Astana International Financial Centre

Coordinates: 51°05′28.5″N 71°24′46.1″E / 51.091250°N 71.412806°E / 51.091250; 71.412806

Astana International Financial Centre
Industry Financial Services
Founded 2018 (planned launch)
Headquarters Astana, Kazakhstan
Key people
 Kairat Kelimbetov (Governor)
Website http://www.aifc.kz/

The Astana International Financial Centre (AIFC) is a financial hub in Astana, Kazakhstan that officially launched on July 5, 2018.[1]

On 20 May 2015, the President of Republic of Kazakhstan Nursultan Nazarbayev announced the “100 Concrete Steps” Plan of the Nation to implement the five institutional reforms, designed to provide a strong national platform needed to achieve country’s ambition of joining the top 30 developed countries by 2050.[2] As part of the Plan of the Nation, the AIFC was established with a special legal status to be based on the EXPO-2017 International Specialized Exhibition infrastructure.[3]

The Constitutional Law "On the Astana International Financial Centre" approved on 7 December 2015 provides a legal framework for the functioning of the AIFC as well as a favourable environment for its participants.[4]

The Astana International Financial Centre plays one of the main roles in attracting financial resources. It is positioned as a financial hub for the countries of Central Asia, the Caucasus, Eurasian Economic Union (EAEU), Middle East, Western China, Mongolia and Europe.[5]

AIFC bodies[4]

AIFC Management Council

It is a supreme authority that includes high profile leaders of global financial corporations and is chaired by the President of Kazakhstan. The main objectives of the Management Council include the determination of the strategic directions for the AIFC development and the assistance in the development of the favourable conditions for the formation of a leading financial centre. AIFC Development strategy was determined by the Management Council during its first meeting on 26 May 2016.[6]

AIFC Authority

The AIFC Authority was established on 28 December 2015 and is responsible for the development of the overall strategic plan, promotion of the AIFC in the global markets, attraction of the potential participants to the AIFC.

Astana Financial Services Authority (AFSA)

The AFSA was registered on 30 January 2017 as an AIFC body and regulates the financial services and related operations of the AIFC. The core functions of the AFSA include:

  • Registration. Registration of legal entities, subsidiaries and representative offices on AIFC territory.
  • Accreditation and Licensing. Issuance of permits to operate on AIFC territory requiring a license.
  • Regulation. Elaboration of acts in the form of regulatory provisions related to financial services regulation.
  • Control and Supervision. Supervision of audited entities compliance with approved acts of AIFC.
  • Law Enforcement. Conducting investigations in cases of violations of AIFC acts and ensuring enforcement of AIFC rules.

A regulatory regime consistent with recognized international standards (IOSCO, Basel, IAIS, FATF, etc.) will be introduced in the AIFC.

Barbara, Lady Judge CBE is the Chairman of the Board of Directors of the Astana Financial Services Authority.[7] Lady Judge is chairman of CJFAS, a UK fraud prevention service. [8]

AIFC Court

The AIFC will have its own legal system based on the principles and rules of English law. The AIFC Court is independent in its activity and separable from the judicial system of the Republic of Kazakhstan. It shall have no jurisdiction in respect of criminal and administrative proceedings and have an exclusive jurisdiction in relation to:

  1. hearing and adjudicating on any disputes between the AIFC participants, AIFC bodies and/or their foreign employees;
  2. hearing and adjudicating on any disputes relating to operations carried out in the AIFC and regulated by the law of the AIFC;
  3. hearing and adjudicating on any disputes transferred to the AIFC Court by agreement of the parties.

The AIFC Court is planned to be launched in 2018.

AIFC International Arbitration Centre

The International Arbitration Centre shall review disputes which the parties have agreed shall be settled by arbitration. It is planned to be launched in 2018.

