Commentary on Article 214. Illegal Entrepreneurship, Illegal Banking, Microfinance or Debt Collection Activities of the Criminal Code of the Republic of Kazakhstan

1. Carrying out entrepreneurial activities, banking activities (banking operations), microfinance or debt collection activities without registration, as well as without a licence mandatory for such activities, or in violation of the legislation of the Republic of Kazakhstan on permits and notifications, as well as engaging in prohibited types of entrepreneurial activities, if these acts have caused major damage to a citizen, an organization or the State, or are associated with the extraction of income on a large scale, or with the production, storage, transportation or sale of excisable goods on a significant scale, —

shall be punishable by a fine in an amount of up to two thousand monthly calculation indices, or corrective labour in the same amount, or engagement in community service for a period of up to six hundred hours, or restriction of liberty for a period of up to two years, or imprisonment for the same period, with or without confiscation of property.

2. The same acts:

1) committed by a criminal group;

2) associated with the extraction of income on an especially large scale;

3) committed repeatedly, —

shall be punishable by a fine in an amount of up to five thousand monthly calculation indices, or corrective labour in the same amount, or engagement in community service for a period of up to one thousand two hundred hours, or restriction of liberty for a period of up to five years, or imprisonment for the same period, with confiscation of property.

Note. A person who has committed an act provided for in Part One of this Article for the first time shall be released from criminal liability in the event of voluntary compensation for the damage.

The State supports and protects the institution of entrepreneurship while, at the same time, exercising a certain degree of control over compliance with the established procedure for carrying out entrepreneurial, banking activities (banking operations), microfinance or debt collection activities without registration, for the purpose of ensuring the legitimate rights and interests of citizens, other entities of economic activity, and the interests of society and the State. Thus, pursuant to Paragraph 4 of Article 26 of the Constitution of the Republic of Kazakhstan, everyone has the right to freedom of entrepreneurial activity and to the free use of their property for any lawful entrepreneurial activity.

The public danger of illegal entrepreneurship, illegal banking activities, and microfinance or debt collection activities without registration lies in the fact that the commission of this crime causes damage to the economic system of the Republic of Kazakhstan.

At the same time, the commission of this crime contributes to the emergence of an uncontrolled “shadow” sector of the economy, which causes damage to the financial interests of the State, leads to violations of competition rules in the market, and facilitates the spread of counterfeit goods, low-quality services and deception of counterparties.

The object of the crime is the established procedure for carrying out entrepreneurial, banking, microfinance or debt collection activities, which ensures compliance with the economic interests and rights of consumer citizens, organizations and the State.

The concept and procedure for carrying out entrepreneurial activities are established by the provisions of the Civil Code of the Republic of Kazakhstan dated December 27, 1994, the Entrepreneurial Code of the Republic of Kazakhstan dated October 29, 2015, and other regulatory legal acts.

According to Paragraph 1 of Article 10 of the Civil Code, entrepreneurship is an independent, initiative-based activity of citizens, kandas and legal entities aimed at generating net income through the use of property, production and sale of goods, performance of work and provision of services, based on the right of private ownership (private entrepreneurship) or on the right of economic management or operational management of a state enterprise (state entrepreneurship). Entrepreneurial activity is carried out in the name of, at the risk of, and under the property liability of the entrepreneur.

The State guarantees freedom of entrepreneurial activity and ensures its protection and support. The rights of entrepreneurs carrying out activities not prohibited by legislation are protected. Entrepreneurial activity may be carried out without obtaining any permits or submitting notifications provided for by the Law of the Republic of Kazakhstan dated May 16, 2014, “On Permits and Notifications”. The establishment of a permitting or notification procedure is carried out by the Law of the Republic of Kazakhstan “On Permits and Notifications”, depending on the level of danger of the activity or action (operation), for the purpose of protecting human life and health, the environment and property, and ensuring national security and public order (Paragraph 4 of Article 10 of the Civil Code).

