Earlier this year, Kyrgyz President Sadyr Japarov signed a decree prohibiting state supervisory agencies from inspecting businesses until the end of 2024. Only evidence that a private company has violated the law could trigger an inspection. That presidential decree banning business inspections was amended recently to ensure economic stability in Kyrgyzstan, and now the tax and customs authorities, as well as the National Bank of the Kyrgyz Republic, can again carry out inspections.
The financial regulator can now assess the activities of commercial banks and other financial institutions, as it was before the presidential decree. In a live broadcast on Kyrgyz state radio, Musa Kataganov, head of the Business Environment Policy Department of the Kyrgyz Ministry of Economy, said that “as you know, numerous sanctions are being imposed against Russia. Our commercial banks are under strict surveillance by the West to ensure that goods do not move from or to Russia.” According to Kataganov, the National Bank of Kyrgyzstan (NBKR) is obliged to monitor the activities of commercial banks – despite the presidential moratorium – to prevent the entire Kyrgyz banking system from falling under Western sanctions.
After the U.S. Treasury Department threatened to impose sanctions for servicing the Russian payment system MIR in September 2022, just under half of Kyrgyzstan’s banks stopped working with the system. U.S. sanctions could affect the servicing of correspondent accounts of Kyrgyz financial institutions abroad, as foreign counter-party banks would likely follow Treasury Department guidelines and cut off access to Kyrgyz banks. Each bank in Kyrgyzstan in this case made the decision on its own, without any pressure from the authorities.
Asked by Times of Central Asia, the NBKR’s press service said that its removal from the list of government agencies on which the inspection moratorium was imposed was primarily due to the need to ensure the safe and reliable operation of Kyrgyzstan’s payments and banking systems in order to promote long-term economic growth in Kyrgyzstan.
“As part of supervision over the activities of commercial banks, the National Bank carries out both remote supervision and on-site inspection of all types of risks inherent in the activities of commercial banks, including compliance with the requirements of the legislation of the Kyrgyz Republic in terms of combating the financing of terrorist activities and legalization (laundering) of criminal proceeds – as well as compliance with international sanctions,” the press service of the NBKR stated.
