AIFC RULES ON CURRENCY REGULATION AND PROVISION OF INFORMATION ON CURRENCY TRANSACTIONS IN THE AIFC AIFC RULES No. 6 of 2021 10 November 2021

AIFC RULES ON CURRENCY REGULATION AND PROVISION OF INFORMATION ON CURRENCY TRANSACTIONS IN THE AIFC AIFC RULES

No. 6 of 2021 10 November 2021 Nur-Sultan, Kazakhstan

1. General Provisions

1.1. These rules are the Rules on Currency Regulation and Provision of Information on Currency Transactions in the AIFC (hereafter, the Rules).

1.2. These Rules commence on December 1, 2021.

1.3. These Rules have been developed in furtherance of paragraphs 3 and 5 of Article 5 of the Constitutional Statute of the Republic of Kazakhstan «On the Astana International Financial Centre» No 438-V ZRK of December 7, 2015.

1.4. The provisions of these Rules apply to:

(a) AIFC participants;

(b) AIFC banks;

(c) residents and non-residents of RK carrying out transactions with AIFC participants or using bank accounts opened in AIFC banks;

(d) STBs of RK to the extent of transactions regulated by these Rules.

Transactions that are not regulated by these Rules are carried out by STBs of RK in accordance with the legislation of RK and by AIFC banks in accordance with the Acting Law of the AIFC.

1.5. Definitions

1.5.1. Schedule 1 (Terms and Definitions) contains definitions of the key terms used in these Rules.

1.5.2. Other terms and definitions used in these Rules and not defined by Schedule 1 to these Rules are used in accordance with the definitions stipulated by the Acting Law of the AIFC and the legislation of RK.

1.6. Objectives

The Rules define:

(a) conditions and procedure for currency transactions related to the provision of financial services by AIFC participants;

(b) conditions and procedure for currency transactions related to the provision of professional services by AIFC participants;

(c) conditions and procedure for currency transactions on the territory of the AIFC that do not fall under subparagraphs (a) and (b) of this paragraph;

(d) list of the financial and professional services provided by AIFC participants to residents of RK that are not AIFC participants.

2. Currency Residency in the AIFC

2.1 Currency Residency

For the purposes of these Rules:

(a) AIFC participants are recognised as residents;

(b) natural and legal entities are recognised as residents in accordance with terms and definitions given in Schedule 1;

(c) natural and legal entities are recognised as non-residents in accordance with terms and definitions given in Schedule 1.

3. Rights of AIFC participants, AIFC Bodies and their organisations. Transactions in the AIFC

3.1 Rights of AIFC participants, AIFC Bodies and their organisations

3.1.1 Unless otherwise prohibited under the Acting Law of the AIFC and (or) the legislation of RK, AIFC participants have the right to provide financial and related services to residents that are not AIFC participants only in accordance with Schedule 2 to these Rules.

3.1.2 AIFC participants (except for the AIFC banks), AIFC Bodies and their organisations have the right to:

(a) open bank accounts in foreign banks in any currency and make payments and money transfers using such accounts, subject to the requirements specified under the Acting Law of the AIFC and (or) the legislation of RK;

(b) open bank accounts in AIFC banks (except Islamic banks) in foreign currency only and make payments and money transfers using such accounts, subject to the requirements specified under the Acting Law of the AIFC;

(с) open bank accounts in STBs of RK or in Islamic banks of the AIFC in any currency and make payments and money transfers using such accounts, subject to the requirements specified under the Acting Law of the AIFC and (or) the legislation of RK.

