Article 13-5. The powers of the authorized body to use the reasoned judgment of the Law on State Regulation, Control and Supervision of the Financial Market and Financial Organizations

Home / RLA / Article 13-5. The powers of the authorized body to use the reasoned judgment of the Law on State Regulation, Control and Supervision of the Financial Market and Financial Organizations

1. The authorized body has the right to use a reasoned judgment in relation to:

1) banks, organizations engaged in certain types of banking operations, bank holdings, major participants in the bank, insurance (reinsurance) organizations, insurance holdings, major participants in insurance (reinsurance) organizations, insurance groups and (or) organizations that are part of insurance groups, insurance brokers, organizations that guarantee insurance payments, actuaries licensed to carry out actuarial activities in the insurance market, professional participants in the securities market (with the exception of organizations, carrying out transfer agency activities), major participants managing the investment portfolio;

2) senior employees, candidates for senior positions of a bank, a bank holding company, an insurance (reinsurance) organization, an insurance holding company, an insurance broker, an organization guaranteeing insurance payments, a professional participant in the securities market (with the exception of organizations engaged in transfer agency activities).

2. A reasoned judgment is a reasoned professional opinion of a collegial body of an authorized body, which is the basis for applying supervisory response measures established by the laws of the Republic of Kazakhstan, as well as for making decisions in other cases provided for by this Law and other laws of the Republic of Kazakhstan.

The authorized body has the right to use a reasoned judgment in the following cases::

1) assessment of business reputation for the presence or absence of an impeccable business reputation, as well as assessment of the financial situation for the presence or absence of an unstable financial situation when issuing (refusing to issue) a permit to open a bank, insurance (reinsurance) organization, consent to acquire the status of a major participant in a bank, a bank holding company, a major participant in an insurance (reinsurance) organization, insurance holding company, major participant managing an investment portfolio, permission for significant participation of a bank and (or) a bank holding company, an insurance (reinsurance) organization and (or) an insurance holding company in the capitals of organizations, permission to establish or acquire a subsidiary by a bank and (or) a bank holding company, an insurance (reinsurance) organization and (or) an insurance holding company, as well as consent to appoint (elect) a senior employee of a bank, bank holding company, insurance company a (reinsurance) organization, an insurance holding company, an insurance broker, an organization that guarantees insurance payments, a professional participant in the securities market (with the exception of organizations, transfer agency activities), upon notification by a bank, a bank holding company, an insurance (reinsurance) organization, an insurance holding company, an insurance broker, an organization guaranteeing insurance payments, a professional participant in the securities market (with the exception of organizations engaged in transfer agency activities) and an organization engaged in certain types of banking operations of the appointment (election) of senior staff, issuing licenses to conduct banking or other operations, and to carry out insurance (reinsurance) activities, to carry out the activities of an insurance broker, to carry out activities on the securities market;

1-1) business reputation assessments for the presence or absence of impeccable business reputation of senior employees of a bank, a bank holding company, an insurance (reinsurance) organization, an insurance holding company, an insurance broker, an organization guaranteeing insurance payments, a professional participant in the securities market (with the exception of organizations engaged in transfer agency activities) during the period of their duties. duties or during the period of validity of the consent granted for appointment (election) to the position of a senior employee of a bank or a bank holding company, an insurance (reinsurance) organization, an insurance holding company, an insurance broker, an organization that guarantees insurance payments, a professional participant in the securities market (with the exception of organizations engaged in transfer agency activities;

2) determining the persons who are recognized as persons having special relations with the bank, insurance (reinsurance) organization, establishing the facts of granting preferential terms by the bank, insurance (reinsurance) organization to persons having special relations with them, as well as attributing transactions made by the bank, insurance (reinsurance) organization to transactions with preferential terms;

3) assessing the quality of the risk management and internal control system in a bank and a banking conglomerate, an insurance (reinsurance) organization and an insurance group, a professional participant in the securities market (with the exception of organizations engaged in transfer agency activities) for the availability and implementation of effective internal policies and procedures appropriate to the nature, scale and complexity of the activity; as well as the size of the bank, banking conglomerate, insurance (reinsurance) organization, insurance group, professional participant in the securities market;

4) assessing the adequacy of provisions (reserves) of a bank, an insurance (reinsurance) organization, a professional participant in the securities market (with the exception of organizations engaged in transfer agency activities), and insurance reserves calculated by an actuary licensed to carry out actuarial activities in the insurance market, including for compliance of methods for their formation with risks a bank, an insurance (reinsurance) organization, a professional participant in the securities market, as well as the reliability of the information used to generate them.

