Kazakhstan is making significant strides in its efforts to combat financial crime, particularly in the cryptocurrency space. Recently, the Kazakh Agency for Financial Monitoring (AFM) reported the closure of 130 cryptocurrency exchanges linked to money laundering activities, along with the confiscation of digital assets valued at approximately $16.7 million (€14.4 million). This move illustrates the government’s commitment to tackling illicit financial practices that have gained ground in the nation.
### The Context of the Crackdown
The AFM’s operation was primarily aimed at dismantling a network of shadow platforms that facilitated money laundering for criminal organizations operating across Kazakhstan, Russia, Ukraine, and Moldova. According to the AFM, these exchanges enabled drug traffickers and cybercriminals to launder their profits. The mechanism typically involved transferring funds into exchange wallets, converting them into various currencies, and orchestrating transactions designed to obscure the original source of the money.
As the AFM noted, “These illicit exchanges act as professional money launderers, cashing out and transferring criminal income abroad,” highlighting the sophisticated nature of the operations. The agencies discovered these exchanges utilized front men’s bank accounts, often complicating the tracing of criminal activities.
### Regulatory Landscape
Under current Kazakh law, only cryptocurrency platforms licensed by the Astana Financial Services Authority (AFSA) and integrated with the national banking system are permitted to operate. The AFSA maintains rigorous standards, ensuring that only platforms adhering to strict cybersecurity and personal data protection measures can provide services.
At present, 27 Digital Asset Service Providers (DASPs), including 12 licensed crypto exchanges, are operating under this framework. These platforms are continuously monitored for compliance with anti-money laundering (AML) and counter-terrorist financing (CTF) regulations.
### Uncovering Hidden Networks
The AFM’s crackdowns also extended beyond cryptocurrency exchanges. Authorities revealed the existence of 81 clandestine groups that specialized in converting illicit funds into cash, with these operations accounting for transactions exceeding €38.5 million. Notably, in a nation with a growing digital payment infrastructure—where even simple purchases can be made using QR codes—cash remains a convenient tool for concealing financial transactions.
AFM Deputy Chairman Kairat Bizhanov expressed concerns over the rise in cash withdrawals, which reached €21 billion this year—an increase of €1.6 billion from 2024. The prevalent use of ATMs, he noted, has become a significant vulnerability in the system, while anonymous transfers present an ongoing challenge for regulatory authorities.
### New Safety Measures
In response to these challenges, the AFM and the National Bank of Kazakhstan are set to introduce new security measures aimed at tightening controls over cash transactions. Upcoming regulations, effective January 1, will require users making cash deposits exceeding 500,000 tenge (€802) to enter a personal identification number. Furthermore, banks are mandated to store ATM video footage for a minimum of 180 days as a surveillance measure.
Additionally, the possibility of implementing biometric verification methods—such as facial recognition or fingerprint scanning—is under consideration. “These measures will help close loopholes for anonymous transactions,” Bizhanov stated, reflecting the authorities’ proactive approach to ensure financial transparency in the digitizing economy.
### Broader Financial Violations
The crackdown on cryptocurrency is part of a more extensive effort to control various types of financial malfeasance in Kazakhstan. In recent months, law enforcement has dismantled illegal operations involved in the production of tobacco and alcohol and identified unlawful exports of petroleum products valued at €27 million.
In a separate initiative, authorities seized €19 million worth of vaping products, which have been banned in Kazakhstan since 2024, and closed down multiple underground gambling operations, including 11 online casinos.
Bizhanov emphasized that many financial violations can be traced back to shell companies, contributing to a system that enables fictitious transactions. Over the past three years, tax authorities have deregistered around 3,600 shell companies that facilitated more than 30,000 false transactions amounting to €450 million.
### Aiming for a Transparent Economy
Kazakhstan’s government is on a mission to reduce the size of its shadow economy to 15% of GDP by the end of this year. This ambitious target is part of a broader strategy to enhance oversight of the nation’s rapidly digitizing financial systems and curtail illegal activities.
As authorities tighten their grip on cryptocurrency and other avenues of financial misconduct, Kazakhstan illustrates that it is serious about compliance and regulation in an increasingly digital world. The recent actions taken by the AFM symbolize a proactive stance aimed at safeguarding the integrity of the country’s financial landscape while also promoting lawful economic growth.
### Conclusion
Kazakhstan’s closure of 130 cryptocurrency platforms reflects a critical juncture in the fight against financial crime and money laundering in the region. The measures implemented by the Kazakh government highlight not only its commitment to regulatory compliance but also its adaptability in the face of emerging financial technologies. As the country continues to evolve and embrace digital assets, maintaining a stringent framework for oversight will be essential in ensuring that the benefits of digital finance are realized while mitigating the risks associated with illicit activities.
This comprehensive approach by Kazakh authorities could serve as a model for other nations grappling with similar challenges in the cryptocurrency landscape. By emphasizing rigorous regulation and the adoption of innovative security measures, Kazakhstan is paving the way for a more transparent and secure financial future.
Source link
