7. Main functions, powers and objectives of the AFSA

(1)  The AFSA has such functions and powers as are conferred, or expressed to be conferred, on it:

(a) by or under the Constitutional Statute of the Republic of Kazakhstan “On the Astana International Financial Centre” (“the Constitutional Statute”); and

(b) by or under any other law made by the Governor or the Management Council.

(2)  The AFSA has power to do whatever it deems necessary for or in connection with, or reasonably incidental to, performing its functions and exercising its powers conferred in accordance with (1).

(3)  In performing its functions and exercising its powers, the AFSA will pursue the following objectives (“the Regulatory Objectives”):

(a)  the regulation, control and supervision of financial activities in the AIFC by Centre Participants with a view to the maintenance of the safety and soundness of the financial system within the AIFC;

(b)  ensuring that financial markets in the AIFC are fair, efficient, transparent and orderly;

(c)  creating fair, transparent and non-discriminatory conditions for Centre Participants;

(d)  fostering and maintaining confidence in the AIFC’s financial system and regulatory regime;

(e)  fostering and maintaining the financial stability of the AIFC’s financial services industry and capital markets, including the reduction of systemic risks;

(f)  preventing, detecting and restraining actions, including Financial Crime, that may cause damage to the reputation of the AIFC or to the financial activities carried out in the AIFC by taking appropriate measures, including by imposing sanctions;

(g)  protecting interests of investors and users of financial services;

(h)  implementing in the AIFC a regulatory regime that complies with international standards in the sphere of regulation of financial services and facilitates the growth of the financial services industry and capital markets in Kazakhstan;

(i)  fostering the development of financial technologies in the AIFC; and

(j)  pursuing such other objectives as may be specified by AIFC’s Regulations from time to time.

(3-1)  In pursuing the objective referred to in (3)(f) in the context of anti-money laundering, countering the financing of terrorism and proliferation of weapons of mass destruction the AFSA shall exercise control and supervision over the compliance of Centre Participants with the relevant AIFC Acts by conducting inspections, taking appropriate enforcement actions and imposing sanctions.

(3-2)  In pursuing the objective referred to in (3)(e) in the context of Recovery, the AFSA will aim:

(a)     to ensure the continuity of systemically important financial services; and

(b)     to avoid unnecessary destruction of value and losses to creditors.

 (3-3)  In pursuing the objective referred to in (3)(e) in the context of Resolution, the AFSA will aim:

(a)     to ensure the continuity of systemically important financial services; 

(b)     to avoid unnecessary erosion of value and losses to creditors; 

(c)     to minimise the overall costs of Resolution, in home and host jurisdictions; and 

(d)     to consider the potential impact of its Resolution Actions on financial stability in other jurisdictions.

(3-4)    In pursuing the objective referred to in (3)(g) in the context of Resolution of an Authorised Person, the AFSA will aim: 

(a)     to protect Clients (including depositors and Policyholders); and 

(b)     to protect Client Assets by providing prompt access to assets through: 

(i)  the continued functioning of the Authorised Person following Resolution; 

(ii)  the rapid return to the Clients of identifiable and segregated Client Assets; or 

(iii)  the transfer of the Client Assets to a performing third party.

(3-5)    In pursuing the objective referred to in (3)(g) in the context of Resolution of an Authorised Market Institution, the AFSA will also aim to:

(a)     achieve continuity and timely completion of critical payment, clearing, settlement and recording functions; 

(b)     facilitate the timely settlement of obligations of the Authorised Market Institution; 

(c)     maintain continuous access of participants to: 

(i)  Securities or cash accounts provided by the Authorised Market Institution; and  

(ii)  Securities or cash collateral posted to and held by the Authorised Market Institution that is owed to such participants; 

(d)    avoid any disruption in the operation of links between the Authorised Market Institution in Resolution and other Authorised Market Institutions that would have a material negative effect on financial stability or the functioning of markets; and 

(e)     safeguard, preserve and enable continuous processing of, and access to, data stored in a trade repository.”.

(3-6) In pursuing the objectives referred to in (3), the AFSA may enter into arrangements or instruments (including orders, agreements, or memoranda of understanding, on mutual recognition or cooperation) with other regulators. 

(4)     The AFSA may prepare and make available forms for any purpose under these Regulations or Rules made hereunder and may give instructions for their completion.