3.1.3 AIFC banks, including Islamic banks of the AIFC, have the right to:

(а) open bank accounts in other banks, including foreign banks, and transfer own funds using such bank accounts in national or foreign currency, subject to the requirements specified under the Acting Law of the AIFC and the legislation of RK;

(b) open bank accounts for residents that are AIFC participants and non-residents, subject to the requirements of subparagraph (b) of paragraph 3.1.4 of these Rules and make payments and (or) money transfers using such accounts, subject to the requirements set out in these Rules;

(с) open correspondent accounts in the STBs of RK in accordance with the procedure established by the legislation of RK and carry out transactions using such correspondent accounts subject to the requirements set out in these Rules and (or) the legislation of RK;

(d) open savings (deposit) accounts in foreign currency for non-residents, and AIFC participants the controlling shareholder (controlling shareholders) of which is non-resident;

(e) carry out transactions envisaged by Schedule 4 to these Rules through their correspondent accounts in national currency in STBs of RK.

3.1.4 AIFC banks (except Islamic banks of the AIFC) are prohibited to:

(a) open bank accounts in the national currency for residents, including AIFC participants and non-residents;

(b) open savings (deposits) accounts for residents, including AIFC participants, except for the case specified in subparagraph (d) of paragraph 3.1.3;

(c) carry out transactions of residents related to export or import of goods (works, services), and (or) transactions subject to assignment of registration number in accordance with the currency legislation of RK;

(d) carry out exchange transactions under instructions of clients using national currency, except for the cases of executing the instructions of clients as part of transactions set out in Schedule 4 to these Rules;

(e) make payments and (or) money transfers with respect to the services which are, under the Acting Law of the AIFC and (or) the legislation of RK, prohibited to be provided by AIFC participants to residents that are not AIFC participants;

(f) provide services to residents that are not AIFC participants, the provision of which by AIFC banks is prohibited in accordance with the Acting Law of the AIFC and (or) the legislation of RK; and

(g) carry out transactions through correspondent accounts in the national currency in STBs of RK that are not in the list set out in Schedule 4 to these Rules.

3.1.5 Islamic banks of the AIFC are prohibited to:

(a) carry out transactions of residents related to export or import of goods (works, services) and (or) transactions subject to assigning of registration number in accordance with the currency legislation of the RK;

(b) carry out exchange transactions under instruction of clients using the national currency;

(c) make payments and (or) transfers of clients' money for the services not related to Islamic financing;

(d) provide services to residents that are not AIFC participants, the provision of which by Islamic banks of the AIFC is prohibited in accordance with the Acting law of the AIFC and (or) the legislation of RK.

3.2 Transactions of AIFC participants

3.2.1 Transactions between AIFC participants are carried out in national or foreign currency, subject to the requirements set out in these Rules.

3.2.2 Transactions between AIFC participants (except AIFC banks) and non-residents are carried out in any currency at the discretion of the parties in accordance with the requirements specified under the Acting Law of the AIFC and (or) the legislation of RK.

3.2.3 Transactions between AIFC participants and residents that are not the AIFC participants are carried out in national or foreign currency in accordance with the requirements specified under the Acting Law of the AIFC and (or) the legislation of RK.

3.3 Provision of financial services by AIFC participants

3.3.1 AIFC banks provide financial services to residents that are not AIFC participants in accordance with the list of financial services set out in Schedule 2 to these Rules, subject to the Acting Law of AIFC and (or) the legislation of RK.

3.3.2 AIFC participants, except AIFC banks, have the right to provide financial services to other AIFC participants and non-residents in accordance with their AFSA licence in national or foreign currency, subject to the following requirements:

- financial services to be rendered in the national currency are provided using the bank accounts of AIFC participants opened in STBs of RK;

- financial services to be rendered in foreign currency are provided using the bank accounts of AIFC participants opened in AIFC banks or STBs of RK.

3.3.3 AIFC participants, (except for the AIFC banks), provide financial and related services to residents that are not AIFC participants in accordance with the list of financial services and in the currency set out in Schedule 2 to these Rules, subject to the Acting Law of the AIFC and (or) the legislation of RK, and in compliance with the following requirements:

- financial and related services to be rendered in the national currency are provided using the bank accounts of AIFC participants opened in STBs of RK;

- financial and related services to be rendered in foreign currency are provided using the bank accounts of AIFC participants opened in AIFC banks or STBs of RK.

