In August 2019, amidst a domestic banking crisis in Tajikistan, FSVC received funding from the U.S. Department of State to support the country’s efforts to deter money laundering and terrorist financing (ML/TF), strengthen financial stability and increase financial inclusion.
The program consisted of a series of activities to strengthen financial stability and help address inflation, currency devaluation and exchange rate uncertainty. FSVC provided technical assistance to different departments at the National Bank of Tajikistan (NBT) in support of the following objectives:
Objective 1: Strengthen Capacity of Regulators and Private Sector to Detect and Report Suspicious Transactions to Law Enforcement: The 2018 National Risk Assessment and FATF Mutual Evaluation identified a number of risks and AML/CFT gaps requiring immediate attention. The NBT’s Financial Monitoring Department (FMD) – the country’s financial intelligence unit – was relatively new and had limited capacity to address these risks. FSVC built the capacity of public and private sector stakeholders and provided them with tools to support their work.
Objective 2: Strengthen Financial Stability: FSVC’s program started in a local context marked by inflation volatility, two major currency devaluations and two widespread bank failures. To promote increased financial stability, FSVC strengthened the capacity of the International Reserves Management and Exchange Rate Policy Department (IRM&ERP) and Internal Audit Department of the NBT to implement international best practices in securities accounting and trading, and auditing business practices, respectively.
Program Impact
- Development of Operational Manual for FMD – The development of the operational manual and supporting templates has led to improvements in the FMD’s operational process. The FMD is now able to obtain more feedback and statistics from REs and use financial intelligence in a more effective and documented manner.
- Development of STR Guidance – FSVC’s trainings on STR guidance resulted in the development of a framework for the FMD to fine tune the set of rules utilized by most banks in order to reduce the filing of STRs that have little or no value to law enforcement. Additionally, FSVC updated the STR form used by the FMD to include a field-by-field description of what and how reporting entities should report suspicious transactions. This updated form will help ensure that consistent and uniform information is provided by reporting entities. As a result, it will increase the quality of information received in STRs thereby streamlining the analysis process conducted by the FMD.
- Increased Capacity of Audit and International Reserves Management Departments – As a result of FSVC’s trainings and consultations, the NBT’s Audit Department has gained the tools necessary to restructure their internal audit processes to mirror those practiced at other central banks. Similarly, the International Reserves Management Department is better positioned to incorporate their newly created Middle Office and ensure that the department can maximize their foreign exchange operations. This is especially important to Tajikistan’s financial stability, as the country’s economy is overwhelmingly reliant on remittances from Russia and the exchange of Russian Rubles to Tajik Somoni.