7-1. Principles of good regulation

In performing its functions and exercising its powers under the Acting Law of the AIFC and these Regulations, the AFSA must have regard to:

(a) the need to act in accordance with all laws and Regulations to which it is subject;

(b) the principle that the AFSA should exercise its powers and functions in a fair and transparent manner;

(c) the need to comply with such generally accepted principles of good governance as it is reasonable to regard as applicable to it;

(d) the need to use its resources in the most economic and efficient way;

(e) the need to balance the burdens and restrictions on firms with the benefit of regulation;

(f) the desirability of facilitating innovation and fostering the international competitiveness of the AIFC; and

(g) the desirability of fostering competition between those who are subject to regulation by the AFSA;

(h) the desirability of sustainable growth; and

(i) the principle of a Centre Participant’s senior management responsibility for the Centre Participant’s activities and for ensuring its business complies with regulatory requirements.

AFSA rulemaking powers

(1)      The AFSA may make Rules on a particular issue is without prejudice to the general rulemaking power of the AFSA and other Centre Bodies under Article 4(3) of the Constitutional Statute.

(2)      The Rules, in such cases or classes of cases as may be prescribed by them, may extend, exclude, waive and/or modify the application of provisions of these Regulations, the Rules or any other legislation administered by the AFSA, with the exception of Part 9 (Enforcement) of these Regulations, if the Board of Directors of the AFSA considers it necessary or desirable order to facilitate the pursuit of the Regulatory Objectives.

(3) The Rules made under this section may enable instruments to carry out their own purposes. 

8-1. Power of the AFSA to give Guidance

(1)     The AFSA may, on the application of a Person or on its own initiative, give Guidance consisting of such information and advice as it considers appropriate:

(a)     with respect to the operation of specified parts of these Regulations, any Regulations and any Rules which the AFSA administers;

(b)     with respect to any matter relating to functions of the AFSA within its competence;

(c)     for the purpose of meeting the Regulatory Objectives; and

(d)     with respect to any matters about which it appears to the AFSA to be desirable to give the relevant information or advice.

(2)     Guidance issued by the AFSA may be given to Persons generally or to a class of Authorised Persons or Ancillary Service Providers.

(3)     Before the AFSA gives Guidance, the AFSA must ensure that the proposed Guidance is made available for public consultation for a period of at least 30 days.

(4)     Before giving the proposed Guidance, the AFSA must consider the submissions made to it about the proposed Guidance during the public consultation period and must make changes to the Guidance that it considers desirable having regard to the submissions.

(5)     The AFSA may give the proposed Guidance without holding public consultation or shorten the public consultation period for the proposed Guidance if satisfied that it is justified in the interests of the AIFC.

(6)     Unless otherwise indicated by the AFSA, Guidance issued by the AFSA is indicative of the view of the AFSA at the time and in the circumstances in which it was given and is non-binding.

(7)     If the AFSA considers it necessary or desirable, it must publish Guidance in a way the AFSA thinks appropriate for bringing Guidance to the attention of:

(a)     Persons likely to be affected by it; and

(b)     others who may be likely to become subject to similar guidance.

9. AFSA power to modify or waive Rules

(1) The AFSA may, on the application of a Person or on its own initiative and by written notice, direct that:

(a) 1 or more relevant provisions: (i) apply to the Person with the modifications mentioned in the notice; or (ii) do not apply in relation to the Person.

(b) the AFSA does not intend to take regulatory action over a particular state of affairs or particular conduct.

(2) The AFSA must not give a direction under paragraph (a) subsection (1) unless it is satisfied that:

(a) compliance by the Person with the relevant provisions, or with the relevant provisions as unmodified, would be unduly burdensome or would not achieve the purpose for which the relevant provisions were made, and

(b) the direction would not adversely affect the advancement of any of the AFSA’s Regulatory Objectives.

(2-1) The AFSA must make public by way of guidance the criteria applicable to giving directions under paragraph (b) of subsection (1) after the date of publication of the guidance

(3) A direction under (1) may be given subject to conditions.

(4) The AFSA, on the application of the Person or on its own initiative, may: (a) revoke a direction; or (b) vary it.

(5) In this section: “Relevant provisions” means any provision (a) of these Regulations, the Rules or any other legislation administered by the AFSA, and (b) of any other Regulations and Rules which (i) relate to the functions of the AFSA and (ii) are declared by Rules adopted by the Board of Directors of the AFSA to be a provision to which this section applies.