A permitting procedure is established in cases where the requirements for products and the requirements for mandatory conformity assessment provided for by the laws of the Republic of Kazakhstan are insufficient to achieve the objectives of State regulation.

Article 2 of the Entrepreneurial Code of the Republic of Kazakhstan provides a definition of the concept of entrepreneurship similar to that contained in the Civil Code. State bodies are prohibited from adopting regulatory legal acts establishing a privileged position for individual business entities. Entrepreneurial activity may be restricted exclusively by the laws of the Republic of Kazakhstan.

According to Article 23 of the Entrepreneurial Code of the Republic of Kazakhstan, business entities are citizens, kandas and non-state commercial legal entities engaged in entrepreneurial activities (private entrepreneurship entities), as well as state enterprises (state entrepreneurship entities).

An individual who is a business entity shall register as an individual entrepreneur in accordance with the procedure provided for by the Entrepreneurial Code of the Republic of Kazakhstan (Article 36 of the Entrepreneurial Code).

A legal entity that is a business entity may be established in an organizational and legal form provided for by the Civil Code of the Republic of Kazakhstan.

Paragraph 1 of Article 1 of the Law of the Republic of Kazakhstan dated August 31, 1995, “On Banks and Banking Activities in the Republic of Kazakhstan”, establishes that a bank is a legal entity that is a commercial organization authorized to carry out banking activities. The official status of a bank is determined by the state registration of the legal entity as a bank with the State Corporation “Government for Citizens” and the possession of a licence issued by the authorized body for the regulation, control and supervision of the financial market and financial organizations to conduct banking operations.

No legal entity that does not have the official status of a bank may be called a “bank” or describe itself as being engaged in banking activities.

The Republic of Kazakhstan has a two-tier banking system. The National Bank of the Republic of Kazakhstan is the central bank of the State and represents the upper (first) tier of the banking system. The objectives, principles of activity, legal status and powers of the National Bank are determined by the Law of the Republic of Kazakhstan dated March 30, 1995, “On the National Bank of the Republic of Kazakhstan”, and other laws of the Republic of Kazakhstan.

All other banks constitute the lower (second) tier of the banking system, with the exception of the Development Bank of Kazakhstan, which has a special legal status determined by a legislative act of the Republic of Kazakhstan.

A bank with foreign participation and an Islamic bank are second-tier banks having certain specific features in their activities.

State registration of a bank is carried out by the Corporation on the basis of a permit issued by the authorized body for the opening of a bank (Article 25 of the Law “On Banks and Banking Activities in the Republic of Kazakhstan”).

According to Paragraph 1 of Article 26 of the Law of the Republic of Kazakhstan “On Banks and Banking Activities in the Republic of Kazakhstan”, licences for conducting banking operations, as well as other operations established by this Law, are issued by the authorized body or the National Bank of the Republic of Kazakhstan within their respective competences and in accordance with the procedure determined by the authorized body or the National Bank of the Republic of Kazakhstan, in compliance with the requirements of this Law. Licences for conducting banking and other operations provided for by Article 52-5 of the aforementioned Law are issued by the authorized body exclusively to an Islamic bank.

In accordance with Subparagraph 5) of Article 1 of the Law of the Republic of Kazakhstan dated November 26, 2012, “On Microfinance Activities”, an organization carrying out microfinance activities means a microfinance organization, credit partnership or pawnshop engaged in the provision of microcredits.

According to Paragraph 1-1 of Article 3 of the said Law, microfinance activities include:

the activities of credit partnerships involving the provision of microcredits to their participants;

the activities of pawnshops involving the provision of microcredits to individuals secured by movable property intended for personal use, for a period of up to one year, in an amount not exceeding eight thousand times the monthly calculation index established for the relevant financial year by the law on the republican budget;

the activities of microfinance organizations involving the provision of microcredits to individuals and (or) legal entities, with or without security, in an amount not exceeding twenty thousand times the monthly calculation index established for the relevant financial year by the law on the republican budget.

