The Central Bank of Azerbaijan (CBA) is expected to supervise not only individual financial institutions but also the financial groups to which they belong.
Operative Information Center-OMM reports that the provision is included in a draft law amending the law on the Central Bank.
The document was discussed at today’s meeting of the Economic Policy, Industry and Entrepreneurship Committee of Milli Majlis (National Assembly).
The draft law was prepared based on Recommendations 26 and 27 of the Financial Action Task Force (FATF), as reflected in the fifth-round mutual evaluation report by the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) concerning Azerbaijan’s system for combating money laundering and terrorist financing. Under the draft, consolidated supervision covering entire financial groups will be conducted for groups comprising banks; domestic and foreign insurers engaged in life insurance savings activities; reinsurers; 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 areas of money laundering and terrorist financing, including risks related to non-compliance with legislation, will be assessed periodically.
If a financial institution is reorganized, its beneficial owner changes, or changes occur in its activities, customer group or geographical area of operation, its risk profile will be reassessed. A reassessment will also be conducted if the intensity or volume of transactions increases by 40% or more compared with the previous calendar year.
The CBA will determine the frequency and intensity of supervisory measures by taking into account the risk profile, policies, internal rules, control mechanisms and procedures of the financial institution or financial group. It will also consider country-level risks related to money laundering, terrorist financing, the proliferation of weapons of mass destruction and the financing of proliferation. When determining the frequency and intensity of supervision, the characteristics of financial institutions and financial groups, the diversity and number of financial institutions, and the scope of powers granted to them by regulatory acts under a risk-based approach will also be assessed.
For the purpose of implementing supervisory measures, the CBA will be authorized to request documents and information from financial institutions or financial groups through written inquiries. The requested documents and information must be submitted within the period specified in the CBA’s inquiry. As a result, the CBA’s powers to conduct risk-based supervision and request information from financial institutions and financial groups will be defined more clearly and comprehensively.
