The Chairman of Uzbekistan's Central Bank, Mamarizo Nurmuratov, has announced the implementation of compliance control measures to prevent sanctions restrictions for banks and businesses in the country. He emphasized the heightened need for such measures in the current global geopolitical crisis, which has increased the demand for foreign exchange transactions by banks.
Compliance control measures
According to Nurmuratov, the compliance control measures are necessary to ensure that Uzbekistan does not face sanctions restrictions on foreign exchange transactions and transfers. He mentioned that foreign exchange transactions have surged, making it essential to introduce compliance control universally. Expert groups in Uzbekistan have been assessing payment compliance for some time, and their conclusions determine the approval of foreign currency sales to clients. Similar groups exist worldwide for similar purposes.
Concerns about currency conversion operations
Nurmuratov expressed concern about currency conversion operations conducted through secondary accounts in seven banks, including five state-owned ones. These operations have increased from 8.9-9% to 24%. Some of these transactions involve foreign currency payments related to contracts made several years ago. The Central Bank is worried that foreign currency might be illicitly withdrawn through secondary accounts for imported goods. The decision to address this issue was made during a meeting of the Committee on Banking Supervision.
Uzbekistan has been included in the list of 15 countries potentially at risk of violating sanctions against Russia. As a result, measures are being taken to strengthen compliance control to avoid sanctions restrictions on foreign exchange transactions and transfers.
Enhancing confidence and cash reserves
Nurmuratov highlighted that the main goal is to prevent Uzbek businesses from falling under sanctions compliance restrictions. This includes ensuring that currency transfers are not delayed or questioned by foreign banks. He compared Uzbekistan favorably to neighboring countries like Armenia, Georgia, and Kazakhstan, stating that such issues occur less frequently in Uzbekistan. The aim is to improve compliance control to build confidence, especially with the Federal Reserve Bank of New York, which supplies cash dollars to Uzbekistan. A strong compliance system ensures that Uzbek banks maintain a reserve of cash currency.
Nurmuratov clarified that the recent decision of the Banking Supervision Committee, which was adopted on Friday and canceled on Saturday, primarily focused on banks taking measures to control customers and reduce sanctions risks. It did not pertain to currency restrictions.
The Uzbek Central Bank's adoption of compliance control measures is driven by the need to prevent sanctions restrictions and maintain the smooth flow of foreign exchange transactions. These measures aim to enhance confidence in Uzbekistan's financial system and ensure the country's resilience in a challenging global environment.
Earlier Daryo reported that the Central Bank of Uzbekistan has quickly reversed its move to implement stricter regulations on foreign exchange transactions for commercial banks due to public backlash.
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