Astana, 21 September 2023 (TDI): On behalf of the President of the Republic of Kazakhstan, MPs of the Mazhilis of the Parliament are pleased to announce the adoption of the “Law of the Republic of Kazakhstan on the Return of Illegally Acquired Assets to the State” on July 12, 2023.
The new law, effective as of September 12, 2023, establishes a clear and comprehensive framework for the voluntary and compulsory return of assets that have been illegally acquired.
Commencing on July 24, 2023, all remaining clauses of the law have come into effect, encompassing measures for monitoring and analyzing information aimed at combating illegal acquisition, withdrawal, and asset recovery.
Moreover, the law reinforces Kazakhstan’s dedication to international standards and best practices in the fight against corruption and money laundering.
Developed through a rigorous process of examination and the application of internationally recognized standards, the law draws upon Kazakhstan’s own experiences in recovering unlawfully acquired property, both domestically and abroad.
It reflects a commitment to implementing global standards while respecting the nation’s constitutional and legal principles.
Key provisions of the law include defining critical terms such as “illegally acquired assets,” “assets,” “administrative and authoritative resources,” “bona fide purchasers,” “bona fide creditors,” and “excess income.”
It identifies subjects covered by the law, including top-level officials, political civil servants, MPs, judges, and high-ranking civil servants who have acquired assets and income through the use of administrative resources and connections.
Crucially, the law ensures that the subject composition remains within the specified boundaries, preventing arbitrary expansion. Only entities and affiliated entities meeting specific criteria, including significant asset ownership, can be included in the register for the verification of asset origin and potential compulsory return.
“The key obligation for entities and their affiliated persons is provided for in Article 2 of the Law – they are obliged to prove the legality of the sources of origin of their assets in court in cases and on the grounds established by this Law.”
The asset recovery process, as delineated in the Law, aligns with core international standards in this domain, with a primary focus on: ensuring that the actions of the state are legitimate, based on strict compliance with the procedures and conditions provided for by law.
Additionally, it focuses confiscation of assets only on the basis of due process and by court decision and transparency for civil society, including in matters of further utilization of confiscated assets for the betterment of the people of the country affected by corruption and the withdrawal of assets.
The law incorporates judicial controls, procedural rules, and substantiation standards to guarantee legal certainty and protect the rights of all parties involved in civil proceedings related to asset origin.
Moreover, it introduces mechanisms for public oversight alongside judicial controls, including the formation of a commission involving representatives from the executive branch, MPs, and respected public figures, ensuring a fair and balanced approach to asset recovery.
To protect the rights of subjects and affiliated persons participating in civil proceedings, the law offers robust guarantees that complement existing constitutional and legal norms. Unlawful actions by the authorized body may result in property liability for the state.
The law also ensures the protection of bona fide purchasers and creditors, as well as individuals reporting illegal acquisition and asset withdrawal, aligning with international best practices and human rights protection standards.
In accordance with the national security legislation, the law is essential for preserving investment activity and upholding Kazakhstan’s economic reputation in the global arena, as hindering investment growth is considered a threat to national security.
The Kazakhstan Law furnishes robust assurances safeguarding the rights of legitimate asset purchasers and creditors. It also provides comprehensive protections for individuals who report instances of illegal acquisition and asset withdrawal or lend assistance to the asset recovery process.
The Constitution of Kazakhstan guarantees the inviolability of private-property rights and the right to own legally acquired property privately. The law enhances these protections while addressing the complexity of asset recovery, reinforcing Kazakhstan’s commitment to international agreements and laws governing national and foreign investors, business entities, and individuals.
The law adopted by the parliament of Kazakhstan on the Return of Illegally Acquired Assets to the State, signifies a significant milestone in the nation’s journey towards social justice and sustainable development.
It establishes a strong legal framework to prevent further asset withdrawal while safeguarding the rights guaranteed by the Constitution, international obligations, and legislation pertaining to investors and business entities.
Importantly, the law does not target bona fide investors, including foreign investors, unless specific conditions are met. The possession of assets exceeding 13 million MCI (44.8 billion tenge or 100 million US dollars) is not an independent basis for its application to bona fide investors, unless other conditions warrant it.