3.4 Provision of professional services by AIFC participants

3.4.1 AIFC participants provide professional services to other AIFC participants and non-residents in accordance with the list approved by AFSA, in any currency, subject to the following requirements:

- professional services to be rendered in the national currency are provided using the bank accounts of AIFC participants opened in STBs of RK;

- professional services to be rendered in foreign currency are provided using the bank accounts of AIFC participants opened in AIFC banks or STBs of RK.

3.5 AIFC participants (except AIFC banks) carry out transactions related to export or import of goods (works, services), exchange transactions using the national currency and transactions subject to assignment of registration number in accordance with the currency legislation of the RK, using bank accounts of AIFC participants opened in STBs of RK only.

3.6 AIFC participants carry out transactions with residents that are not AIFC participants in accordance with these Rules and (or) the currency legislation of RK.

3.7 AIFC participants have the right to provide professional services in foreign currency to residents that are not AIFC participants, only in accordance with the list set out in Schedule 3 to these Rules.

4. Payments and (or) money transfers on transactions of residents and non-residents in the AIFC

4.1 Payments and (or) money transfers on foreign exchange transactions of AIFC participants (except AIFC banks) are carried out through bank accounts in AIFC banks and (or) the STBs of RK in compliance with the conditions specified by the Acting Law of the AIFC and the legislation of RK.

4.2 The AIFC bank transfers money of AIFC participants from their accounts in the AIFC bank to their accounts in a STB of RK, as well as from their accounts in the STB of RK to their accounts in the AIFC bank in foreign currency.

4.3 Payments and (or) money transfers for client transactions are made in accordance with the following conditions:

(a) The AIFC bank requests from the client the following identifying documents and information:

(і) currency contract (for transactions in the equivalent of over USD 10,000);

(ii) BIN;

(iii) if the client is a legal entity or an organisation that are not legal entities - documents defining the country of registration and the founders of the entity or organisation, if these documents have not been submitted or have been changed.

(b) The AIFC bank must have sufficient identification information about the client to determine the client’s residency, link to the AIFC public register and, if applicable, client’s status as an AIFC participant;

(c) The AIFC bank must have sufficient information about the transaction or operation for which the payment and (or) transfer of money is carried out to determine matters, including, but not limited to:

(і) the country of registration or residence of the payer and beneficiary;

(ii) the sender of the payment and (or) money transfer and its ultimate beneficiary;

(iii) the affiliation of the payer and the beneficiary (for the allocation of intra-corporate transfers and payments between affiliated parties);

(iv) the economic sector for the payer and the beneficiary;

(v) the purpose of the payment.

(d) The AIFC bank must refuse to make a payment and (or) to transfer money to the client if:

(і) the payment and (or) money transfer is made in the national currency (for the AIFC banks that are not Islamic banks);

(ii) the payment and (or) money transfer is made in the national currency and is not in respect of provision of Islamic finance services (for Islamic banks of the AIFC);

(iii) the payment and (or) money transfer is made under the transactions stipulated by paragraphs 3.5 and 4.4 of these Rules;

(iv) the payment and (or) transfer of money contravenes the Acting Law of the AIFC and (or) the legislation of RK.

4.4 Residents that are not AIFC participants, are not entitled to carry out, through AIFC banks, currency transactions related to export or import of goods (works, services), exchange transactions using the national currency, and transactions subject to assignment of registration number in accordance with the currency legislation of RK. These transactions are carried out solely through the STBs of RK or foreign banks to the extent permitted by the currency legislation of RK.

5 Exchange transactions in the AIFC

5. A purchase and (or) sale of foreign currency can be carried out only through AIFC banks or STBs of RK, subject to the following requirements:

(a) the purchase or sale of non-cash foreign currency is carried out on the basis of a request indicating the purpose of the purchase or sale;

(b) the purchase or sale of non-cash foreign currency for the national currency is carried out solely through STBs of RK;

(c) the purchase or sale of non-cash foreign currency for other non-cash foreign currency is carried out through AIFC banks or STBs of RK;

(d) purchase or sale of foreign currency in cash is carried out through STBs of RK or through legal entities carrying out the transactions solely through exchange offices on the basis of a NBRK licence for exchange transactions with foreign currency in cash, in accordance with the procedure established by the legislation of RK.

