Financial Crime World

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Azerbaijan Tackles Money Laundering with Risk-Based Approach

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As a key player in the global economy, Azerbaijan has been grappling with the growing threat of money laundering and terrorist financing. Despite its remarkable economic growth, the country has seen an increase in illicit activities such as drug trafficking, theft, tax evasion, and human trafficking.

Corruption Remains a Persistent Challenge

Azerbaijan’s authorities acknowledge that corruption remains a persistent challenge, with organized crime groups operating within the country’s borders. The nation’s banking sector is believed to be a primary conduit for money laundering and terrorist financing activities.

FATF Compliance

While Azerbaijan is not on the Financial Action Task Force (FATF) blacklist, it has been categorized as “Partially Compliant” with FATF’s 40 Recommendations. The country has actively worked to address its anti-money laundering (AML) deficiencies and has undergone evaluations by the Committee of Experts on the Evaluation of Anti-Money Laundering Measures (MONEYVAL).

International Cooperation

Azerbaijan has engaged in cooperation agreements with other nations to combat money laundering and terrorist financing, including a trilateral agreement with Georgia and Türkiye focused on joint efforts against organized crime and serious criminal activities.

The country’s legal framework for combating money laundering is anchored in several key laws and regulations, including:

  • Anti-corruption legislation
  • Financial sector oversight
  • Taxation and customs control
  • Legal professions

Government Bodies Involved

In Azerbaijan, various government bodies and institutions collaborate to combat money laundering, including:

  • Anti-Corruption Commission
  • Ministry of National Security
  • Chamber of Auditors
  • Ministry of Foreign Affairs

Risk-Based Approach

To effectively tackle money laundering, Azerbaijan is embracing a risk-based approach, which involves identifying high-risk customers and transactions and implementing targeted measures to mitigate the risks. This approach enables financial institutions to allocate resources more efficiently and reduce the compliance burden on low-risk customers.

Future Outlook

Azerbaijan’s move towards a risk-based approach is expected to strengthen its AML framework and enhance international cooperation in the fight against money laundering and terrorist financing. As the country continues to develop its AML capabilities, it is likely to become an increasingly attractive destination for foreign investment and trade.