AML/CTF Concerns in Azerbaijan
A recent report has highlighted significant Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CTF) concerns in Azerbaijan. The majority of Suspicious Transaction Reports (STRs) filed with the country’s financial intelligence unit relate to terrorist financing, yet few investigations or prosecutions have been initiated.
Neglect of Existing Criminal Law
The Prosecutor’s Office appears to be neglecting the use of existing criminal law to combat money laundering and terrorist financing, despite its potential effectiveness. Law enforcement authorities lack training and awareness on these issues, as well as expertise in financial investigation techniques.
- There is a perception among authorities that prosecuting money laundering cases would be challenging and would not add value to convictions for predicate offenses.
- As a result, investigations and prosecutions have been scarce.
Insufficient Asset Seizure and Confiscation
The report also notes that Azerbaijani authorities have not provided statistics on asset seizure and confiscation, despite issuing such orders in the past. The country’s criminal law only allows for confiscation of property related to money laundering and crimes punishable by two years or more in prison.
Narrow Definition of Terrorism Financing
Azerbaijan has criminalized the financing of terrorism, but the definition is narrow and does not cover all forms of terrorist financing. There have been no successful prosecutions against individuals or organizations accused of financing terrorism.
Implementation of UNSCRs
The country’s implementation of United Nations Security Council Resolutions (UNSCRs) 1267 and 1373 has also been criticized. While Azerbaijan has sent out lists of designated persons to other ministries and supervisory bodies, there has been no guidance issued to the financial sector, and non-banking sectors have not frozen assets in conjunction with the UNSCRs.
Recommendations for Improvement
The report concludes that Azerbaijan’s AML/CTF regime is in need of significant improvement, particularly with regards to:
- Training for law enforcement and prosecutors
- Establishment of a functional financial intelligence unit
- Prohibiting bearer shares
- Implementing effective measures to prevent money laundering and terrorist financing
By addressing these concerns, Azerbaijan can strengthen its efforts to combat money laundering and terrorist financing, and bring its AML/CTF regime in line with international standards.