In addition to the activities specified in Paragraph 1-1 of Article 3, microfinance organizations are entitled to carry out other operations provided for in Paragraph 1-2 of Article 3 of the said Law (consisting of 12 subparagraphs).

The concept and procedure for carrying out debt collection activities are established by the Law of the Republic of Kazakhstan dated May 6, 2017, “On Debt Collection Activities”. Thus, according to Subparagraph 6) of Article 1 of the said Law, debt collection activities mean the activities of a debt collection agency aimed at the pre-trial collection and settlement of debt, as well as the collection of information related to the debt. According to Paragraph 2 of Article 3 of the Law, a legal entity not included in the register of debt collection agencies is not entitled to carry out debt collection activities, describe itself as being engaged in debt collection activities, or use the words “debt collection agency” or words derived from them in its name, implying that it carries out debt collection activities.

The objective side of the crime under consideration is characterized by:

carrying out entrepreneurial, banking (banking operations), microfinance or debt collection activities without registration;

carrying out entrepreneurial, banking (banking operations), microfinance or debt collection activities without a licence mandatory for such activities;

carrying out entrepreneurial, banking (banking operations), microfinance or debt collection activities in violation of the legislation on permits and notifications;

engaging in prohibited types of entrepreneurial activities.

The mandatory characteristics of lawful entrepreneurial, banking, microfinance or debt collection activities are the prior registration of a person with the relevant authorities or the possession of another special permit (licence) to engage in such activities.

Carrying out entrepreneurial, banking, microfinance or debt collection activities without registration means engaging in such activities in the absence of a document confirming the state registration of a legal entity or an individual entrepreneur.

Paragraph 3 of the Regulatory Resolution of the Supreme Court of the Republic of Kazakhstan dated January 24, 2020, “On Certain Issues of the Application by Courts of Legislation in Cases Involving Criminal Offences in the Sphere of Economic Activity”, states that, when qualifying an act under Article 214 of the Criminal Code of the Republic of Kazakhstan on the ground of “absence of registration”, courts should bear in mind that the state registration of an individual carrying out private entrepreneurship without establishing a legal entity consists of registering that person as an individual entrepreneur with the state revenue authority at the place of residence of that person.

Criminal liability for illegal entrepreneurship on the ground of absence of registration arises in cases where, pursuant to Paragraph 2 of Article 35 of the Entrepreneurial Code, an individual was required to register as an individual entrepreneur but failed to do so, and this act caused major damage to a citizen, an organization or the State, or was associated with the extraction of income on a large scale or the production, storage, transportation or sale of excisable goods on a significant scale.

According to Paragraph 2 of Article 35 of the Entrepreneurial Code of the Republic of Kazakhstan, individuals who meet one of the following conditions are subject to mandatory state registration as individual entrepreneurs:

they permanently use the labour of hired employees;

they receive annual income from private entrepreneurship, calculated in accordance with the tax legislation of the Republic of Kazakhstan, in an amount exceeding twelve times the minimum wage established by the Law of the Republic of Kazakhstan “On the Republican Budget” and effective as of January 1 of the relevant financial year.

The activities of the listed individual entrepreneurs without state registration are prohibited, with the exception of persons specified in Subparagraphs 3 and 4 of Article 35 of the Entrepreneurial Code of the Republic of Kazakhstan, as well as cases provided for by the tax legislation of the Republic of Kazakhstan.

In accordance with Paragraph 3 of Article 36 of the Entrepreneurial Code of the Republic of Kazakhstan: “An individual who does not permanently use the labour of employees shall be entitled not to register as an individual entrepreneur when receiving the following types of income established by the Code of the Republic of Kazakhstan dated December 25, 2017, ‘On Taxes and Other Mandatory Payments to the Budget’ (Tax Code): 1) income subject to taxation at the source of payment; 2) property income; 3) income from sources outside the Republic of Kazakhstan; 4) income of domestic workers in accordance with the labour legislation of the Republic of Kazakhstan, who receive income from persons who are not tax agents...” (there are nine subparagraphs in total in Paragraph 3 of Article 35 of the Entrepreneurial Code). The procedure for state registration of individual entrepreneurs is regulated by Article 36 of the Entrepreneurial Code.

