Minutes of the Meeting

of the Interdepartmental Working Group with the Participation of Public Organizations/Civil Society Institutions on Developing Further Actions to Counter Financial Pyramids within the Framework of the Signed Memorandum

Attendees
Representatives of government agencies and public organizations (as per the list).

Agenda

1. Approaches to improving financial literacy, and the prevention and timely detection of financial pyramids.
2. Improving interaction between law enforcement agencies and civil society institutions by developing a unified and effective feedback channel.
3. Discussion of the Work Plan for the implementation of the Memorandum of Interaction and Cooperation on the Prevention and Timely Detection of Financial Pyramids.

Almaty
No. 7
Dated March 31, 2021

Attended:
Representatives of government agencies and public organizations (as per the list).

Agenda:

1. Approaches to improving financial literacy, and the prevention and timely detection of financial pyramids.
2. Improving interaction between law enforcement agencies and civil society institutions by developing a unified and effective feedback channel.
3. Discussion of the Work Plan for the implementation of the Memorandum of Interaction and Cooperation on the Prevention and Timely Detection of Financial Pyramids.

1. Approaches to Improving Financial Literacy, and the Prevention and Timely Detection of Financial Pyramids.

(Abdrakhmanov N.A., Kanatbayeva A.Sh., Kusetov S.S., representatives of public organizations)

1. Aigul Kanatbayeva, from the Department for the Protection of Financial Services Consumers' Rights, presented information on the placement of materials to improve financial literacy among the population on the Fingramota.kz website, social networks, and other platforms. It was noted that there is a problem with the overall target audience reach. To expand coverage, the Agency has sent a letter to local executive bodies to conduct on-site lectures and seminars in May 2021 (for employees of city-forming enterprises, socially vulnerable groups, university students, etc.). Due to the epidemiological situation, these will be held in the form of online training.
2. Bibinur Sheralieva, Head of the Public Foundation "Social House 'Rahym'," noted the problem of aggressive promotion by financial pyramid agents (aggressive advertising, conducting lectures, etc.). It was proposed to consider the need for a dedicated information (news) channel about financial pyramids in the media.
3. Kazybek Shaikh, President of the "National Association of Cooperatives and Other Forms of Economic Communities of the Republic of Kazakhstan," stated that the majority of financial pyramids are registered as consumer cooperatives, housing construction cooperatives, and multi-level marketing (MLM) companies. The Association is currently working on the activities of cooperatives, conducting online training, and has established standards for cooperatives. The Association also offered to assist in identifying financial pyramids that are disguised as cooperatives. A Committee on the MLM Industry has also been established under the Association. It was also proposed that all government agencies post information (presentations, informational videos, lists of companies with signs of financial pyramids, etc.) on the information platform of the National Association of Cooperatives and Other Forms of Economic Communities of the Republic of Kazakhstan (Kooperativ.kz).
4. Nurlan Abdrakhmanov of the ARRFD supported the proposal for public organizations to work directly with cooperatives (providing recommendations, standards, and training materials). The mechanism for implementing this proposal needs to be developed.
5. Public organizations raised the question of whether "recruiters" for financial pyramids are being held criminally liable. Samat Kusetov, Deputy Head of the Department for the Investigation of Property Theft of the Criminal Police Department of the Ministry of Internal Affairs of the Republic of Kazakhstan, noted that criminal legislation does not provide for the possibility of prosecuting so-called "recruiters." However, each case is individual and unique, and criminal proceedings may be initiated against such individuals under Article 190 of the Criminal Code of the Republic of Kazakhstan, "Fraud."
6. Deputy Chairman Nurlan Abdrakhmanov instructed the Department for the Protection of Financial Services Consumers' Rights (Aigul Kanatbayeva) to request informational material on "recruiters" and cooperatives from public organizations. He also instructed them to include these issues in the Work Plan for the implementation of the Memorandum on Interaction and Cooperation on the Prevention and Timely Detection of Financial Pyramids and to coordinate with public organizations.

2. Improving Interaction between Law Enforcement and Civil Society

(Abdrakhmanov N.A., Kutepov S.S., Turlybayev O.N., representatives of public organizations)

