Compliance in banks
Nowadays Uzbekistan supports a program by the President of the Republic of Uzbekistan and the Government of the Republic of Uzbekistan of developing and implementation of compliance control system in state bodies, as well as in various business sectors. A certain number of legal acts aimed at implementing the compliance system in various areas have been developed. For example, for the first time, compliance control was mentioned in the joint Resolution of the Board of the Central Bank of the Republic of Uzbekistan Of the Department for combating economic crimes under the Prosecutor General’s office of the Republic of Uzbekistan “On approval of internal control rules for countering the legalization of proceeds from criminal activities, the financing of terrorism and the financing of the proliferation of weapons of mass destruction in commercial banks” No. 2886 dated 23.05.2017, which states that commercial banks should develop internal rules, which should reflect assurance compliance control, audit and (or) functions on counteraction of legalization of incomes received from criminal activity, financing of terrorism and (or) the financing of proliferation of weapons of mass destruction, obtaining in the necessary cases for the purposes of counteraction of legalization of incomes received from criminal activity, financing of terrorism and (or) the financing of proliferation of weapons of mass destruction, information from branches and subsidiaries about their clients, accounts and transactions. Implementation of compliance control in banks is aimed to protect interests of investors, banks and their clients by monitoring compliance of bank employees with the provisions of current legislation, requirements of supervisory authorities, as well as documents defining the Bank’s internal policies and procedures.
According to the act, commercial banks should take appropriate measures to study, analyze, identify, evaluate, monitor, manage, document and reduce the level of risk. In their activities they are required to systematically conduct researches, analysis and identification of possible risks of legalization of proceeds from criminal activities, financing of terrorism and financing the proliferation of weapons of mass destruction, and document the results of the study.
For example, the commercial bank Hamkorbank has a Code of corporate ethics, which declares that the Bank does not accept any types of bribery and corruption. Neither employees nor third parties cooperating with the bank can give remuneration to officials in order to obtain or accelerate actions on their part. The commercial bank Uzpromstroybank has set up an anti-corruption hotline, where you can report illegal actions of employees, as well as warn about various causes and conditions that may contribute to the manifestation of corruption.
The position of compliance lawyer
After the above-mentioned legal act position of a compliance lawyer officially appears in Uzbekistan. Thus, according to the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan “On further improvement of the classifier of the main positions of employees and professions of workers” No. 795 dated 04.10.2017, the document was supplemented with the position of a compliance lawyer.
Compliance in the construction sector
Uzbekistan is taking measures to introduce modern market mechanisms to support business entities, provide greater freedom to private sector, strengthen guarantees of their rights and legitimate interests, attract foreign investment and modern technologies. Construction sector can be called one of priority sectors economy of Uzbekistan. The modern construction industry is one of the most prominent national sectors of the economy of the Republic of Uzbekistan showing stable annual growth. President Sh. Mirziyoyev in his strategy of development of the economy on 2017-2021 stated that special attention is given to the construction industry as a priority of the economy to accelerate development of the construction of buildings and structures, new objects of industry and private businesses, railways, roads, residential buildings. In view of this, in accordance with the Decree of the President of the Republic of Uzbekistan “On measures to radically improve the quality of construction and installation works and improve the control system in construction” under No. 4586 dated 05.02.2020 in order to further improve the quality of construction and installation works, strengthen the role of inspections for control in the construction sector a compliance service must be created, that will report directly to the head of the construction control inspectorate under the Ministry of construction of the Republic of Uzbekistan.
Compliance in the oil and gas industry
The development of the oil and gas industry of Uzbekistan is inextricably linked with the implementation of tasks to ensure the effective functioning of the fuel and energy complex of the Republic. On 04.04.2020 the decree of the President of the Republic of Uzbekistan “On priority measures to improve the financial stability of the oil and gas industry” came into force, which stated that in order to fully meet the needs of the economy and population of the Republic in energy resources, financial recovery of oil and gas enterprises, as well as creating favorable conditions for the development of a healthy competitive environment in the industry based on generally accepted international standards and best foreign practices, must be ensured implementation of the anti-corruption system “compliance control” at all enterprises of the oil and gas industry.
To date, JSC “UZBEKNEFTEGAZ” has developed local regulatory documents in order to prevent corruption offenses, as well as a helpline for reporting signs of corruption. Also, the compliance control system seems to be implemented in JSC “UZKIMYOSANOAT”. However, there is no information about the development and implementation of the compliance control system in other organizations related to the oil and gas industry.
