Azerbaijan’s Milli Majlis (National Assembly) has approved in its third and final reading an expansion of the Central Bank of Azerbaijan’s (CBA) powers to supervise financial institutions.
“Operative Information Center-OMM” reports that a draft law amending the Law on the Central Bank of the Republic of Azerbaijan was discussed at today’s plenary session of parliament.
Under the bill, the CBA will periodically assess the risk profiles of financial institutions and financial groups in relation to preventing money laundering and terrorist financing, including the risks of non-compliance with the requirements of the Law on Combating the Legalization of Property Obtained by Criminal Means and the Financing of Terrorism.
The assessment will also be repeated when significant changes occur in the management or operations of a financial institution or the financial group to which it belongs. Such changes include reorganizations, changes in beneficial owners, changes to an institution’s activities, customer base or geographic reach, and an increase of 40% or more in the intensity or value of transactions compared with the previous calendar year.
The frequency and intensity of supervisory measures by the CBA will be determined taking the following 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 money laundering, 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 variety and number of financial institutions and the degree of authority granted to them under regulatory acts within a risk-based approach.
Consolidated supervision for the purposes of combating money laundering and terrorist financing will apply to financial groups that include banks; domestic and foreign insurers engaged in life insurance with savings features; reinsurers and insurance intermediaries; investment companies and investment funds and their managers; and representative offices of foreign investment funds.
Under the bill, the CBA’s supervision will cover not only individual financial institutions but also the financial groups to which they belong.
Consolidated supervision, covering the entire group, will apply to financial groups that include banks; domestic and foreign insurers engaged in life insurance with savings features; reinsurers and insurance intermediaries; investment companies and investment funds and their managers; as well as representative offices of foreign investment funds.
The CBA will be entitled to request documents and information in writing from financial institutions or financial groups for supervisory purposes. The requested documents and information must be submitted within the period specified in the CBA’s request. The bill will thus define more clearly and comprehensively the CBA’s powers to conduct risk-based supervision of financial institutions and groups and to request information from them.
Following debate, the bill was put to a vote and adopted in its third reading.
