Financial Crime World

Armenia Cracks Down on Financial Crime with Stringent Reporting Guidelines

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In its ongoing efforts to ensure financial stability, Armenia has introduced a robust regulatory framework that governs various aspects of banking and finance. A key component of this framework is the reporting guidelines aimed at preventing financial crimes such as money laundering and terrorist financing.

Anti-Money Laundering/Know Your Customer (AML/KYC) Requirements

The Law on Combating Money Laundering and Terrorist Financing enshrines the AML/KYC requirements, which are mandatory for all banks operating in Armenia. These regulations include:

  • Conducting thorough customer due diligence
  • Evaluating potential risks associated with transactions and business relationships
  • Reporting suspicious transactions
  • Freezing assets linked to terrorism or weapons proliferation

Depositor Protection Regime

Armenia has also established a Depositor Protection Regime aimed at safeguarding the interests of depositors. The Deposit Guarantee Fund of Armenia is responsible for:

  • Managing funds
  • Paying compensation in the event of a bank insolvency
  • Calculating contributions from banks based on their total attracted deposits

Depositors are protected up to certain limits, including:

  • AMD 16 million for Armenian dram-denominated deposits
  • AMD 7 million for foreign currency-denominated deposits
  • AMD 16 million for deposits exceeding AMD 7 million

However, compensation is not provided in specific cases where the depositor is a bank manager or significant shareholder.

Bank Secrecy Requirements

Armenia has implemented stringent Bank Secrecy requirements aimed at protecting confidential customer information. The general rule is that disclosure of bank secrecy is prohibited, with violations potentially leading to:

  • Civil liability
  • Administrative penalties
  • Criminal liability

However, there are certain exceptions where disclosure is allowed, including:

  • Customer consent
  • Disclosure to the Central Bank of Armenia or Deposit Guarantee Fund in connection with supervision
  • Provision of information to companies providing services for the bank

Conclusion

These reporting guidelines demonstrate Armenia’s commitment to ensuring financial stability and protecting depositors’ interests. Banks operating in the country must adhere to these regulations to maintain a reputation for transparency and accountability.