(6) Unless the AFSA is satisfied that it is inappropriate or unnecessary to do so, it must publish a notice under subsection (1) in a way the AFSA considers appropriate for bringing the notice to the attention of: (a) person(s) likely to be affected by it; and (b) others who may be likely to become subject to a similar notice.

(7) The application for a direction, revocation of a direction or its variation must be accompanied by the filing fee prescribed in the Rules by the AFSA from time to time.

10. AFSA decision making procedure

(1) Where a provision in these Regulations or Rules made thereunder requires the AFSA to make a decision, the AFSA will follow the decision making procedures set out in Schedule 1.

(2) Should it consider it necessary or desirable to do so, the AFSA may establish a mechanism whereby a decision made in accordance with (1) may be reviewed by officers of the AFSA who were not involved in making such decision or an objective independent third party competent to carry out such function.

11. Appeals against decisions of the AFSA, and the AFSA's statutory immunity

(1) A Person aggrieved by a decision of the AFSA may appeal to the AIFC Court against the decision.

(2) The grounds of an appeal under this section are that:

• (a) the decision was ultra vires or there was some other error of law;
• (b) the decision was unreasonable;
• (c) the decision was made in bad faith;
• (d) there was a lack of proportionality; or
• (e) there was a material error as to the procedure.

(3) The procedure to be adopted by parties to an appeal and by the AIFC Court on such an appeal is set out in Schedule 2.

(4) Neither the AFSA nor any Person who is, or is acting as, a director, officer or member of staff of the AFSA may be held liable for anything done or omitted to be done in the performance or purported performance of its functions, or in the exercise or purported exercise of its powers, under these Regulations or any other AIFC Regulations or Rules, unless the act or omission is shown to have been done in bad faith.

12. Definition of Centre Participant

A Centre Participant is defined under Article 1(5) of the Constitutional Statute.

13. Definition of Authorised Firm

An Authorised Firm is a Centre Participant which has been licensed by the AFSA to carry on one or more Regulated Activities.

14. Definition of Authorised Market Institution

An Authorised Market Institution is a Centre Participant which has been licensed by the AFSA to carry on one or more Market Activities.

15. Definition of Authorised Person

An Authorised Person is either an Authorised Firm or an Authorised Market Institution.

16. Definition of Ancillary Service Provider

An Ancillary Service Provider is a Centre Participant which has been licensed by the AFSA to carry on one or more Ancillary Services.

17. Definition of Regulated Activity

The AFSA may make Rules prescribing which kinds of Regulated Activities, with such modifications or limitations as may be specified, may be carried on by an Authorised Firm.

18. Definition of Market Activity

(1) The activities specified in Schedule 4 of AIFC General Rules constitute Market Activities for the purposes of these Regulations and Rules made thereunder.

(2) The AFSA may make Rules adding to, removing activities from, or otherwise modifying the lists of Market Activities prescribed under section 18(1).

19. Definition of Ancillary Service

The AFSA may make Rules prescribing which kinds of Ancillary Services, with such modifications or limitations as may be specified, may be carried on by an Ancillary Service Provider.

20. Definition of Controlled Function

(1) The AFSA may make Rules prescribing functions (“Controlled Functions”) of an Authorised Person that may only be carried out by individuals who have been approved by the AFSA to carry out those functions.

(2) Controlled Functions prescribed under subsection (1) may include the functions of senior officers or Employees with material responsibility for both or either:

• (a) managing an Authorised Person; or
• (b) the carrying on by an Authorised Person of its Regulated or Market Activities

21. Definition of Approved Individual

An Approved Individual is an individual who is approved by the AFSA to carry out a Controlled Function.

22. Definition of Designated Function

The AFSA may make Rules prescribing functions (“Designated Functions”) of an Authorised Person that may only be carried out by individuals who have been appointed by the Authorised Person as a Designated Individual in relation to that function

23. Definition of Designated Individual

A Designated Individual is an individual who is appointed by an Authorised Person to carry out a Designated Function.

24. The General Prohibition

A Centre Participant must not carry on a Regulated Activity, Market Activity or Ancillary Service unless it is licensed to do so by the AFSA.

25. Prohibition relating to Controlled Functions

(1) A Person must not carry out a Controlled Function for an Authorised Person unless he is approved by the AFSA as an Approved Individual to carry out that Controlled Function for the Authorised Person.