At the same time, it is necessary to take into account that Subparagraphs 3 and 4 of Article 35 of the Entrepreneurial Code and the tax legislation provide for cases in which a person carrying out entrepreneurial activities is entitled not to register as an individual entrepreneur. In accordance with Paragraph 1 of Article 774 of the Code of the Republic of Kazakhstan “On Taxes and Other Mandatory Payments to the Budget (Tax Code)”, payers of the unified aggregate payment are recognized as individuals carrying out entrepreneurial activities without registration as individual entrepreneurs who simultaneously meet the following conditions:

they have paid the unified aggregate payment;

they do not use the labour of hired employees;

they provide services exclusively to individuals who are not tax agents and (or) sell exclusively to individuals who are not tax agents agricultural products produced by their own household subsidiary plots, with the exception of excisable products.

Individuals carrying out entrepreneurial activities that meet the requirements of Paragraph 1 of Article 774 of the Tax Code are not subject to registration as individual entrepreneurs; therefore, such persons are not subject to criminal liability under Article 214 of the Criminal Code.

In accordance with Paragraph 1 of Article 33 of the Civil Code of the Republic of Kazakhstan: “A legal entity is an organization that owns separate property under the right of ownership, economic management or operational management and is liable for its obligations with this property, may, in its own name, acquire and exercise property and personal non-property rights and obligations, and may act as a claimant and defendant in court.”

A legal entity must have an independent letterhead or estimate.

Civil legislation distinguishes between two types of legal entities:

a commercial organization, which pursues the extraction of income as the main objective of its activities and may be established in the form of a state enterprise, business partnership, joint-stock company or production cooperative;

a non-commercial organization, which does not pursue the extraction of income as such an objective and does not distribute the net income received among its participants, and which may be established in the form of an institution, public association, joint-stock company, consumer cooperative, foundation, religious association or another form provided for by legislative acts.

A non-commercial organization may engage in entrepreneurial activities only insofar as such activities correspond to its statutory objectives (Article 34 of the Civil Code).

A legal entity that is a non-commercial organization and is maintained exclusively at the expense of the State budget may be established solely in the form of a state institution (Paragraph 3-1 of Article 34 of the Civil Code).

According to Paragraph 1 of Article 42 of the Civil Code, a legal entity that is a non-commercial organization is subject to state registration with the justice authorities. A legal entity that is a commercial organization is subject to state registration with the State Corporation “Government for Citizens”, with the exception of cases provided for by legislative acts of the Republic of Kazakhstan. The procedure for state registration is determined by the legislation of the Republic of Kazakhstan.

A legal entity is considered established from the moment of its state registration. It should be noted that, according to Article 3 of the Law of the Republic of Kazakhstan dated April 17, 1995, “On State Registration of Legal Entities and Record Registration of Branches and Representative Offices”, all legal entities established in the territory of the Republic of Kazakhstan are subject to state registration, regardless of the purposes of their establishment, the type and nature of their activities, or the composition of their participants (members). Branches and representative offices of legal entities located in the territory of the Republic of Kazakhstan are subject to record registration without acquiring the rights of a legal entity.

According to Article 12 of the Law of the Republic of Kazakhstan “On State Registration of Legal Entities and Record Registration of Branches and Representative Offices”, the document confirming the state registration of a legal entity is a certificate in the form established by the Ministry of Justice of the Republic of Kazakhstan.

In accordance with Article 43 of the Civil Code, a branch is a separate subdivision of a legal entity located outside its place of location and performing all or part of its functions, including entrepreneurial functions.

