CBA to supervise financial groups on consolidated basis

The Central Bank of Azerbaijan (CBA) will supervise not only individual financial institutions but also the financial groups to which they belong, as reflected in a draft law on amendments to the Law "On the Central Bank."

According to Report, the document was submitted for discussion at today"s meeting of the Milli Majlis Committee on Economic Policy, Industry and Entrepreneurship.

The draft law was prepared based on the 26th and 27th recommendations of the Financial Action Task Force (FATF) as part of the fifth-round assessment of the system for combating money laundering and terrorist financing (AML/CFT) by the Council of Europe"s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL).

According to the document, consolidated supervision covering the entire group will apply to financial groups that include banks, local and foreign life insurers engaged in savings life insurance, 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 groups related to money laundering and terrorist financing, including the risks of non-compliance with legislative requirements, will be assessed periodically. A reassessment will be carried out in the event of a reorganization of a financial institution, a change in its beneficial owner, changes in its types of activities, customer base or operating geography, as well as when 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, taking into account the risk profile of the financial institution or group, their policies, internal rules and control mechanisms, as well as country-level risks related to money laundering, terrorist financing and the proliferation of weapons of mass destruction.

To carry out supervisory measures, the CBA will be authorized to request documents and information from financial institutions and groups through a written request. The requested documents and information must be provided within the timeframe specified in the request.