January 8, 2021

Changes in internal control of banks

Amendments have been made to the Internal Control Rules of commercial banks on counteracting to legalization (laundering) of the proceeds of crime, terrorist financing, and financing proliferation of weapons of mass destruction (amendments as of 25.12.2020).

These changes include:

  1. Expanding the scope of these Rules, as they now cover agents and subagents of banks.
  2. The third party is now understood only as organizations registered in Uzbekistan (previously, these were any organizations that carry out operations with cash or other property).
  3. The concept of public officials has been expanded. The military structures of a foreign state now also fall under this category. Moreover, they can now include former public officials.
  4. The regulations defining the tasks, rights and responsibilities of the Internal Control Service of Commercial Banks should now be developed, approved by the Supervisory Board and put into effect. This provision should also contain requirements for the relationship of the Internal Control Service with management, including the Supervisory Board and its committees, and the Management Board.
  5. A new provision was also introduced, according to which the Internal Control Service is independent of the heads of the bank’s profit-making units in order to avoid any influence that hinders the performance of its functions.

This independence is ensured by the following aspects:

  • decisions on the appointment and dismissal of the head and employees of the Internal Control Service, as well as the assessment of their activities and the amount of remuneration (salary, bonuses, etc.), are made exclusively by the Supervisory board;
  • the head of the Internal Control Service may not have financial obligations and powers to manage and implement operations of the bank’s profit-making division, and it is also not allowed to combine positions.