AZE.US
BAKU, Azerbaijan - Draft legislation would require a financial institution’s risk profile to be reassessed when the intensity or value of its transactions increases by at least 40% from the previous calendar year, according to a proposal scheduled for consideration by Azerbaijan’s parliament.
The amendments to the law on the Central Bank of Azerbaijan are on the agenda for the Milli Majlis plenary session on October 16, when lawmakers are expected to consider the bill in its first reading, according to APA.
The measure has not yet been adopted. Any new authority would take effect only after the bill completes the legislative process and enters into force.
What the Bill Would Change
The proposal would expand the Central Bank’s supervision beyond individual financial institutions to include the financial groups to which they belong. That would allow the regulator to assess risks across connected entities rather than examining each company in isolation.
The consolidated framework would cover banks, life insurers offering savings products, reinsurers, insurance intermediaries, investment companies, investment funds and their managers, as well as representative offices of foreign investment funds.
The Central Bank would also be authorized to request documents and information in writing from financial institutions and groups. The requested material would have to be supplied within the period specified by the regulator.
The 40% Trigger
A new assessment would be required when transaction intensity or transaction value rises by 40% or more compared with the previous calendar year, according to reports by Report and Modern.az.
Risk profiles would also be reassessed after a financial institution is reorganized or when there are significant changes to its beneficial owners, activities, customer base or geographic scope.
The Central Bank would determine how often and how intensively to conduct supervisory measures by considering an institution’s or group’s exposure to money laundering, terrorist financing and proliferation-financing risks, along with its internal policies, controls and procedures.
Why the Rules Are Being Revised
The legislation was prepared in response to Recommendations 26 and 27 of the Financial Action Task Force, as reflected in MONEYVAL’s fifth-round evaluation of Azerbaijan’s system for combating money laundering and terrorist financing.
The change would turn a sharp increase in transaction activity into a clear, measurable signal for an additional risk review while giving the Central Bank a broader view of risks spread across linked financial entities.
Source: Vesti Baku