004;
  
  
• Law on Narcotic Drugs and Psychotropic Substances (1999);
  
  
• The Law on Banks and Bank Activity (1996);
  
  
• Criminal Code.

The US Department of State’s Bureau of International Narcotics and Law Enforcement Affairs in its 2009 International Narcotics Control Strategy Report (INCSR) reported that in 2004 Uzbekistan enacted a basic AML/CTF regime that contained a range of AML/CTF provisions, including CDD, record keeping, reporting, and the establishment of an FIU. While the AML/CTF law went into effect on January 1, 2006, important parts of the law were repealed pursuant to several presidential decrees and an additional law. In particular, provisions relating to suspicious transaction reporting, CDD, information gathering, and the FIU were suspended until 1 January 2013.

In addition, pursuant to a February 2008 decree that expires on 1 April 2009, banks are prohibited from inquiring into customers’ source of funds and providing customer information to any government authorities.

Specifically, the Presidential Decrees had the effect of rescinding the main legislative provisions as follows:

• Presidential Decree No. PP-565 of 12 January 2007 suspended the obligation of covered entities to report to the FIU information about threshold financial transactions (i.e., cash transactions above U.S. $40,000 (approximately), and suspicious transactions), and further subjects such reports to legislation on bank secrecy;
  
  
• Presidential Decree No. PP-586 of 20 February 2007 suspended all AML/CTF Presidential and Cabinet of Ministers Decrees until 1 January 2013. It rescinds the various authorities provided to the FIU including the authority to establish a financial intelligence system, monitor financial and property transactions, identify money laundering and terrorist financing mechanisms and channels, share information on identified crimes with law enforcement agencies for criminal prosecution, cooperate and exchange information with foreign agencies and international organizations on AML/CTF issues based on Uzbekistan's international obligations and agreements ;
  
  
• Presidential Decree No. PP-586 also suspends the Cabinet of Ministers Regulations on the creation of the FIU database and the reporting procedure. Law RU-94 of 27 April 2007 suspends Articles 9 and 13-16 of the main AML/CTF Law which correspond to these FIU authorities and include all of the covered entities’ obligations regarding customer identification/due diligence, threshold transaction reports, suspicious transaction reports and internal control requirements. However, Article 21 on record keeping remains in place.

Separately and in addition, on 20 February 2008, the Government of Uzbekistan issued Decree No. YP-3968 that expires on 1 April 2009. This decree imposes blanket bank secrecy within the Uzbek financial system for natural persons—residents of Uzbekistan. It prohibits financial institutions from requesting background information from customers making deposits and transferring money from abroad into Uzbek banks; and further prohibits financial institutions from providing such information with respect to those customers to any governmental authorities.

The express purpose of this decree—as stated in its preamble—is to reinforce people’s confidence in the banking system, reduce the volume of cash transactions that are not made through banks, and create “further incentives to attract people’s idle funds to deposits with commercial banks as a key source of investment resources for rapid development of the country’s economy.”

The Presidential Decrees were detested by the international community. Consequently, Uzbekistan remedied the situation. The United Nations Office on Drugs and Crime (UNDOC) in their 2009 Anti-money Laundering and Countering the Financing of Terrorism (AML/CFT) Newsletter for Central Asia reported that Uzbekistan’s AML/CFT Law was adopted by both chambers of the Parliament and signed by the President in April 2009. On 22 April 2009, this Law came into effect and repealed Articles 9 and 13-16 of the 2007 Presidential Decrees.

The Presidential decree of 20 Feb 2008, which prohibits banks and officials from enquiring into the legality of sources of funds of transactions executed by physical persons, has also lapsed. The 2004 AML/CFT law should therefore now be fully effective, although basic and, as it was stated in the previous box, AML legislation still does not apply to lawyers in Uzbekistan.

Amendments to the other 16 laws were drafted and are currently being discussed between the relevant ministries.

ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?

Visiting lawyers are only subject to local laws indirectly through universal criminal law. Residents and non-residents may bring the equivalent of US $10,000 into the country tax-free.

LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE.

N/A.

IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?

N/A.

DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS. 

The client due diligence requirement does not apply to lawyers.  

DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?

N/A.

ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?

N/A.

ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?

N/A.

ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.

N/A.

WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?

A lawyer is under no duty to report a suspicious transaction. The obligation to report a suspicious transaction applies only to banks.

DOES ATTORNEY/CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS?

N/A.

DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?

The civil indemnity under article 38 of the Law on Banks and Bank Activity (1996) applies only to banks.

ONCE A SUSPICIOUS TRANSACTION REPORT HAS BEEN FILED, IS A LAWYER ALLOWED TO PROCEED WITH THE LEGAL ADVICE/TRANSACTION, AND, IF SO, MUST CONSENT FROM AUTHORITIES BE OBTAINED FIRST? 

N/A.

IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE.

N/A.

DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT.

N/A.

ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE.

Under Article 6 of the AML, the ongoing monitoring requirements for existing clients apply only to banks in terms of record keeping. 

DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION.

Lawyers are affected by general export limits and they should not be involved in transactions which surpass the legal export limit. The law stipulates that residents may export up to the equivalent of US $2,000.

Residents who wish to take out higher amounts must obtain authorisation. Amounts over US $2,000 must be approved by an authorised commercial bank, and amounts over US $5,000 must be approved by the CBU.

International cash transfers to or from an individual person are limited to US $5,000 per transaction. There is no monetary limit on international cash transfers made by legal entities. 

HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?

According to the 2009 International Narcotics Control Strategy Report (INCSR), there have been no cases implicating lawyers. 

HAS THE FINANCIAL ACTION TASK FORCE (FATF) CONDUCTED A MUTUAL EVALUATION OF THIS COUNTRY, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF 40+9 RECOMMENDATIONS?

On 20 June, 16 October 2008 and 25 February 2009, the FATF reaffirmed its statement of 28 February 2008 regarding the risks posed by Uzbekistan. In its last statement the FATF stated that despite the progress undertaken by Uzbekistan to adopt comprehensive measures, concrete measures to address the identified deficiencies have not yet been implemented. The last report can be viewed here.

According to the statement released by the FATF on 26 June 2009, Uzbekistan is still kept on the list of enhanced security.

Though Uzbekistan is currently a member of the Eurasian Group on combating money laundering and financing of terrorism (EAG), a FATF-style regional body uniting Belarus, Kazakhstan, China, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan, there has been no Mutual Evaluation on Uzbekistan conducted by the EAG to date.

On 24-25 June 2008, a joint FATF-EAG High-Level/Technical Mission to Uzbekistan took place. The Uzbek authorities acknowledged that FATF’s concerns were reasonable and committed to instituting an AML/CTF regime that meets international standards by enacting necessary legislation within 6 months. However, this has not been achieved. 

Prepared by:

Kexian Ng
Commercial Law Intern
International Bar Association
10th Floor, 1 Stephen Street
London W1T 1AT