OSCE Supports National Bank of the Kyrgyz Republic in Strengthening Capacity on FATF Standards for Virtual Assets

From 20 to 21 August, in Bishkek, Kyrgyzstan, the OSCE organized a workshop on Virtual Assets and International Standards, focused on aligning national regulatory practices with the Financial Action Task Force (FATF) recommendations, in particular Recommendations 15 and 16.

The workshop was tailored for representatives of the National Bank of the Kyrgyz Republic. The agenda covered the conceptual and technological foundations of virtual assets, including distributed ledger technology (DLT), tokenization, and custodial versus non-custodial arrangements, as well as blockchain analytics methods used to trace on-chain transactions and identify illicit flows. Sessions also examined comparative regulatory frameworks across jurisdictions, the allocation of supervisory competence among national authorities, the operationalization of the FATF "Travel Rule" for VASPs, and the reporting and information-sharing obligations that apply between competent authorities in AML/CFT supervision.

In her opening remarks, Vera Strobachova-Budway, Senior Economic Officer at the OSCE Secretariat, underlined that "new products, new business models and new technologies are continuously emerging, and regulators and central banks not only need to understand virtual assets, but also how to regulate and supervise them effectively, while allowing legitimate innovation to develop and, at the same time, protecting the integrity and stability of financial systems."

Sanzhar Kanimetovich Abdygaziev, Member of the Board of the National Bank of the Kyrgyz Republic, noted: "Today, virtual assets and the technologies underpinning them represent one of the most dynamically developing areas of the financial sector. For a central bank and financial regulator, this is no longer simply a new technological topic, but an area directly linked to financial stability, risk management, consumer protection, and combating money laundering and terrorist financing."

The workshop is particularly timely as the Kyrgyz Republic prepares for its Mutual Evaluation by the Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG), a FATF-style regional body (FSRB) that assesses jurisdictions' technical compliance with FATF recommendations and the effectiveness of their implementation. In this context, it is essential to strengthen the capacity of government officials to understand virtual asset risk typologies and to establish a clear, shared understanding of the institutional division of responsibilities and the compliance and AML/CFT reporting channels between banks and virtual asset service providers.

The workshop was organized as part of the OSCE extrabudgetary project “Innovative policy solutions to mitigate money-laundering risks of virtual assets,” implemented by the Office of the Co-ordinator of OSCE Economic and Environmental Activities, with support from Germany, Italy, Poland, Romania, the United Kingdom and the United States.