Compliance in the Ministry of Justice
Next legal act, which refers to compliance is the decree of the President of the Republic of Uzbekistan “On measures on further improvement of activity of bodies and establishments of justice in the implementation of state legal policy”, which provides that the Ministry of Justice of the Republic of Uzbekistan has to implement anti-corruption compliance and create a position of “officer integrity” for coordination of anti-corruption policy of the Ministry of Justice of the Republic of Uzbekistan.
It is also worth noting that the Ministry of Justice of the Republic of Uzbekistan was the first among the state administration bodies of Uzbekistan to receive the certificate of the international standard of anti-corruption management ISO 37001:2016 “Anti-Corruption management system”. The international standard ISO 37001: 2016 provides for the implementation of acceptable and comparable measures to prevent, detect and take measures against corruption, as well as to minimize corruption risks.
Compliance and Anti-Corruption Agency
Thus, another legal act that referred to compliance is the Decree of the President of the Republic of Uzbekistan “On additional measures to improve the Anti-Corruption system of the Republic of Uzbekistan”, which declared formation of the Anti-Corruption Agency. One of the main tasks of the Agency is to organize the implementation and effective functioning of the internal Anti-Corruption compliance control system and other international anti-corruption tools in state and economic management bodies, state-owned enterprises, including banks with a state share in the authorized capital, and to conduct anti-corruption monitoring based on modern methods and technologies, as well as to compile a rating of their activities in this area. Based on this Decree, the Anti-Corruption Agency of the Republic of Uzbekistan is the responsible body for implementing the compliance control system in the above-listed organizations.
Compliance and business development Agency
According to the decree of the President of the Republic of Uzbekistan “On additional measures to improve the system of public involvement in entrepreneurship and entrepreneurship development” under No. PP-4862 dated 13.10.2020, the Agency for business development, together with the State Inspectorate for supervision of the quality of education and the Ministry of justice was instructed to submit to the Cabinet of Ministers within a month the procedure for forming an electronic register of non-state educational organizations participating in programs for training the population in professions and entrepreneurship, as well as compensation for their expenses spent on training of public. At the same time, it should include: ensuring transparency and fairness in the provision of compensation, creating a system of compliance control to combat corruption, aimed at preventing various forms of abuse in this process.
Implementation of compliance in state-owned enterprises
The next regulatory act is the Decree of the President of the Republic of Uzbekistan “On measures for accelerated reform of enterprises with state participation and privatization of state assets” No. up-6096 dated 27.10.2020, which provides for the formation of a Department for the transformation of large enterprises with state participation in the structure of the Central office of the Ministry of Finance, one of the main tasks of which is to introduce a modern corporate governance system that provides for auditing procurement and management systems, as well as the formation of the compliance system and anti-corruption services in enterprises with state participation.
The main goal of privatization in Uzbekistan is to attract private sector investment in the modernization, technical and technological re-equipment of privatized enterprises, the production of import-substituting and export-oriented products and creation of new job opportunities. Thereby ensuring the growth of the importance and share of the private sector in the country’s economy and accelerating structural changes in the economy.
Compliance in the Cadastral Agency under the State tax Committee
Also, the system of compliance control is provided in the Cadastral Agency under the State tax Committee, as well as in organizations that are part of the Cadastral Agency system, as stated in the Decree of the President of the Republic of Uzbekistan “On organizational measures to reduce the shadow economy and improve the efficiency of tax authorities” No. up-6098 dated 30.10.2020. This implementation is noticeable on the official website of the Cadastral Agency under the State tax Committee, where a section “Fight against corruption” was added, which provides an opportunity to contact anonymously about the presence of corruption. However, according to article 29 of the Law of the Republic of Uzbekistan “On appeals of individuals and legal entities”, appeals submitted anonymously are not subject to consideration.
Conclusions and recommendations.
It is worth to emphasize that it is noticeable how the Government of Uzbekistan is taking measures to implement the compliance system in various areas, including in the activities of state bodies last three years. However, policy development alone is not enough without proper implementation in processes. In addition to hiring employees with special knowledge in the field of compliance, for the positions of compliance lawyers, i.e. “integrity officers”, it is important to conduct regular compliance courses for other employees, develop incentive systems, build an internal system of checks and balances and in order to succeed it is necessary to establish the work of the personnel service, financial control system, etc. It is important to bring existing local regulations into line. Most importantly it is necessary to review and adopt a number of changes and additions to the existing legislation of the Republic of Uzbekistan.