Recent Important Changes to Legislation in Azerbaijan Republic
Change of Regulatory Authorities in Banking Sector
- By the Law on introducing amendments to the Law on Banks dated 4 March 2016 (approved by the Presidential Decree on 9 March and officially published on 11 March) a number of the regulatory authorities of the Central Bank in respect of monitoring the banks’ activities have been delegated to the Chamber of Control over Financial Markets (“Chamber”). The authorities of the new Chamber will include (i) issuance or revocation of licenses to banks and non-banking organizations, (ii) determining limitation as to participation of foreign bank capital in local banking system, (iii) granting permits to local banks for establishment of their branches/representative offices, granting licenses for establishment of branches of foreign banks and permits for opening representative offices of foreign banks in Azerbaijan.
- By the Law on introducing amendments to the Law on Central Bank dated 4 March 2016 , a legal statues of the Central Bank is determined to be a public legal entity (which is different from the statues of the conventional state authority). Under the Law amongst others, the purpose of the Central Bank’s activity shall be limited to regulation of centralized inter-banking and other non-licensed payment systems and ensure effective operation of such systems. In addition, the following authorities of the Central Bank have been revoked:
- determining prudential norms of credit organizations;
- appointment of temporary receiver for banks;
- imposition of restriction on banking operations.
- Also authority of the Central Bank to impose sanctions in respect of credit organizations was removed.
- On 10 March 2016 the Charter of the Chamber of Control over Financial Markets was approved by the Presidential Decree. The Chamber is established as a public legal entity and prohibited to engage into entrepreneurial activities. The Chamber shall enjoy powers of the “unified” controlling body over financial markets and will conduct financial monitoring in respect of banks, non-banking organizations, credit unions, post offices, insurance companies, players of securities market, investment funds. It will also be responsible for developing currency regulations, rules on deposits’ insurance and money laundering. The control over activity of this Chamber shall be performed by the President of Azerbaijan.
- By the Law on introducing amendments to the Law on Currency Regulation dated 4 March 2016 (approved by the Presidential Decree on 9 March, the Chamber is inter alia authorized to determine conditions as to opening of foreign bank accounts of entities licensed to act in securities market, credit organizations, professional participants of insurance market, investment funds and their managers. Also the rules as to opening foreign bank accounts of residents and foreign & local bank accounts for non-residents will further be developed by this Chamber. Such rules were previously approved by the Central Bank.
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* Information in our updates does not constitute legal advice.