Financial Crime World

Azerbaijan Introduces New Anti-Money Laundering Laws to Combat Financial Crime

In a significant move aimed at strengthening its financial system and combating financial crime, Azerbaijan has introduced new anti-money laundering (AML) laws, effective from February 1, 2023. The laws replace the previous AML legislation and introduce new measures to prevent money laundering and financing of terrorism.

Key Changes in the New Laws

  • Reporting Requirements: Financial institutions and non-financial businesses and professions are required to report suspicious transactions and maintain accurate records of customer information.
  • Expanded Coverage: The list of financial institutions covered by the law includes credit institutions, local and foreign insurers, investment companies, virtual asset service providers, and more.
  • Non-Financial Institutions: Real estate agents, advocates, notaries, and other non-financial businesses and professions are also required to report suspicious transactions.

Targeted Financial Sanctions

The new AML laws introduce targeted financial sanctions (TFS) aimed at combating terrorism financing. The TFS law allows for the freezing of assets used to finance terrorism and includes procedures for including individuals and institutions on a list subject to sanctions.

Implementation Support

To support the implementation of the new AML laws, amendments have been made to various codes, including:

  • Code of Civil Procedure
  • Code of Criminal Procedure
  • Banking code
  • Insurance code
  • Investment funds code
  • Securities market code
  • Cashless settlements code

High-Risk Areas and Restrictions

The new AML laws define high-risk areas as jurisdictions or areas lacking an adequate AML/CFT system, supporting armed separatism, extremism, mercenarism, and terrorism. The Financial Monitoring Service and responsible persons are authorized to implement restrictions and special measures in relation to these high-risk zones.

National Action Plan

A National AML/CFT Action Plan for 2023-25 has been approved by the President of Azerbaijan, outlining the country’s strategy for implementing its AML/CFT obligations.

Objectives

The new laws aim to bring Azerbaijan’s financial system into line with international standards and prevent the misuse of its financial institutions for criminal purposes. The implementation of these laws is expected to strengthen the country’s efforts to combat financial crime and protect its financial system from abuse.