Financial Crime World

Armenia’s Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) System

Executive Summary

The Financial Action Task Force (FATF) has reviewed Armenia’s AML/CFT system and identified areas for improvement. This report summarizes the key findings and recommendations to enhance Armenia’s AML/CFT capabilities.

Assessment of Money Laundering Threat

Limitations in Assessing ML Threat

  • Armenia’s assessment of the money laundering threat is limited to analyzing convictions, which does not provide a comprehensive understanding of the overall criminal activity faced by the country.
  • The authorities should consider the magnitude and significance of domestic and foreign criminal activity, including corruption, cross-border illicit flows, and trends in money laundering.

Vulnerabilities in Armenia’s AML/CFT System

Areas for Improvement

  • DNFBPs (Designated Non-Financial Businesses and Professions): Armenia has vulnerabilities related to DNFBPs, which can be exploited by money launderers.
  • Abuse of Legal Persons: There are concerns about the abuse of legal persons in Armenia’s AML/CFT system.
  • Corruption: Corruption is a significant vulnerability in Armenia’s AML/CFT system.
  • Shadow Economy: The shadow economy is another area of concern, as it can facilitate money laundering and other illicit activities.
  • Extensive Use of Cash: The extensive use of cash in Armenia’s economy poses a challenge to effective AML/CFT measures.

Beneficial Ownership

Requirements for Beneficial Ownership Information

  • All legal persons are required to be registered, with basic information publicly available.
  • The Central Depository and reporting entities maintain beneficial ownership information, which is available to competent authorities.
  • However, there is no formal mechanism for monitoring the adequacy, accuracy, or currency of this information.

International Cooperation

Limited Scope for Informal Exchange

  • Armenia demonstrates characteristics of an effective system in international cooperation, but law enforcement authorities have limited scope for informal exchange of information with foreign counterparts.

Recommendations to Improve Armenia’s AML/CFT System

  1. Deepen Analysis and Re-Evaluate Vulnerabilities: Armenia should deepen its analysis and re-evaluate vulnerabilities faced by the country towards money laundering.
  2. Make Full Use of Intelligence: Law enforcement authorities should make full use of intelligence generated internally or by the FMC to develop evidence and trace criminal proceeds.
  3. Develop National Law Enforcement Policy: Armenia should develop a national law enforcement policy to investigate and prosecute money laundering offences.

These recommendations aim to improve Armenia’s AML/CFT system, address vulnerabilities, and enhance international cooperation in combating money laundering and terrorism financing.