Azerbaijan’s Milli Majlis (National Assembly) has passed at first reading a bill to expand the Central Bank of Azerbaijan’s (CBA) authority to oversee financial institutions.
Operative Information Center-OMM reports that amendments to the Law on the Central Bank of the Republic of Azerbaijan were discussed at today’s plenary session of parliament.
Under the bill, the CBA would periodically assess the risk profiles of financial institutions and financial groups in relation to preventing the legalization of property obtained through crime and the financing of terrorism. The assessments would also cover risks of non-compliance with the requirements of Azerbaijan’s Law on Combating the Legalization of Property Obtained Through Crime and the Financing of Terrorism.
The CBA would repeat an assessment if significant changes occurred in the management or operations of a financial institution or its financial group. These include a reorganization, a change in beneficial owners, changes in the institution’s business activities, customer base or geographical scope, or an increase of 40% or more in the intensity or value of transactions compared with the previous calendar year.
The frequency and intensity of the CBA’s supervisory measures would be determined taking into account:
- risks identified through assessments of financial institutions’ or financial groups’ risk profiles, as well as their policies, internal rules, control mechanisms and procedures;
- risks at the national level related to the legalization of property obtained through crime, terrorist financing, the proliferation of weapons of mass destruction and the financing of proliferation;
- the characteristics of financial institutions and/or financial groups, including the diversity and number of institutions and the scope of the powers granted to them by regulatory acts under a risk-based approach.
For anti-money laundering and counter-terrorist financing purposes, consolidated supervision would apply to financial groups that include banks; domestic and foreign insurers engaged in life insurance with an accumulated savings component; reinsurers and insurance intermediaries; investment companies; investment funds and their managers; and representative offices of foreign investment funds.
Under the bill, the CBA’s supervision would cover not only individual financial institutions but also the financial groups to which they belong.
Consolidated supervision, covering the entire group, would apply to groups that include banks; domestic and foreign insurers engaged in life insurance with an accumulated savings component; reinsurers and insurance intermediaries; investment companies; investment funds and their managers; and representative offices of foreign investment funds.
The CBA would be entitled to request documents and information in writing from financial institutions or financial groups for supervisory purposes. The requested materials would have to be submitted within the deadline specified in the CBA’s request. The amendments would clarify and broaden the CBA’s risk-based supervisory powers and its authority to request information from financial institutions and groups.
Following debate, lawmakers put the bill to a vote and passed it at first reading.
