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Uzbek Police Keep Eagle Eye on Banks

Despite claims that money now flows freely through the banks, the secret police still routinely inspect transfers from abroad.
By IWPR Central Asia
Despite the Uzbek government’s insistence that it no longer monitors the flow of money in and out of private bank accounts, there is amply evidence that the secret police continue to monitor transfers, partly with a view to intimidating rights groups.

On February 1, the National Bank of Uzbekistan, NBU, gave notice that “no accounts of citizens of Uzbekistan who receive remittances are [still being] opened and inspected”.

The bank’s declaration followed reports in the state media indicating that banks had stopped people withdrawing remittances received from abroad altogether.

However, local observers say the rumours were untrue and in fact the banks never stopped disbursing remittances to individuals; there were merely difficulties in getting the money because of cash-flow problems.

Some observers argue that the rumours were deliberately spread as a way of reminding people that the authorities still monitor financial flows.

“The secret services may have intentionally leaked information concerning the selective inspections of remittances in order to intimidate Uzbeks who have foreign employers,” said one analyst in Tashkent.

By doing this, the analyst continued, the government could continue to limit the presence and activity of foreign employers and maintain control over the activities of groups deemed to be suspect.

The Uzbek government has become progressively more hostile to the presence of foreign organisations operating in the country.

Within the last two years, the authorities have closed the representative offices of most international and public organisations in which Uzbek nationals worked and received salaries.

The measures formed part of President Islam Karimov’s tough response to international criticism of his handling of a demonstration in the eastern city of Andijan in May 2005. Government troops shot hundreds of the protesters dead.

As part of the government’s package of isolationist measures, in January 2006, the NBU froze bank remittances coming from abroad to accounts belonging to non-government and international organisations.

In March 2006, the courts closed the bank account and local office of the United States-based non-profit group Freedom House, which had provided internet access to various human rights organisations. A similar fate befell other US-based groups working in the country including Internews, the Eurasia Foundation, Counterpart International and the American Bar Association.

Starting from spring last year, however, the authorities began to back away from some of their harsh measures – at least on paper.

In March 2007, President Karimov suspended the validity of an earlier decree empowering the prosecutor general to require state-owned and commercial banks to hand over information on the financial transactions of their clients.

In November, shortly before a presidential election in which he was re-elected, Karimov issued another decree which appeared designed to encourage Uzbeks to have more confidence in the privacy of bank accounts. (See Thumbs Down for Uzbek Bank Reform, RCA No. 520, 07-Dec-07.)

Other measures aimed at financial liberalisation have followed. In January, the authorities launched electronic internal bank transfers for the first time and increased the number of cash machines.

Meanwhile, banks have encouraged an explosion in debit and credit cards. Almost four million out of a population of 28 million now hold plastic cards, according to the NBU.

Despite such attempts to boost confidence in the banks and encourage people to deposit money, observers in Uzbekistan say the old practice of monitoring financial transfers from abroad has not changed.

“The financial monitoring service of the prosecutor general’s office has neither disappeared nor stopped work,” said one local observer.
“On the contrary, it has concentrated its attention on independent journalists, civil activists and other citizens seen as disloyal dissidents and who sometimes receive grants and honorariums from abroad.”

As proof of this, another commentator recalled the way criminal proceedings were conducted against journalist and human rights activist Umida Niazova, arrested in January 2007 and accused of distributing anti-government material.

Prosecution staff exerted pressure on witnesses by using the originals of payments receipts.

“To get the testimonies they needed, the investigators showed them [the witnesses] detailed copies of all the remittances that they or their relatives and friends had received in banks in Uzbekistan,” said this source.

A bank worker, who wished to remain anonymous, confirmed that police monitoring of accounts was still standard practice.

The bank clerk said that on the request of the Uzbek secret services, bank officials and agents for money transfer companies routinely handed over information on their clients’ transactions.

“The secret services and their representatives within the banks pay special attention to any money transfers exceeding 1,000 dollars sent to Uzbekistan from the US, Europe or from the addresses of representative offices of foreign organisations in neighbouring countries,” said the clerk.

In the light of this continuing practice, it is not surprising that local non-government organisations, NGOs, remain wary of opening bank accounts or of receiving money from abroad.

One local rights activist told IWPR that even the most innocuous of NGOs that receive foreign grants found it very difficult to operate because opening a bank account was potentially “life threatening” given the secret service’s oversight of money flows.

(The names of people in this story have been withheld out of concern for their security.)

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