Kazakhstan MP doubts upcoming legalization

Omarkhan Oksikbayev, Member of the Lower Chamber of the Kazakhstan Parliament, doubts success of the forthcoming legalization of property in Kazakhstan, Tengrinews reports.

Kazakhstan has scheduled its new amnesty campaign to September 1, 2014 - December 31, 2015. Money, securities, equity stakes and real estate located outside Kazakhstan can be legalized during the campaign except for property obtained through criminal practices, including corruption. 

According to Tax Justice Network, Kazakhstan is among the ten countries notorious for offshoring money. The international estimates suggest that the money offshored from Kazakhstan amounts to $138 billion. The Government of Kazakhstan is expecting the amnesty to draw $10 to $12 billion back into the country. 

But the MP believes that to return an amount as large as $10-12 billion back into Kazakhstan's economy, the government has to make sure that those who are supposed to legalize their money are not scared of doing so.

The Government announced that law enforcement authorities would be closely monitoring the process. "Won't this scare away the people who should come legalize? Since we have gone this far, maybe we should then liberalize this too (lift police supervision from the process)? Then we indeed might get the expected 10-12 billion. This compromise is worth it. Not all, perhaps, should be punished,” he said addressing the Vice-Minister of Finance of Kazakhstan Ardak Tengebayev during discussion of the draft law on Amnesty of Kazakhstan citizens, oralmans (repatriated ethnic Kazakhs) and permanent residence holders in relation to legalization of their property in the Parliament.

He believes that “scaring” those will to participate in the legalization with harsh measures is counterproductive and will not result in the desired effects. “It will result in a waste of money and time of government agencies. Once again we will be a laughingstock,” he continued and quoted President Nursultan Nazarbayev as saying: "Let us forgive, have them return the money."

He reminded that it would not be the first attempt to return offshore funds and property back into the country that Kazakhstan was making. "We expected around 15 billion dollars from the first amnesty. But we got only around 500 million dollars. We didn't get what we expected from the second amnesty either. So this third one is unlikely to succeed," he said pessimistically.

Kazakhstan held its first legalization campaign in 2001. It resulted in return of $480 million. The second legalization held in 2006-2007 was more successful and brought a lump sum of $6.8 billion.

Vice-Minister Tengebayev addressed Oksikbayev’s remarks by saying that the bill offered incentives even to those who earned money by engaging in economic crimes. Tengebayev assured that all the cases related to economic crimes would be closed and no new ones would be initiated as a result of the legalization. Therefore, the law enforcement agencies would only monitor the process and would not be addressing any such cases during the legalization of property.

However, the Kazakhstan government approach to corruption offenses is quite different, the vice-minister continued. After we consulted the EAG (Eurasian Group on Combating Money Laundering and Financing of Terrorism) and the FATF (Financial Action against Money Laundering), and met with Moscow law enforcement officials and the National Bank, our negative position towards corruption became even firmer, he said. Therefore, property obtained via corruption schemes will not be subject to legalization.

Reporting by Altynai Zhumzhumina, writing by Dinara Urazova, editing by Tatyana Kuzmina