A representative office is a separate subdivision of a legal entity located outside its place of location and carrying out the protection and representation of the interests of the legal entity, concluding transactions and performing other legal actions on its behalf, with the exception of cases provided for by legislative acts of the Republic of Kazakhstan.

Branches and representative offices are not legal entities. They are provided with property by the legal entity that established them and operate on the basis of regulations approved by that legal entity.

The carrying out of entrepreneurial activities by an individual after being removed from the registration records as an individual entrepreneur by the registering authority (Paragraph 4 of Article 38 of the Entrepreneurial Code), and by a legal entity after information on the termination of its activities has been entered into the National Register of Business Identification Numbers (Article 16 of the Law of the Republic of Kazakhstan “On State Registration of Legal Entities and Record Registration of Branches and Representative Offices”), is recognized as illegal entrepreneurship on the ground of absence of registration.

Engaging in entrepreneurial, banking, microfinance or debt collection activities without a licence means carrying out such activities in the absence of a licence in cases where carrying out such activities without obtaining a licence is prohibited by the legislation on permits and notifications.

If an individual entrepreneur carries out an activity subject to licensing, they are required to have a licence granting the right to carry out such activity (Paragraph 5 of Article 19 of the Civil Code). The main regulatory legal act governing the licensing procedure is the Law of the Republic of Kazakhstan “On Permits and Notifications”. In particular, Chapter 5, “Licensing”, of the Law determines the areas subject to licensing, the procedure and conditions for issuing a licence, its validity, termination of its validity, etc.

According to Subparagraph 6) of Article 1 of the Law of the Republic of Kazakhstan “On Permits and Notifications”, a licence means a first-category permit issued by a licensor to an individual or legal entity for carrying out a licensed type of activity or a subtype of a licensed type of activity associated with a high level of danger. In accordance with the aforementioned Law, a notification is a document prepared by an applicant using the form approved by the authorized body in the field of permits and notifications or by the National Bank of the Republic of Kazakhstan, informing of the commencement or termination of an activity or action.

A violation of the legislation on permits and notifications should be understood as carrying out entrepreneurial or banking activities (banking operations) in violation of the licensing conditions and requirements established by the Law of the Republic of Kazakhstan “On Permits and Notifications”.

For the purpose of understanding the essence of this form of illegal entrepreneurship and illegal banking activities, the provisions of the Law of the Republic of Kazakhstan “On Permits and Notifications” concerning licensing requirements and conditions are of fundamental importance, that is, the totality of requirements and conditions established by the regulations on permits and notifications for specific types of activities, compliance with which is mandatory for a licensee when carrying out a licensed type of activity. The establishment of licensing requirements and conditions by the regulations on permits and notifications for specific types of activities is one of the fundamental principles of licensing.

The content of licensing requirements and conditions is determined by the criteria for defining licensed types of activities. Licensing requirements and conditions include:

qualification requirements for an applicant for a licence and a licensee, in particular, for employees of a legal entity or an individual entrepreneur. Such requirements are imposed in relation to licensed types of activities that require special knowledge for their implementation;

requirements concerning the conformity of the facility in which or by means of which the type of activity is carried out (building, structure, equipment and other technical means) with the special conditions for carrying out such activity;

other requirements and conditions provided for by the regulations on permits and notifications for carrying out specific types of activities.

Part One of Article 214 of the Criminal Code provides for criminal liability for engaging in prohibited types of entrepreneurial activities. Prohibited types of activities are activities for which criminal or administrative liability has been established. At the same time, if a person engages in prohibited types of entrepreneurial activities, criminal liability arises directly for that criminal offence. For example, if a person illegally manufactures, processes, stores, transports for the purpose of sale, or sells narcotic drugs, psychotropic substances or their analogues, the act does not require additional qualification under Article 214 of the Criminal Code.

