Financial Crime World

Azerbaijan’s Anti-Money Laundering Regulatory Bodies Take Center Stage

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Azerbaijan is at the forefront of combating money laundering and terrorist financing. The country’s financial sector is governed by the Anti-Money Laundering Law, which aims to detect and prevent the legalization of property obtained through crime and finance terrorism.

A Gap in the Law

However, experts have identified a gap in the law that excludes certain sectors from its coverage. Dealers of arts, antiques, and high-value consumer goods, as well as entities dealing with jewelry and precious metals, travel agencies, and auto dealers are not currently subject to anti-money laundering regulations.

Key Players in the Fight Against Money Laundering

The Financial Monitoring Service under the Central Bank of Azerbaijan is responsible for implementing AML/CFT measures in the country. This independent government agency:

  • Monitors financial transactions
  • Investigates suspicious activities
  • Enforces regulations related to AML/CFT
  • Can impose administrative sanctions and penalties on financial institutions that fail to comply with AML/CFT regulations

The Ministry of Internal Affairs and the State Border Service are also key players in Azerbaijan’s fight against money laundering and terrorist financing. The Ministry:

  • Investigates and prosecutes money laundering and terrorism financing cases
  • The State Border Service:
    • Controls the country’s borders to prevent the movement of illicit funds and activities

Improving AML Compliance Risk

To improve its AML compliance risk, Azerbaijan can take several steps:

  • Strengthening its legal framework by amending the AML/CFT law to include previously excluded sectors
  • Enhancing the capacity of the Financial Monitoring Service and other relevant authorities:
    • Providing additional training to staff
    • Increasing the number of investigators and analysts
  • Improving technology use to detect and investigate suspicious transactions

Compliance Requirements

To comply with AML regulations, designated service providers in Azerbaijan must:

  • Develop and implement a compliance program with a rigorous anti-money laundering counter-terrorism financing policy in place
  • Strengthen the country’s AML/CFT legal framework
  • Enhance international cooperation and exchange of information with other countries
  • Conduct regular risk assessments to identify and mitigate potential money laundering and terrorist financing risks
  • Raise awareness and provide training to relevant stakeholders about AML/CFT measures

Conclusion

By implementing these measures, Azerbaijan can strengthen its position in the fight against money laundering and use new technologies such as non-fungible tokens (NFTs) in accordance with their purpose, while preventing crime.