(2) An Authorised Person must take all reasonable steps to ensure that no Person performs a Controlled Function on its behalf:

• (a) without being authorised by the AFSA as an Approved Individual in relation to the relevant Controlled Function; or
• (b) contrary to a restriction imposed by the AFSA; or
• (c) where Approved Individual status of that individual has been suspended or withdrawn.

26. Prohibition relating to Designated Functions

An Authorised Person must take all reasonable steps to ensure that no Person performs a Designated Function on its behalf

• (a) without being appointed by the Authorised Person as a Designated Individual in relation to the relevant Designated Function; or
• (b) contrary to a restriction imposed by the AFSA; or
• (c) where Designated Individual status of that individual has been suspended or withdrawn.

27. Prohibition relating to Financial Promotions

(1) A “Financial Promotion” is any communication (made via any medium including brochures, telephone calls and presentations) the purpose or effect of which is:

• (a) to promote or advertise
• (i) Investments or
• (ii) any Regulated Activity; or
• (b) to invite or induce any Person
• (i) to enter into an agreement with any Person in relation to Investments or
• (ii) to engage in any Regulated Activity.

(2) A Centre Participant may not make a Financial Promotion except as provided by or under these Regulations.

(3) The AFSA may make Rules relating to:

• (a) the circumstances in which a Centre Participant may make, or will be deemed to make, a Financial Promotion; and
• (b) the form and content of such Financial Promotion.

28. Enforceability of Agreements

(1) Subject to section 28(5), a Centre Participant who makes an agreement whilst acting in breach of the General Prohibition, or who makes an agreement as a result of the making by himself or another Person of a Financial Promotion which is in breach of the Financial Promotions Prohibition, will not be entitled to enforce such agreement against any party (a "relevant party") to the agreement.

(2) Subject to any agreement that may otherwise be reached between the parties, a relevant party may apply to the AIFC Court to recover:

• (a) any money paid or property transferred by him under the agreement;
• (b) compensation reflecting any loss sustained by the relevant party as a direct result of such payment or transfer; and
• (c) compensation for an amount becoming due that is dependent upon a contingency occurring under the relevant agreement, provided that such contingency has occurred prior to the relevant party being notified by the other party or by the AFSA that the agreement was entered into in breach of the General Prohibition or the Financial Promotions Prohibition.

(3) If the relevant party chooses not to perform the agreement or, under section 28(2), recovers money paid or property transferred by him under the agreement, he must in turn repay any money or property received under the agreement.

(4) The compensation recoverable under section 28(2)(b) is the amount agreed between the parties to the agreement or, following an application to the AIFC Court, the amount determined by the AIFC Court.

(5) If the AIFC Court is satisfied that the Centre Participant:

• (a) who acted in breach of the General Prohibition reasonably believed that he was not in breach of the General Prohibition by entering into such agreement; or
• (b) who made the Financial Promotion reasonably believed that he was not in breach of the Financial Promotions Prohibition; or
• (c) who made an agreement as a result of the making by another Person of a Financial Promotion which was in breach of the Financial Promotions Prohibition, did not know that the relevant Financial Promotion was in breach of the Financial Promotions Prohibition.

and that it is fair and just in the circumstances to make such an order, it may make one or more of the following orders:

• (d) an order that the agreement be enforced between the parties to such extent and under such terms and conditions as the AIFC Court sees fit; or
• (e) an order that money paid or property transferred under the agreement be retained or dealt with in accordance with the agreement or in such manner as the AIFC Court deems fit.

(6) For the purposes of (5), it is not relevant that the relevant Centre Participant was unaware of the existence of either the General Prohibition or the Financial Promotion Prohibition.

(7) Where property transferred under the agreement has been transferred to a third party, a reference in this section to such property will be interpreted as a reference to the value of the property at the time of the transfer under the agreement.

(8) In this section, "agreement" means an agreement, the making or performance of which constitutes, purports to constitute or is part of, the carrying on of a Regulated Activity, Market Activity or Ancillary Service.

29. False claims to be a Centre Participant

(1) A Person who is not a Centre Participant must not represent that he is a Centre Participant.

(2) A Centre Participant who is not an Authorised Firm, an Authorised Market Institution or an Ancillary Service Provider must not represent that he is such a Person.