The Regulatory Resolution of the Supreme Court of the Republic of Kazakhstan dated January 24, 2020, “On Certain Issues of the Application by Courts of Legislation in Cases Involving Criminal Offences in the Sphere of Economic Activity”, states that the list of types of activities and actions (operations) for which a permitting or notification procedure has been established under the Law of the Republic of Kazakhstan “On Permits and Notifications” is exhaustive and is not subject to broad interpretation.

The permitting procedure consists of establishing the obligation of a person to possess a valid permit of the relevant category (first or second) before commencing an activity or action (operation).

The notification procedure consists of establishing the obligation of an individual or legal entity to notify the State body responsible for receiving notifications of the commencement of an activity or action before commencing such activity or action (Paragraph 6 of the Regulatory Resolution of the Supreme Court).

Compliance with the permitting or notification procedure must take place before the commencement of an activity or action. Subsequent receipt of a permit or submission of a notification does not release a person from criminal liability under Article 214 of the Criminal Code.

It should be borne in mind that, according to Article 26 of the Law “On Permits and Notifications”, a permit and (or) an annex to a permit shall be deemed issued if the permitting authority has failed to issue them within the prescribed period, with the exception of cases provided for in Subparagraph 3) of Article 26 of this Law.

Failure by a licensee to comply with the requirements of Article 33 of the Law “On Permits and Notifications” concerning the reissuance of a licence and (or) an annex to a licence does not entail criminal liability under Article 214 of the Criminal Code.

The acquisition and storage of goods, provision of premises, transportation services and other assistance in carrying out illegal entrepreneurial activities entail criminal liability only in cases where such actions were committed with direct intent by a person who was aware of the illegality of the entrepreneurial activities. The actions of such a person should be classified as aiding illegal entrepreneurship, regardless of whether that person received remuneration for the services provided. If the specified actions were committed with the aim of obtaining profit jointly with the entrepreneur from illegal entrepreneurial activities, they should be regarded as co-perpetration of the crime provided for in Article 214 of the Criminal Code.

Criminal liability under Part 1 of Article 214 of the Criminal Code arises for carrying out entrepreneurial activities, banking activities (banking operations), microfinance or debt collection activities without registration, as well as for engaging in prohibited types of entrepreneurial activities, if these acts have caused major damage to a citizen, an organization or the State, or are associated with the extraction of income on a large scale, or with the production, storage, transportation or sale of excisable goods on a significant scale.

By its structure, the corpus delicti of this crime is both material and formal. The crime under consideration should be recognized as a material offence if, as a result of its commission, major damage has been caused to a citizen, an organization or the State, or if it is associated with the extraction of income on a large scale or with the production, storage, transportation or sale of excisable goods on a significant scale.

Illegal entrepreneurship, illegal banking, microfinance or debt collection activities also fall under formal offences if they are associated with the extraction of income on a large scale. Establishing major damage in this case is not mandatory for bringing a person to criminal liability.

Depending on whether illegal entrepreneurship, illegal banking, microfinance or debt collection activities are classified as formal or material offences, the structure of their objective side and, accordingly, the number of elements that must be proven differ.

According to Subparagraph 38) of Article 3 of the Criminal Code of the Republic of Kazakhstan, major damage means damage caused to a citizen in an amount exceeding two thousand times the monthly calculation index, or damage caused to an organization or the State in an amount exceeding ten thousand times the monthly calculation index. In accordance with Subparagraph 38) of Article 3 of the Criminal Code of the Republic of Kazakhstan, income on a large scale means income the amount of which exceeds ten thousand monthly calculation indices.

According to Subparagraph 2) of Article 3 of the Criminal Code of the Republic of Kazakhstan, the production, storage, transportation or sale of excisable goods on a significant scale means the quantity of goods whose value exceeds two thousand monthly calculation indices.