6. Provision of information on currency transactions in the AIFC for the purposes of currency regulation

6.1 The list and procedure for providing information on transactions carried out on the territory of the AIFC and on transactions of AIFC participants carried out outside the AIFC is established in accordance with Schedule 5 to these Rules.

7. Exchange of information between the AIFC and NBRK bodies

7.1 Procedure for information interaction

The procedure for exchanging information on the matters related to currency transactions carried out in the AIFC is determined in accordance with Schedule 5 to these Rules.

8. Confidentiality

Any commercial, banking and other information, protected by the Acting Law of AIFC, that AIFC participants, their employees and agents became aware of while carrying out the transactions both on their own behalf and on behalf of other persons must be kept secret.

9. Responsibility for Rules contravention

9.1 Contravention

An AIFC participant who:

(a) commits an act prohibited under the Acting Law of the AIFC and (or) the legislation of RK;

(b) omits to do an act that is required under the Acting Law of the AIFC and (or) the legislation of RK; or

(c) otherwise contravenes the Acting Law of the AIFC and (or) the legislation of RK,

commits contravention of these Rules, which entails responsibility established by the Acting Law of the AIFC, the legislation of RK and AFSA policy.

Schedule 1

TERMS AND DEFINITIONS

1) AFSA - Astana Financial Services Authority;

2) ARDFM - Agency of the Republic of Kazakhstan for Regulation and Development of Financial Market;

3) AIFC bank - an AIFC participant licensed by AFSA to provide the following services, subject to the requirements set out in these Rules:

a) accepting deposits, granting the loans, making payments, opening and maintaining bank accounts;

b) Islamic banking and Islamic financing (except for non-banking Islamic organisations);

4) STB of RK - an authorised bank recognised as such in accordance with the currency legislation of RK;

5) national currency - national currency of the Republic of Kazakhstan;

6) NBRK - National Bank of the Republic of Kazakhstan;

7) non-residents - legal and natural entities recognised as non-residents under the Law of the Republic of Kazakhstan «On Currency Regulation and Currency» Control»;

8) AIFC Bodies - as defined in Article 9 of the Constitutional Statute of the Republic of Kazakhstan «On the Astana International Financial Centre», No. 438-V ZRK of 7 December 2015;

9) RK - Republic of Kazakhstan;

10) for the purposes of currency regulation the following persons are recognised as residents of the Republic of Kazakhstan:

(a) legal and natural entities as well as branches (and representative offices) of foreign entities recognised as residents under the Law of the Republic of Kazakhstan «On Currency Regulation and Currency Control»;

(b) AIFC participants.

11) AIFC participants - legal entities registered in accordance with the Acting Law of the AIFC as well as other legal entities accredited by the AIFC;

12) KASE - JSC «Kazakhstan Stock Exchange»;

13) Controlling shareholder - a shareholder who owns, whether on its own or jointly with its affiliates, 50%+1 of the shares of an AIFC participant.

Schedule 2

LIST OF FINANCIAL SERVICES PROVIDED BY AIFC PARTICIPANTS TO RESIDENTS THAT ARE NOT AIFC PARTICIPANTS

LIST OF RELATED SERVICES PROVIDED BY AIFC PARTICIPANTS TO RESIDENTS THAT ARE NOT AIFC PARTICIPANTS

Schedule 3

LIST OF PROFESSIONAL SERVICES THAT CAN BE PROVIDED BY AIFC PARTICIPANTS TO RESIDENTS THAT ARE NOT AIFC PARTICIPANTS, IN ANY CURRENCY

Schedule 4

LIST OF TRANSACTIONS THAT AIFC BANKS ARE ENTITLED TO CARRY OUT THROUGH THEIR CORRESPONDENT ACCOUNTS IN THE NATIONAL CURRENCY IN STBs OF RK

Schedule 5

PROCEDURE FOR PROVIDING INFORMATION ON CURRENCY TRANSACTIONS IN THE AIFC

1. GENERAL PROVISIONS

1.1. This Schedule sets out requirements for AIFC participants to provide information for purposes of currency regulation on currency transactions carried out by them, including on behalf of clients, as well as for STBs of RK on currency transactions carried out on behalf of AIFC participants.

