Earlier this year, on July 12th, President Kassym-Jomart Tokayev of Kazakhstan has taken a definitive step towards ensuring the recovery of assets acquired illegally and hidden abroad. He has signed a new law, ‘On the return of illegally acquired assets to the state,’ and also made supplementary amendments to the country’s Code of Administrative Offenses, Tax Code, and the Law on the Prosecutor’s Office. As reported our insight into this legal development first comes from Aidana Tastanova, a Kazakh national and 3rd year law student at the Moscow State Institute of International Relations.
President Tokayev has expressed concern in the past regarding the concentration of wealth among a few individuals in positions of power under the previous regime and the subsequent hiding of this wealth in offshore firms and various funds. To underline the severity of this issue, he stated that half of Kazakhstan’s wealth is held by only 162 individuals. He then pledged to develop a mechanism to recover these assets.
According to the Tax Justice Network, over the past 25 years, a staggering estimated range of $140-160 billion, equivalent to the annual GDP of the entire country and its external debt, has been funneled from Kazakhstan to offshore accounts. However, this figure could potentially be even higher. To date, the Prosecutor General has stated that about 760 billion tenge has been successfully returned to the country.
The recent law applies to entities tied to individuals holding or having held responsible public positions, along with positions in state legal entities and quasi-public sector entities. The law comes into effect for individuals with assets in total exceeding a pre-determined legal threshold of 44 billion 850 million tenge, the equivalent of about $100 million.
It’s worth noting that the law allows for both voluntary and forcible return of illegally acquired assets, a move, no doubt designed to incentivize cooperation with the legal measures. Consequently, a specific state fund will be created to manage the returned assets and these funds will be allocated towards social and economic projects. International legal cooperation mechanisms are also included in the law to facilitate the enforcement of court decisions and assets holding abroad. Further reinforcing this is an agreement signed between the Attorney General’s Office of Kazakhstan and the International Asset Recovery Center (ICAR) of the Basel Institute on Governance.
This new law falls in line with President Tokayev’s larger reform agenda and response to demands for greater social justice. It represents a crucial instrument in the systematic, evolutionary return of illicit assets aiming to construct a more balanced Kazakhstan while maintaining a steady investment climate. More details can be found here.