When determining the property income of an individual, the provisions of Paragraph 1 of Article 330 of the Tax Code should be followed. At the same time, income should be understood as the entire amount of funds or the value of other property received from the sale of goods (work, services), without deducting expenses associated with carrying out illegal entrepreneurial activities.

The list of excisable goods is established in Article 462 of the Tax Code.

According to Part 3 of Article 13 of the Criminal Code, when illegal entrepreneurial activities take the form of organizing illegal gambling business with the extraction of income on a large or especially large scale, there is no aggregate of criminal offences provided for in Articles 214 and 307 of the Criminal Code, and criminal liability arises under Article 307 of the Criminal Code, which is a special provision in relation to Article 214 of the Criminal Code.

Illegal medical and pharmaceutical activities, in the absence of the consequences provided for in Article 322 of the Criminal Code, entail liability under the relevant part of Article 214 of the Criminal Code if such activities have caused major damage to a citizen, an organization or the State, or are associated with the extraction of income on a large or especially large scale, or with the production, storage, transportation or sale of excisable goods on a significant scale.

If the specified activities have resulted in consequences provided for both in Article 214 and in Article 322 of the Criminal Code, the actions of the guilty person shall be qualified under the aggregate of criminal offences.

If, while carrying out illegal entrepreneurial activities, a person illegally uses another person's trademark, service mark, trade name, appellation of origin of goods or designations similar to them for homogeneous goods or services, then, where the elements of the criminal offence provided for in Article 222 of the Criminal Code are present, this act must be qualified under the aggregate of criminal offences provided for in Articles 214 and 222 of the Criminal Code.

The actions of a person found guilty of engaging in illegal entrepreneurial activities and failing to pay taxes and (or) fees on income received as a result of such activities are fully covered by the corpus delicti of the crime provided for in Article 214 of the Criminal Code.

If a person who is not registered as an individual entrepreneur acquires residential premises or other real estate for personal needs, or receives such property by inheritance or as a gift, and, due to the absence of any need to use this property, temporarily leases it out and receives income as a result of such civil-law transaction (including income on a large or especially large scale), criminal liability under Article 214 for illegal entrepreneurship does not arise. In the event that such a person evades payment of taxes and (or) other mandatory payments to the budget on the income received, the act should, where there are grounds for doing so, be qualified under Article 244 of the Criminal Code as evasion by a citizen of payment of tax and (or) other mandatory payments to the budget. At the same time, activities involving the rental of residential real estate together with the provision of hotel-type services to guests (cleaning of premises, security, laundry services and preparation of meals) must be recognized as entrepreneurial activities.

The subjective side of this act is characterized by an intentional form of guilt. The guilty person is aware that they are carrying out entrepreneurial, banking, microfinance or debt collection activities without registration, as well as without a licence mandatory for such activities, or in violation of the legislation on permits and notifications, or that they are engaging in prohibited types of entrepreneurial activities, and wishes to act in this manner.

The subject of the crime is a sane individual who has reached the age of sixteen. The special characteristic of the subject of this crime is that this is a person who directly carries out entrepreneurial, banking, microfinance or debt collection activities, or manages an organization engaged in entrepreneurial, banking, microfinance or debt collection activities, and therefore it is precisely this person who is obliged to undergo registration in accordance with the established procedure, obtain a licence and comply with the legislation on permits and notifications.

Under Part 2 of Article 214 of the Criminal Code, liability arises for the same acts:

committed by a criminal group;

associated with the extraction of income on an especially large scale;

committed repeatedly.

The definition of the concept of a criminal group is provided in Subparagraph 24) of Article 3 of the Criminal Code (see the commentary to Subparagraph 24) of Article 3 and Part 3 of Article 31 of the Criminal Code of the Republic of Kazakhstan).

When calculating the amount of income received by a criminal group, the total amount of income extracted by all its participants should be taken as the basis.

The especially large amount of income is defined in Subparagraph 3) of Article 3 of the Criminal Code: it constitutes income the amount of which exceeds twenty thousand monthly calculation indices.

