PART A - INTRODUCTION

Comments to be addressed to:

R.Abdirassilov@aifc.kz

1.Scope and Purpose

1.1 This paper presents a proposed policy to be adopted by the Astana Financial Services Authority (the "AFSA") for the regulation of digital banking services in the Astana International Financial Services Centre (the "AIFC") (the "Framework").

1.2 Terms not defined herein have the meaning given to them in the AIFC Glossary.

1.3 The proposed Framework will aid the economic and social development of Kazakhstan by diversifying who provides banking services, what those banking services are and how Clients[1] use these services.

1.4 This will support the five-year programme for 'Digital Kazakhstan', which is seeking to improve the competitiveness of Kazakhstan’s economy and quality of life through the progressive development of the digital ecosystem. This programme also includes the development of financial technologies, non-cash payments and electronic commerce, as well as progressive regulations that create a vibrant environment to promote greater inclusion and innovation. The AFSA is being supported by and working with the European Bank of Reconstruction and Development (the "EBRD") in implementing aspects of the 'Digital Kazakhstan' programme within the AIFC. The AFSA and the EBRD are engaging consultants, such as Clifford Chance in this case, to assist it with this programme. The proposed Framework is a part of this programme.

1.5 The aim of the proposed Framework is to enhance and build on the existing regulatory framework in order to support the licensing of digital-only banks and to regulate banking services provided remotely (e.g. online; in a mobile app), in support of the introduction of "Open Banking".

1.6 The proposed Framework will provide regulatory certainty to Authorised Firms providing banking services, and to their Clients. It will also promote new and innovative ways for banking services to be provided in the AIFC. 

2. Background

2.1 Digital banking is transforming how banking services are provided around the world. It is expanding the ways that banking services can be offered, which is opening it up to clients that were previously under-served. This means that traditional banking products, such as accepting deposits and providing credit, do not need to be offered through physical branches, but can be provided remotely; for example, online or in a mobile app. Clients can therefore access more banking services in any location.

2.2 In addition, the concept of 'Open Banking' has gained traction over the past few years. This allows a client's banking data to be used not only by his or her own bank, but also by third party providers in order to enable the provision of new products and services which will benefit clients. It establishes a secure way for a wide variety of providers to access a client's banking information and receive improved financial services and other related services.

2.3 Over the past few years, an increasing number of jurisdictions have been putting in place the regulatory infrastructure to enable remote access through digital banking, and to develop 'Open Banking'. Against this background, the AIFC is seeking to put in place the proposed Framework so that Kazakhstan can benefit from these developments and become an attractive location for both local and international providers of such services.

[1]    As per the AFSA Glossary, "Clients" is a broad term including individuals, corporate and government bodies, which can be located within Kazakhstan or externally.