1.2. The information on currency transactions including client operations provided by AIFC participants includes:

(a) information on payments and (or) money transfers on currency transactions carried out by AIFC banks, including on behalf of clients, as well as by a STB of RK - on behalf of AIFC participants;

(b) information on resident clients' transactions and the status of their accounts provided by AIFC banks;

(c) information on deals and transactions carried out by AIFC participants, including on behalf of clients, that affected the change in requirements for non-residents and obligations in front of them;

(d) information on transactions with securities and derivatives carried out by AIFC participants with non-residents;

(e) information on income accrued and received from foreign exchange transactions with financial instruments of AIFC participants.

1.3. Information on currency transactions carried out, including on behalf of clients, is provided by AIFC participants and STBs of RK to the AFSA in the form of regular reports, the format and timing of which are determined by these Rules, or at the request of the AFSA.

1.4. AIFC participants provide the AFSA with the data and information in accordance with these Rules electronically through secure communication channels with confirmation by an electronic digital signature.

1.5. AIFC participants are responsible for non-submission, late submission, as well as the provision of false data in accordance with the Acting Law of the AIFC.

1.6. AIFC Bodies and their organisations include information about their own transactions in the reports submitted by the AFSA to the NBRK on the transactions carried out by AIFC participants.

1.7. The data in the reports related to monetary obligations and payments (or transfers) of money are reflected in USD. Unless otherwise indicated, if the currency of the obligation or payment (or transfer) of money differs from the USD, the equivalent in USD is calculated using the market exchange rate at the date of the transaction.

1.8 Zero values are provided for types of operations prohibited for AIFC participants provision of information on which is required by these Rules.

2. TERMS AND DEFINITIONS

2.1. For the purposes of this Schedule of the Rules, the key definitions specified in the Rules on Currency Regulation in the AIFC are used, together with the following definitions:

(a) the object of investment is a legal entity, investment fund, whose securities (votes of participants) are being acquired (acquired), as well as organisations to whose property contributions are being made (were made). In the case of depositary receipts, the object of investment is an issuer of the security that is their underlying asset;

(b) own transactions - currency transactions of a resident who is a party to an agreement, carried out on his own behalf and at his own expense.

2.2. Accepting Deposits is a type of regulated activity, as defined in paragraph 17 of Schedule 1 of the AIFC General Rules.

2.3. Providing Custody is a type of regulated activity, as defined in paragraph 5 of Schedule 1 of the AIFC General Rules.

3. PROCEDURE FOR PROVIDING INFORMATION ON CURRENCY TRANSACTIONS BY AIFC BANKS AND STBs OF RK

3.1. An AIFC bank and a STB of RK provide to the AFSA the following:

(a) a report on payments and (or) transfers made on foreign currency transactions, including on behalf of AIFC participants, made in the AIFC territory, for an amount equal to or exceeding the equivalent of USD 50,000, in accordance with Annex 1 to this Schedule. The report is submitted monthly no later than the 15th (fifteenth) day of the month following the reporting month;

(b) a report on clients' bank accounts in foreign currency, including a list of residents who have bank accounts in foreign currency with the AIFC bank, and aggregated data on cash balances on them, in accordance with Annex 2 to this Schedule. The report is submitted monthly no later than the 10th (tenth) day of the month following the reporting month;

(c) a report on the bank accounts of the AIFC participants who have opened deposit accounts in STBs of RK in the form in accordance with Annex 5 to this Schedule. The report is submitted quarterly no later than the 10th (tenth) day of the month following the reporting quarter.

