The National Bank of Kyrgyzstan has introduced late payment penalties in the interbank foreign exchange market

The National Bank of Kyrgyzstan has updated the rules governing the interbank foreign exchange market—banks will now have to adhere more strictly to settlement deadlines and pay closer attention to transaction audits.

The key change is the introduction of the concept of compliance checks. Simply put, these are internal bank audits designed to ensure that transactions are not linked to money laundering or other illegal schemes.

But most importantly, the regulator is increasing banks’ financial liability. If one party to a transaction delays the transfer of funds, a penalty will be charged for each day of delay. Moreover, the National Bank will be able to automatically deduct these amounts from the banks’ accounts.

If the delay exceeds five business days, the transaction is effectively canceled—the parties are required to return the funds to each other.

However, exceptions are provided for: if the delay is due to force majeure or additional checks by intermediary banks, no penalties will be imposed.

Overall, the changes are aimed at making the foreign exchange market more disciplined and transparent.