5) identification of persons who are (jointly are) major participants in a bank, insurance (reinsurance) organization, banking, insurance holdings.

3. The composition of the collegial body of the authorized body specified in the first part of paragraph 2 of this Article shall be approved by the Board of the authorized body from among the Deputy Chairmen of the authorized body, heads of structural divisions of the authorized body. Meetings of the collegial body of the authorized body are conducted by one of the Deputy Chairmen of the authorized body.

A reasoned judgment is used by the authorized body in compliance with the principles of legality, reasonableness, objectivity and a uniform approach.

A reasoned judgment is based on information obtained as part of the authorized body's control and supervision of the activities of the persons referred to in subparagraph 1) of paragraph 1 of this article, and other information received from individuals and legal entities, international organizations, government agencies, including foreign supervisory authorities and organizations, and other available sources. essential for the formation of a motivated judgment.

When forming a reasoned judgment, the authorized body shall take into account the explanations of the persons specified in paragraph 1 of this article, if any.

The draft reasoned judgment is sent to the person specified in paragraph 1 of this article. The person referred to in paragraph 1 of this article must, within five working days, submit to the authorized body a reasoned response on consent or disagreement with the draft reasoned judgment. Failure by the person referred to in paragraph 1 of this article to provide a reasoned response within the prescribed period is considered consent to the draft reasoned judgment.

Based on the results of consideration of a reasoned response of disagreement with the draft reasoned judgment, if submitted by the person specified in paragraph 1 of this article, the authorized body determines the need to submit the draft reasoned judgment for consideration by the collegial body of the authorized body.

4. In case of disagreement with the supervisory response measure applied by the authorized body on the basis of a reasoned judgment, the person specified in paragraph 1 of this article has the right to submit his objections in writing to the authorized body within ten working days from the date of application of the supervisory response measure.

Objections to the application of a supervisory response measure are considered at a meeting with the participation of the Chairman of the authorized body or submitted for consideration by the Board of the authorized body on the proposal of the Chairman of the authorized body. In the event that a supervisory response measure applied on the basis of a reasoned judgment may lead to a reduction in prudential standards and other mandatory standards and limits below the established values, the objections received are considered by the Board of the authorized body. Representatives of the person referred to in paragraph 1 of this article have the right to participate in the consideration of objections.

Objections must be considered within ten working days from the date of their receipt. The deadline for consideration of objections may be extended once for a period of no more than ten working days.

Based on the results of consideration of the objections of the person referred to in paragraph 1 of this Article, the authorized body shall send a written notification of a reasoned disagreement with the objections or cancellation of the supervisory response measure applied by the authorized body.

A supervisory response measure applied on the basis of a reasoned judgment shall enter into force upon the expiration of the period specified in part one of this paragraph, or from the date of sending a written notification to the person specified in paragraph 1 of this article of a reasoned disagreement with objections, if they are submitted.

The person referred to in paragraph 1 of this article has the right to appeal a supervisory response measure applied on the basis of a reasoned judgment in court.

The authorized body is responsible for decisions deemed illegal, taken on the basis of a reasoned judgment, in accordance with the Civil Code of the Republic of Kazakhstan.

5. The authorized body publishes, taking into account confidentiality requirements, a generalized practice of applying supervisory response measures using reasoned judgment.

6. The procedure for forming and using a reasoned judgment is determined by a regulatory legal act of the authorized body.

7. The requirements of this article apply to branches of non–resident banks of the Republic of Kazakhstan, branches of non–resident insurance (reinsurance) organizations of the Republic of Kazakhstan, branches of non–resident insurance brokers of the Republic of Kazakhstan.

The Law of the Republic of Kazakhstan dated July 4, 2003 No. 474-II.

This Law regulates public relations related to the implementation of state regulation, control and supervision of the financial market and financial organizations, and is aimed at increasing the stability of the financial system of the Republic of Kazakhstan and creating conditions to prevent violations of the rights and legitimate interests of consumers of financial services.

President

Republic of Kazakhstan

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