UZBEK BANKS: CONTROL OF PRIVATE BANK ACCOUNTS REMAINS
In the beginning of February 2008, the press-service of the National Bank of Uzbekistan (NBU) gave an official notice of disapproval regarding an information leak stating that the governmentâ€™s special services inspect bank accounts of citizens receiving funds or remittances from abroad. The statement followed after a number of foreign media sources reported that accounts of the bankâ€™s clients were being interfered with. It was then argued that the information sought to destabilize the official money transfer market and reorient it to unofficial and illegal conduits.
The issue came out after several of the bankâ€™s clients were denied immediate cash withdrawals from their bank accounts. In effect, tightened control over money transfers to Uzbek citizens has been practiced for several years. The delays and difficulties with withdrawing cash from the bank intensified in December 2007. According to sources in financial circles, the government ordered the â€œfreezingâ€ of accounts of Uzbek citizens receiving transfers from abroad last year â€œuntil complete retrieval of information about the sending sideâ€. However, local observers claim that the rumors are false and maintain that the situation is a result of cash-flow problems.
The National Bank has recently tried to boost confidence in banks and encourage people to deposit money by introducing new kinds of bank services and operations. The proliferation of plastic (debit and credit) cards is one of these strategies. The bank offers its clients international cards such as Visa Classic and Visa Electron, debit Sum cards, overdraft credit cards, IAPA discount cards and Priority Pass. According to the NBU, almost four million out of a population of 28 million now hold plastic cards. Moreover, another service offered allows holders of the plastic cards to pay their utility bills at NBU specialized cashiers and terminals. Credit card emission rise for organizations' employees in the framework of salary projects, realization of regional complex programs with transfer of retail payments into cashless settlement using plastic cards, establishment and launch of ATMs and offering clients interactive services are all among the prospective directions in development of the bank services offered.
In addition, the NBU offers a wide range of deposit checking. Opening a deposit checking in foreign currency would allow for money transfer to any part of the world, in national currency â€“ to pay for goods and services inside the country. All the money resources on the checking accounts are guaranteed by the â€œCitizensâ€™ Bank Account Guarantee Fundâ€. Money transfer services are also within the system of the NBU services, with more than a hundred centers using the systems of Western Union, â€œAziya Expressâ€, â€œContactâ€ and â€œMigomâ€.
In March 2007, the president, perhaps out of concern with the growing discontent among bank clients, suspended the validity of an earlier decree empowering the prosecutor general to require state-owned and commercial banks to hand over information on the financial transactions of their clients. In November 2007, another decree was issued, designed to encourage Uzbeks to have more confidence in the privacy of their bank accounts. In January, the authorities launched electronic internal bank transfers for the first time and increased the number of cash machines.
With all the new services offered and decrees enforced, â€the secret services and their representatives within the banks still pay special attention to any money transfers exceeding $US1,000 sent to Uzbekistan from the U.S., Europe or from the addresses of representative offices of foreign organizations in neighboring countries,â€ said a clerk of the NBU. Furthermore, the new order enforced in the NBU requires that a client must present a number of documents as well as a written request addressed to a bank official, requesting to receive the sum transferred to his bank account. If he successfully proves that the funds transferred to his account are not a grant and do not present any other â€œsuspiciousâ€ funds, he will be able to withdraw cash from his account within two to three days. This procedure contributes to a gross violation of bank operation rules, which normally guarantees confidentiality of accounts and balances, as well as immediate withdrawal of deposits and transfers upon a clientâ€™s request.
Control and inspection of private bank accounts may be permissible in cases when there is a direct threat and fear of external involvement in, or assistance to, certain â€œdevelopmentsâ€ in the country. That was allegedly the case in Ukraine and Kyrgyzstan. Thus, in Uzbekistan where security issues are of high priority, it appears that all the means are justified. The only question is to what extent the banks should be involved in supporting state affairs, affecting the interests and rights of their clients?