Kazakhstan’s Supreme Court suggests tougher regulations for online lenders
Kazakhstan’s Supreme Court has raised concerns about the spike in internet fraud and is proposing stricter legislation to address fraudulent loans, according to its press office. The issue was discussed at a recent meeting of the Supreme Court’s International Council, where it was noted that, in 2024, cases of internet fraud have surged by over 270% compared to 2022.
Under the influence of scammers, Kazakhstani citizens often voluntarily take out loans and sell property, transferring funds to unidentified individuals. Currently, the criminal code does not specifically protect victims of internet fraud, though victims can pursue claims in civil court.
Typically, two classes of cases are filed: recovery of unjust enrichment from so-called «money mules» and claims against banks and microfinance organizations (MFO). If a court determines that a fraudster’s account received unjustified funds, the fraudster is required to return the money to the victim.
The judges agreed on the need to strengthen criminal legislation to address internet fraud. The Agency for Regulation and Development of the Financial Market (ARDFM) is already working on these improvements.
Since Aug. 20, banks and MFOs are required to cancel loans if a court determines they were fraudulently issued. Additionally, these institutions must now perform biometric identification for clients when arranging online loans.
In response to a parliamentary inquiry, National Bank Chairman Timur Suleimenov outlined ARDFM’s further plans to mandate that banks and MFOs write off loans if they fail to meet specific requirements, including:
- Obtaining explicit consent from certain borrower categories for online loans;
- Applying a cooling-off period;
- Conducting biometric identification;
- Ensuring robust information and cybersecurity measures for online lending.
