Notification of clients about changes made in the Law on AML/CFT:

Dear clients,

We would like to bring to your notice that in continuation of the reforms conducted in the legislative system of our country, as well as with the purpose of coordination of local legislative system that regulates activity of financial institutions with the global economic and legal processes, the Law of the Republic of Azerbaijan “On the Prevention of the Legalization of Criminally Obtained Funds or Other Property and the Financing of Terrorism” (shortly – Law on AML/CFT) has been approved in a new reading. We would like to bring to your attention the following important issue arising from the Law:

• 4.4.6. The persons having responsibility for fulfilling requirements set forth in articles 4.19 and 4.20 of the Law are obliged to keep a client informed.
• 4.19. The persons who within the framework of their professional activity render to third parties such services as incorporation of legal entities or its affiliates and representations, fulfillment of functions of a lawful representative of legal entities, provision of registered office address for legal entities or its affiliates and representations will be considered as Service Providers of the company. When service providers of the company acting as external manager of legal entity incorporated (registered) in a foreign country (on a foreign territory) establish business relations with persons having obligations in accordance with areas of their activities, they will be obliged to declare that they are acting as service provider of the company and will be obliged to provide all necessary data and documents related to such position.
• 4.20. When the persons acting as a manager of a foreign legal entity establish business relations with persons having obligations (banks are also referred to such persons) in accordance with areas of their activities, they will be obliged to declare that they are acting as managers of foreign legal entity (as the case may be) or they will be obliged to provide data and documents about persons having the same or similar rights and duties and a copy of incorporating documents of the foreign legal entity.
• 1.1.17. foreign legal entity – is a trust or other institution that have similar characteristics, carries out activity related to transfer by its founder being a physical person or legal entity of a property in the ownership of manager of foreign legal entity upon condition of control by guarantor of foreign legal entity within the framework of making of profit by a beneficiary or a group of beneficiaries or achieving of special purposes, incorporated without creation of a legal entity, in accordance with the legislation in force in a foreign country (on a foreign territory). Such notions as founder, manager, guarantor, beneficiary or group of beneficiaries of a foreign legal entity imply persons having relevant rights and duties arising from incorporating document of the foreign legal entity;

The following sanctions stipulated in the Code of Administrative Offences may be applied in regard to the aforesaid issue:

• 598.2. For failure to fulfill requirement on declaring by the person acting as manager of foreign legal entity of the fact that he (she) is a manager of foreign legal entity when establishing business relations with the persons having obligations – physical persons will be penalized to the extent of between one thousand Manats and two thousand Manats, officials – to the extent of between AZN two thousand Manats and four thousand Manats, and legal entities – to the extent of between twelve thousand Manats and twenty thousand Manats.
• 598.3. For failure to fulfill requirement on declaring by service provider of company acting as external manager of legal entity incorporated (registered) in a foreign country (on a foreign territory) of the fact that he (she) takes part in this activity in the capacity of service provider of company when establishing business relations with persons having obligations and the requirement on providing all necessary data and materials related to such activity - physical persons will be penalized to the extent of between one thousand five hundred Manats and two thousand five hundred Manats, officials – to the extent of between two thousand five hundred Manats and five thousand Manats, and legal entities – to the extent of between fifteen thousand Manats and twenty thousand Manats.