Armenian AML/CFT Law Fails to Align with International Standards

Summary of Key Findings

The Armenian Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) law has been analyzed against European Union and Financial Action Task Force (FATF) directives. The report highlights several areas where the law falls short in implementing international standards.

Inadequate Coverage for Auditors and Accountants

• The Armenian AML/CFT law does not cover auditors and accountants when acting in their professional activities, which is contrary to EU Directive requirements.
• This omission creates a gap in regulatory oversight and potentially exposes the financial system to money laundering risks.

Limited Scope of High Value Dealers

• The law only partially complies with the EU Directive by limiting its application to dealers in precious metals and stones, while the directive requires a broader coverage of high-value transactions.
• This limitation may hinder the effectiveness of AML/CFT measures in detecting and preventing money laundering activities.

Reporting Obligation Shortcomings

• The Armenian AML/CFT law does not fully comply with the directive’s requirement for ex ante reporting, which triggers a reporting obligation when the Financial Monitoring Centre receives suspicious transaction reports or certain types of transactions exceeding specified thresholds.
• However, it lacks an explicit general rule of reporting before executing suspect transactions, creating a potential loophole in the law.

Protection from Tipping Off

• The Armenian AML/CFT law does protect employees of reporting institutions from being exposed to threats or hostile actions, thus implementing Art. 27 of the Directive.
• This provision ensures that individuals responsible for reporting suspicious transactions are safeguarded against potential retaliation.

Lack of Explicit General Rule for Reporting

• Unlike Article 24.2 of the EU Directive, which provides an exception under specific conditions for not disclosing up front, the Armenian AML/CFT law does not have a general obligation to disclose suspicious transactions before executing them, unless it’s impossible or could frustrate an investigation.
• This omission may create confusion and undermine the effectiveness of AML/CFT measures.

Conclusion

The report concludes that Armenia’s law has areas where it fails to fully align with international and EU standards in the fight against money laundering and terrorism financing. Addressing these shortcomings is essential to strengthen the country’s AML/CFT regime and prevent financial crimes.