1. Samat Kusetov, Deputy Head of the Department for the Investigation of Property Theft of the Criminal Police Department of the Ministry of Internal Affairs of the Republic of Kazakhstan, stated that every head of a regional, provincial, or ministry department has blogs on official websites. Letters and complaints receive a sufficiently prompt response. The "102" online application, which can be downloaded from the Play Market, is also active, where citizens can file appeals/complaints (similar to a taxi-hailing app). Regarding the improvement of interaction between government agencies, a current plan is in place. The ARRFD has received 24 materials under this plan, and three criminal cases have been initiated and are under investigation.
2. Oryn Turlybayev, Senior Investigator of the Investigative Department of the Agency for Financial Monitoring, stated that all appeals are considered within the framework of the law and information is provided within state-mandated timeframes.
3. Robert Abzalilov, Head of the ALE "National League of Pawnshops of Kazakhstan," stated that currently, in order to submit information about a company with signs of a financial pyramid, the association has to contact three government agencies simultaneously (the Agency, AFM, and the Ministry of Internal Affairs). He proposed establishing a single platform or a single government body (e.g., the General Prosecutor's Office) for submitting such requests. This single body would then distribute the information and forward it to the relevant government agency if a prior case has been initiated. He also noted the need for a single platform/portal to access reliable information and a registry of companies that are under pre-trial investigation, have criminal cases initiated against them, or have already been convicted by a court for creating financial pyramids.
4. Nurlan Abdrakhmanov stated that if law enforcement agencies (AFM, Ministry of Internal Affairs) provide a list/registry of companies against which criminal cases have been initiated or which have been convicted by a court for creating financial pyramids, the Agency is ready to post this list/registry on the Fingramota.kz website.
5. Kanat Sozakbayuly, First Vice-President of the Republican Public Association "Eurasian Union of Lawyers and Mediators 'Prakticos'," stated that the public organizations that signed the Memorandum currently cannot schedule appointments with regional or provincial law enforcement departments to hold a constructive dialogue.
6. Nurlan Abdrakhmanov noted the need to develop a single feedback channel for each government agency to connect with public organizations/civil society institutions (a unified format for all government agencies). He stated that law enforcement agencies must work on this issue in collaboration with public organizations.

3. Discussion of the Work Plan for the Implementation of the Memorandum

(Abdrakhmanov N.A., Shagdarov M.A., Turlybayev O.N., representatives of public organizations)

1. Maksat Shagdarov, Head of the Financial Market Abuse Counteraction Department of the Agency's Financial Institutions Methodology and Prudential Regulation Department, stated that the Agency has developed a plan of action for the implementation of the Memorandum. He added that proposals for additional items in the plan should be sent to the Agency.
2. Bibinur Sheralieva, Head of the Public Foundation "Social House 'Rahym'," noted that during long investigations, fraudsters have the opportunity to sell or transfer property to third parties. It is also discovered that the property is already mortgaged because no seizure was placed on it. Therefore, she proposed that law enforcement agencies should promptly seize all property of a suspicious company when a criminal case is initiated.
3. Oryn Turlybayev, Senior Investigator of the Investigative Department of the AFM, stated that many citizens currently have a very low level of legal and financial literacy. When summoned by an AFM investigator, many financial pyramid investors (victims) refuse to testify and refuse to file complaints about the companies' illegal activities. Therefore, he proposed that public organizations/civil society institutions should assist in explaining to the public that the activities of organizations under investigation show signs of a financial pyramid and that it would be advisable for investors to file complaints with law enforcement agencies and assist in the criminal investigation by providing testimony. He also noted that during criminal investigations, there is a need for qualified assistance from public organizations as specialists in their fields. To this end, it is necessary to consider the possibility of involving representatives of public organizations/associations as specialists in investigations. Public organizations expressed their agreement to assist law enforcement agencies by providing specialists in each represented field (consumer cooperatives, pawnshops, MFIs, etc.).
4. It was agreed that the parties to the Memorandum should submit their proposals to the ARRFD and approve the Work Plan by April 26, 2021.

Deputy Chairman of the Agency for Regulation and Development of the Financial Market
N.A. Abdrakhmanov

List of Invited Participants

1. KOZHAKHMET Madiyar Duysembayevich - Chairman of the Committee for Civil Society Affairs of the Ministry of Information and Social Development
2. BAKIROV Anuar - Head of the Department for the Development of Banks and Non-Banking Organizations of the National Bank of the Republic of Kazakhstan
3. KUSETov Samat Sultanovich - Deputy Head of the Department for the Investigation of Property Theft of the Criminal Police Department of the Ministry of Internal Affairs of the Republic of Kazakhstan
4. TURLYBAYEV Oryn Nurzhanovich - Senior Investigator of the Investigative Department of the AFM
5. OMARKHANOV Yerbol Sekenovich - Director of the ALE "Association of Microfinance Organizations of Kazakhstan"
6. ABZALILOV Robert Shaukatovich - Head of the ALE "National League of Pawnshops of Kazakhstan"
7. SHERALIYEVA Bibinur Kokishevna - Head of the Public Foundation "Social House 'Rahym'"
8. DANILINA Anna Viktorovna - Public Association "Alternative" Mediation and Peacemaking Center
9. SOZAKBAYULY Kanat - First Vice-President of the Republican Public Association "Eurasian Union of Lawyers and Mediators 'Prakticos'"
10. PETROV Yevgeny Nikolaevich - Head of the Public Association "Society for the Support of Law Enforcement Agencies in the Fight Against Economic and Administrative Offenses"
11. SHAIKH Kazybek Altaevich - President of the "National Association of Cooperatives and Other Forms of Economic Communities of the Republic of Kazakhstan"
12. KANATBAYEVA Aigul Pashikhanovna - Deputy Director of the Department for the Protection of Financial Services Consumers' Rights of the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market
13. SHAGDAROV Maksat Amzeevich - Head of the Financial Market Abuse Counteraction Department of the Agency's Financial Institutions Methodology and Prudential Regulation Department

• Letter to the Members of the interdepartmental working group on the development of effective measures to counter financial pyramids and to public organizations

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