Illegal entrepreneurship, illegal banking, microfinance or debt collection activities committed repeatedly should be understood as the commission of two or more acts provided for in Article 214 or a part of Article 214 of the Criminal Code.

Illegal entrepreneurship, illegal banking, microfinance or debt collection activities committed at different times, where the actions of the guilty person were characterized by independent intent, should be qualified as a crime committed repeatedly.

Illegal entrepreneurship, illegal banking, microfinance or debt collection activities may not be recognized as repeated if it is established that the commission of these criminally punishable acts was covered by a single intent. In such cases, the acts shall be recognized as a single crime, and the actions of the guilty person should be qualified under Part 1 of Article 214 of the Criminal Code.

Cases in which the guilty person has been convicted for a previously committed crime or released from criminal liability on grounds established by law cannot be qualified on the basis of repetition either.

It should be noted that the Code of Administrative Offences provides for liability for illegal entrepreneurship (Article 153), illegal banking activities (Article 155), violation of the requirements of the legislation of the Republic of Kazakhstan on microfinance activities (Article 211), and violation of the requirements of the legislation of the Republic of Kazakhstan on debt collection activities (Article 211-1). A comparative analysis of the above-mentioned provisions of the Code of Administrative Offences with Article 214 of the Criminal Code has revealed certain provisions that have not been regulated by legislation in the Code of Administrative Offences and the Criminal Code. Thus, liability for illegal entrepreneurship and illegal banking activities (Articles 153 and 155 of the Code of Administrative Offences) arises if, as a result of such activities, major damage has been caused to a citizen, an organization or the State, or if such activities are associated with the extraction of income on a large scale or with the production, storage, transportation or sale of excisable goods on a significant scale (the latter element is contained only in Article 153), provided that these actions do not contain the elements of a criminally punishable act.

According to the Note to Article 153 of the Code of Administrative Offences:

For the purposes of Articles 153 and 155, major damage means damage caused to a citizen in an amount not exceeding one thousand monthly calculation indices, or damage caused to an organization or the State in an amount not exceeding ten thousand monthly calculation indices.

For the purposes of Articles 153 and 155 of the Code of Administrative Offences, income on a large scale means income the amount of which does not exceed ten thousand monthly calculation indices.

As previously noted, with regard to Article 214 of the Criminal Code, according to Subparagraph 38) of Article 3 of the Criminal Code, major damage means damage caused to a citizen in an amount exceeding two thousand times the monthly calculation index, or damage caused to an organization or the State in an amount exceeding ten thousand times the monthly calculation index.

A question arises as to how to qualify the actions of the guilty person when the amount of damage caused to a citizen exceeds the range from one thousand to two thousand monthly calculation indices. I believe that the legislator needs to regulate this gap. Unfortunately, it must be acknowledged that there are quite a few such discrepancies in the Code of Administrative Offences and the Criminal Code in relation to homogeneous offences.

The Note to the provision under consideration states that a person who has committed an act provided for in Part One of this Article for the first time shall be released from criminal liability in the event of voluntary compensation for the damage.

The act provided for in Part 1 of Article 214 of the Criminal Code of the Republic of Kazakhstan is classified as a minor offence.

The act provided for in Part 2 of Article 214 of the Criminal Code of the Republic of Kazakhstan is classified as an offence of medium gravity.

Commentary of 2021 to the Criminal Code of the Republic of Kazakhstan by Isidor Shamilovich Borchashvili, Honoured Figure of Kazakhstan, Doctor of Law, Professor, Academician of the Kazakhstan National Academy of Natural Sciences, member of the Scientific Advisory Councils under the Constitutional Council of the Republic of Kazakhstan and the Supreme Court of the Republic of Kazakhstan, member of the working group on the reform of the law enforcement system under the Security Council of the Republic of Kazakhstan, Honoured Employee of the Ministry of Internal Affairs of the Republic of Kazakhstan.

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