AIFC Bureau for Continuing Professionals Development

AIFC Bureau for Continuing Professional Development is responsible for human capital development and plans to retrain over 2000+ specialists in the financial industry of Kazakhstan and, ultimately, creating critical mass of professionals for AIFC eco-system and beyond. In addition, the Bureau is responsible for investment and financial literacy programs related to AIFC’s core pillars including Islamic Finance, Fintech, Capital Markets, Green Finance, as well as Asset and Wealth Management.

Development strategy[9]

Kazakhstan enters a new phase of the development after a period of high economic growth. Diversification of economy, better management of the accumulated funds and assets, as well as the development of a financial services market have become important.

AIFC shall first be established as a local centre of expertise with a developed capital markets and later develop into a regional platform for financial intermediation. This shall serve as a solid foundation for the realisation of the subsequent phases, namely, development into a regional financial centre, and eventually, into an international financial centre.

AIFC Development strategy was determined six key priorities have been identified for the successful project implementation:

  1. Establishment of a transparent and clear legal regime based on world best practices is vital for ensuring global community’s confidence in AIFC.
  2. It is necessary to create a regulatory regime consistent with recognised international standards to ensure fairness, transparency and efficiency of the financial market, protect interests of investors and financial services customers, and to minimise systemic risk.
  3. AIFC Exchange shall comply with the world best practices for the development of the local capital market.
  4. In order to attract domestic and foreign capital for investment management it is necessary to create a favourable environment facilitating the arrival of recognised professional managers to AIFC platform.
  5. Considerable attention must be paid to supporting a sustainable economic growth and the development of green finance on AIFC platform.
  6. AIFC shall become the centre of local expertise and facilitate increase and development of the country's human capital by creating a favourable environment to attract the world’s best experts.

Positioning Astana as a main financial centre in the region shall be achieved through the implementation of the following five core pillars:

Pillar 1. Capital Markets

Kazakhstan possesses both attractive assets and accumulated resources, it is essential that right infrastructure is in place to allow channeling these resources into Kazakhstan's economy. A developed capital market will provide necessary mechanism for companies to attract capital and for the investors to diversify their investment portfolios. The new AIFC Exchange will allow trading in securities, commodities, and derivatives, and will provide a full range of services including listing, organization of trades, clearing, settlement and registrar. Capital market development shall create a significant alternative to the banking system and allow mobilising free financial resources of the country and the region, taking into account the interests of market players and needs of national economy. The Privatisation Program 2016-2020 as part of the Samruk Kazyna's Transformation program and IPO of companies from Baiterek's "National Champions" program will be the major drivers for the development of capital market in Kazakhstan.

The AIFC is a partner with the U.S.-based NASDAQ exchange to provide trading, clearing and exchange operations technology.[10]

Pillar 2. Asset Management

Over the last decade, Kazakhstan has maximised the nation's wealth and accumulated more than $90 billion[11] in foreign reserves that can potentially play a key role in the AIFC development process. AIFC aims to promote itself as an attractive local hub for setting up funds on AIFC territory for inbound and outbound investments.

Localisation of foreign asset management companies on AIFC territory shall give an effective boost to the development of local asset management and capital markets, and subsequently shall facilitate the inflow of funds from other sovereign wealth funds, institutional and large private investors to the market. It can subsequently become an additional competitive advantage for foreign asset management companies for participation in the tender for management of National Fund of Republic of Kazakhstan and Integrated Accumulative Pension Fund assets.

Pillar 3. Financial Technology

The AIFC shall become a centre of attraction of fintech projects due to its modern infrastructure, laboratories and close cooperation with the major financial and technological companies operating in the financial centre.

Development of a new class of high-tech financial services on the AIFC platform shall allow reducing the cost of traditional financial services, facilitating the integration with global markets and accelerating the development of the local financial market.

Pillar 4. Islamic Finance

Asset-backed financing and risk-sharing feature of Islamic finance could provide support for SMEs as well as investment in public infrastructure. Given the prohibition of speculation and uncertainty, Islamic financial institutions may enhance financial stability and provide sustained economic growth.

