New Currency Control Law In Kazakhstan

The new Law of the Republic of Kazakhstan "On Currency Regulation and Currency Control" (the New Law) enters into force (with the exception of certain provisions) on July 1, 2019. To implement certain provisions of the New Law, the National Bank of the Republic of Kazakhstan (the NBK) has developed several new resolutions on currency regulation and currency control. These resolutions have not yet been adopted by the NBK and, accordingly, have not entered into force.

Below we outline certain provisions of the New Law and the draft NBK Resolution on the approval of new rules for monitoring currency transactions in Kazakhstan.

Currency monitoring

From the date when the New Law comes into force, the existing currency regulation regimes will be cancelled. In lieu of such regimes, the New Law provides for the expansion of monitoring of currency transactions.

As part of the expanded monitoring, the NBK will carry out record registration of currency contracts related to capital movement transactions. The concept of "capital movement transaction" includes the following:

1) financial loans; 2) equity participation; 3) transactions with securities, participatory interests and derivatives; 4) acquisition of ownership title to real estate; 5) acquisition of exclusive rights to intellectual property; 6) transfer of money / property in performance of the obligations of a joint venture participant, as well as their transfer in trust management, trust; 7) transfer of money / financial instruments to professional securities market participants; 8) gratuitous transfer of money / currency values.

In addition, as part of the expanded monitoring, the NBK will carry out record registration of the accounts opened by residents in foreign banks.

Export / Import

The New Law does not significantly change the existing regime for export and import transactions.

Branches (representative offices) of foreign organisations

From July 1, 2019, branches (representative offices) of foreign non-financial organizations will be considered as residents of Kazakhstan. From 16 December 16, 2020, branches of foreign financial organizations which have the right to carry out banking and (or) insurance activities in Kazakhstan will also be considered as residents.

The New Law establishes certain exceptions to the above rule. In particular, the following branches (representative offices) will not be considered as residents:

1) Branches (representative offices) of foreign legal entities...