Article 15-8. Risk-based approach within the framework of control and supervision of the Law on State Regulation, Control and Supervision of the Financial Market and Financial Organizations

Home / RLA / Article 15-8. Risk-based approach within the framework of control and supervision of the Law on State Regulation, Control and Supervision of the Financial Market and Financial Organizations

1. The authorized body applies a risk-based approach in the framework of control and supervision over the activities of banks, banking conglomerates, organizations engaged in certain types of banking operations, insurance (reinsurance) organizations, insurance groups, branches of non–resident banks of the Republic of Kazakhstan, branches of insurance (reinsurance) organizations of non–residents of the Republic of Kazakhstan, organizations engaged in brokerage and (or) dealer activity in the securities market, investment portfolio management activities.

The main objectives of the risk-based approach are to identify and prevent risks and deficiencies in the activities of the persons referred to in part one of this paragraph, with a view to early intervention and timely supervisory actions to ensure their financial stability and prevent an increase in risks in their activities.

The risk-based approach is based, inter alia, on a motivated judgment formed on the basis of a quantitative and qualitative analysis of the activities of the persons specified in part one of this paragraph, an analysis of their risk management and internal control systems, including analysis and assessment of the business model, corporate governance, countering the legalization (laundering) of proceeds from crime, financing of terrorism and financing the proliferation of weapons of mass destruction, the level of capital and liquidity to cover risks, assessment of internal procedures for determining the required level of equity and liquidity, as well as analysis and evaluation, taking into account the nature and scale of the activities of the persons specified in part one of this paragraph.

2. The risk-based approach within the framework of control and supervision of the activities of the persons specified in the first part of paragraph 1 of this Article takes into account the principle of proportionality, which assumes:

consideration of the size, significance, nature, scale and complexity of their activities;

categorization according to their importance in the financial market;

determining the frequency, depth, and intensity of monitoring and supervision.

3. Based on the results of control and supervision based on a risk-based approach, the authorized body shall bring to the attention of the persons specified in the first part of paragraph 1 of this Article the identified risks and deficiencies and apply supervisory response measures and (or) sanctions in accordance with the laws of the Republic of Kazakhstan.

4. The procedure for applying a risk-based approach in the framework of control and supervision of the activities of the persons specified in the first part of paragraph 1 of this article is determined by a legal act of the authorized body, is confidential information and is not subject to publication in the media.

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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