3.2. In order to clarify the circumstances of currency transactions, the AFSA has the right to request from the AIFC bank the provision of a contract on the basis and (or) pursuant to which a payment and (or) money transfer was made or a corresponding obligation of the AIFC bank arises.

3.3. The AFSA, no later than the 18th (eighteenth) day of the month following the reporting month, provides information to the NBRK in the form of Annex 1 to this Schedule and no later than the 15th (fifteenth) day of the month following the reporting month, provides information to the NBRK in the form of Annex 2 to this Schedule electronically via secure communication channels with confirmation by electronic digital signature.

4. PROCEDURE FOR PROVIDING INFORMATION BY AIFC PARTICIPANTS PROVIDING DEPOSITORY AND BROKERAGE SERVICES

4.1. AIFC participants providing depository and brokerage services in accordance with the their AFSA licence (hereinafter referred to as participants), quarterly no later than the 10th (tenth) day of the month following the reporting month, submit reports on securities to AFSA in accordance with Annex 3 to this Schedule.

The AFSA submits the participants' reports to the NBRK no later than the 20th (twentieth) day of the month following the reporting quarter.

4.2. The report is submitted on the AIFC participants' own transactions and transactions of their clients:

(a) with securities issued by residents and owned by a non-resident;

(b) with securities issued by non-residents and owned by a resident;

(c) with securities issued by residents abroad and owned by a resident.

4.3. The report reflects data on transactions carried out during the reporting period (on its own behalf and on behalf of clients) with all securities issued in the Republic of Kazakhstan and abroad. Data are also provided on the number of securities, their value at the beginning and end of the reporting period, and, if available, investment income from the ownership of securities and service fees, including in the absence of transactions in the reporting period.

Transactions of securities repurchased are not reflected in Annex 3 to this Schedule. Data at the beginning and end of the reporting period on the security involved in the repurchase agreements are reflected by the original owner of the security.

4.4. The data is presented separately for each type of security by customer/owner sectors:

«1» central government;

«2» regional and local governments;

«3» central (national) banks;

«4» other depositary organisations;

«5» other financial organisations;

«6» state non-financial organisations;

«7» non-state non-financial organisations;

«8» non-profit organisations serving households;

«9» households.

4.5. Positions on securities at the beginning of the reporting period are equal to their positions at the end of the previous period. The position on securities at the end of the reporting period is determined based on the market price announced on the organised securities market at the end of the reporting period.

4.6. In the case of securities for which transactions are concluded in an unorganised market, the following prices are applied in order of preference to assess the position on securities at the end of the reporting period:

(a) the last transaction price of the security;

(b) the price of the security at the purchase price, excluding acquisition-related expenses (brokerage fees, renumeration for banking services);

(c) nominal value of the security.

4.7. Financial transactions include transactions between a resident and a non-resident involving a change in the economic ownership of securities, and are reflected at the value specified in the transaction (in case of absence of the value - at the price quoted on the market on the date of the agreement): purchase (sale) on the primary and secondary securities markets, receipt (transfer) of securities as a gift, by inheritance.

4.8. Other transactions include:

1) transactions between a resident and a non-resident that do not result in the transfer of ownership of securities (transfer of securities to a nominal holding, transfer of clients from one nominal holder or registrar to another nominal holder or registrar);

2) transactions between a resident and a non-resident with the transfer of ownership rights, except for those related to financial transactions: alienation of securities by court decision;

3) transactions between non-residents with the transfer of ownership rights (purchase on secondary market, sale on secondary market);

4) transactions between residents with the transfer of ownership rights (purchase on secondary market, sale on secondary market).

4.9. Financial transactions and other indicators denominated in other foreign currencies are converted into USD at the cross-rate determined as follows:

1) the cost at the beginning of the period is transferred at the cross-rate at the end of the previous period;