The development of Islamic banking and non-banking financial services, as well as Islamic capital market instruments shall require a special legal regulation and control in accordance with the principles of Islamic finance.

Pillar 5. Private Banking

Private banking shall be developed in conjunction with the Asset Management pillar both in terms of services provided to rich and affluent persons, and the management of repatriated funds and funds of wealthy citizens of neighboring states.

Increasing pool of affluent clients and high-net worth individuals in Kazakhstan as well as in the CIS/EAEU region makes AIFC an ideal platform for private banking services and solutions in fulfilling the demands of sophisticated private clients and family offices.

Favourable Environment[4]

Preferential tax regime

Corporate tax waiver till 1 January 2066 is given to AIFC bodies and AIFC participants providing Islamic banking, asset management, reinsurance and insurance brokerage, brokerage and dealer, underwriting services and other financial services determined by the resolution of the AIFC Management Council.

Corporate tax waiver till 1 January 2066 is given to AIFC participants providing law, audit, accounting, consulting services to AIFC bodies and other AIFC participants. AIFC bodies and participants are exempted from paying land tax and property tax for objects located in the AIFC territory.

Individual income tax waiver till 1 January 2066 is given to foreign employees of the AIFC bodies and participants.

Individuals and legal entities are exempted from paying individual income tax and corporate tax on capital gains, dividends and compensation on the securities listed on AIFC Exchange as well as capital gains and dividends on the shares of AIFC participants.

Common law framework

The legal framework of the AIFC shall be based on the principles, norms and precedents of England and Wales and standards of the leading international financial centres. The system will be institutionalized by the AIFC Court with qualified judges having experience in common law jurisdiction countries.

Simplified visa and labour regime

AIFC provides visa waiver up to 30 days for citizens of OECD countries, United Arab Emirates, Malaysia, Republic of Singapore and Principality of Monaco. Foreign employees of AIFC bodies and participants as well as their family members will enjoy special visa regime with extension up to 5 years.

One-stop-shop registration

AIFC implements one-stop shop: visa issuance, registration, work permits and other AIFC-related procedures all located in one place.

Language

English is the official language on the AIFC territory.

Priority Sectors

Finance

It is the goal that the AIFC become a regional financial centre and be a top 20 leading Asian financial centres within 10 years.[12]

Equities Trading

The AIFC has partnered with NASDAQ and the Shanghai Stock Exchange.[12]

References

  1. ↑ "Central Asian global financial hub AIFC opens in Astana". Business Standard.
  2. ↑ "Embassy of Kazakhstan in the UK / 100 Concrete Steps". www.kazembassy.org.uk. Retrieved 2017-05-02.
  3. ↑ "Astana International Financial Centre to Cement Capital's Place in Global Finance". Astana Times. Retrieved 12 December 2016.
  4. 1 2 3 "Constitutional Law "On the AIFC" dated 7 Dec 2015" (PDF).
  5. ↑ "Number of foreign companies in Kazakhstan increases 25 percent in the past year". astanatimes.com.
  6. ↑ "The first meeting of the Management Council of Astana International Financial Centre was held in Astana | Invest In Kazakhstan". invest.gov.kz. Retrieved 2017-05-02.
  7. ↑ "The AIFC Management Council has appointed Lady Barbara Judge CBE as Chairman of the Board of Directors of the Astana Financial Services Authority". AIFC.
  8. ↑ "Lady Barbara Judge CBE joins CIFAS as new Chairman". cifas.
  9. ↑ "AIFC Development Strategy" (PDF). 26 May 2016.
  10. ↑ "Astana International Financial Centre JSC and Nasdaq Sign Technology Deal for New AIFC Exchange". Yahoo! Finance.
  11. ↑ "International Reserves and Assets of the National Oil Fund of Republic of Kazakhstan". National Bank of Kazakhstan.
  12. 1 2 "AIFC, green tech centre and IT start-up hub to begin operating in 2018".
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