Strengthening Control over the Purchase of Noncash Foreign Currency in Kazakhstan

Amendments to the Rules for Conducting Currency Transactions in the Republic of Kazakhstan (the Amendments) came into effect on January 1, 2025. From now on, banks will control the acquisition of foreign currency by reference to a total amount purchased by a legal entity within one operational day.

SPECIFIC PROVISIONS

Hence, to file the application(s) for currency conversion in the amount exceeding in aggregate the established threshold of the equivalent of $50,000 (the threshold) at the same bank on the same business day, the legal entity shall:

1. indicate in the application the purpose of the purchase of foreign currency;
2. submit the currency contract and the invoice or any other payment document, which execution requires the noncash foreign currency to be purchased; and
3. perform the reverse conversion of the noncash foreign currency into the national currency for all applications, the amount of which exceeds the threshold, in case the purchased currency is not used for the declared purposes within 10 working days from the date of the purchase.

To control the domestic currency market, the National Bank of Kazakhstan has previously applied the abovementioned procedure in cases where the amount of conversion within a single application exceeded the threshold.

However, due to the need to stabilize the exchange rate of the national currency and to reduce the purchases of foreign currency “for reserve” as a tool for legal entities to hedge their foreign exchange risks, the regulator resorted to introducing a similar approach to the total aggregate of applications for conversion made by a legal entity within one operational day.

The Amendments also provide for a mechanism of monitoring the 10-day period for the use of foreign currency and selling back unused currency in case the legal entity transfers foreign currency, purchased from one bank to its account in another bank.