Who Will Police the Financial Police?

New legislation granting greater powers to Kyrgyzstan’s financial police lacks transparency and will not go down well with the public, NBCentralAsia political analysts say.



From November 8, all organisations that transfer funds or assets must report to the Financial Investigation Service, FIS, any transactions that might relate to money-laundering or terrorist activity. The new law covers transactions of more than one million soms - 25,000 US dollars – except for real estate, where the threshold is 4.5 million soms or 112,000 dollars.



The FIS was created by a presidential decree of September 2005 with the aim of curbing the funding of terrorism and the laundering of illegal earnings. The authorities point out that many other countries have similar agencies, and that it was also necessitated by certain international obligations undertaken by Kyrgyzstan.



Political observers interviewed by NBCentralAsia say the FIS will be watched closely by non-government groups since the law contains a number of potential pitfalls.



There is some public concern, for example, at the lack of a mechanism for exercising public scrutiny of the FIS’s work. Then there is the danger that the service – whose head is appointed by the Kyrgyz president – could be deployed to exert pressure on political opponents or business rivals of those in power. Even now, financial checks and over-zealous tax inspections often seem to be used to pressure particular politicians, independent media outlets and businesses.



When the law comes into effect, a range of current legislation will have to be altered to accommodate the new rules. At the moment, the banking law makes it illegal for a bank to disclose information about its clients’ transactions to a third party.



Public distrust of the FIS’s inspection power could actually increase the illegal circulation of money, NBCentralAsia analysts say. Less money might be entrusted to the financial institutions, and other ways might be found to make the proceeds of crime “legal”.



(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)