Armenia Struggles to Implement Effective Anti-Money Laundering Policies
A recent evaluation by international authorities has revealed significant shortcomings in Armenia’s efforts to combat money laundering and terrorist financing. The country’s rating, which reflects its adherence to global standards, fell short of expectations in several key areas.
Key Areas of Concern
Risk-Based Approach
- While Armenian authorities have made some progress in implementing a risk-based approach, they still lag behind other countries in terms of effective identification and management of high-risk transactions.
- The country needs to improve its ability to assess and mitigate financial risks.
National Cooperation and Coordination
- Despite efforts to improve cooperation, Armenia’s national cooperation and coordination mechanisms are still seen as inadequate, leading to delays and inefficiencies in investigations and prosecutions.
- The country needs to strengthen its cooperation between different government agencies responsible for combating money laundering and terrorist financing.
Confiscation and Provisional Measures
- Armenian authorities have been criticized for failing to adequately implement laws related to confiscation and provisional measures, leaving loopholes that allow criminals to evade justice.
- The country needs to improve its implementation of these provisions.
Terrorist Financing Offence
- Armenia’s terrorist financing offence is not effectively enforced, with many cases being left unresolved due to lack of evidence or inadequate investigation.
- The country needs to strengthen its enforcement of this offence.
Financial Institution Secrecy Laws
- Armenia’s financial institution secrecy laws are seen as inconsistent with global standards.
- The country needs to improve its customer due diligence requirements and ensure that they are robust enough to prevent money laundering through Armenian banks and other financial institutions.
Record-Keeping Practices
- Armenia’s record-keeping practices fall short of international best practices, making it difficult for authorities to track and investigate suspicious transactions.
- The country needs to improve its record-keeping practices.
Correspondent Banking Relationships
- Armenia struggles to effectively identify and manage the risks associated with correspondent banking relationships.
- The country needs to strengthen its oversight of these relationships.
Rating Breakdown
| R. Number | Criterion | Rating |
|---|---|---|
| R.1 | Assessing risk & applying risk-based approach | PC (Partially Compliant) |
| R.2 | National cooperation and coordination | LC (Largely Compliant) |
| R.3 | Money laundering offence | LC (Largely Compliant) |
| R.4 | Confiscation and provisional measures | NC (Non-Compliant) |
| R.5 | Terrorist financing offence | NC (Non-Compliant) |
| R.6 | Targeted financial sanctions related to terrorism & terrorist financing | LC (Largely Compliant) |
| R.7 | Targeted financial sanctions related to proliferation | PC (Partially Compliant) |
| R.8 | Non-profit organisations | LC (Largely Compliant) |
| R.9 | Financial institution secrecy laws | NC (Non-Compliant) |
| R.10 | Customer due diligence | LC (Largely Compliant) |
| R.11 | Record keeping | NC (Non-Compliant) |
| R.12 | Politically exposed persons | PC (Partially Compliant) |
| R.13 | Correspondent banking | NC (Non-Compliant) |
| R.14 | Money or value transfer services | NC (Non-Compliant) |
| R.15 | New technologies | NC (Non-Compliant) |
| R.16 | Wire transfers | NC (Non-Compliant) |
| R.17 | Reliance on third parties | NC (Non-Compliant) |
| R.18 | Internal controls and foreign branches and subsidiaries | NC (Non-Compliant) |
| R.19 | Higher-risk countries | NC (Non-Compliant) |
| R.20 | Reporting of suspicious transactions | NC (Non-Compliant) |
| R.21 | Tipping-off and confidentiality | NC (Non-Compliant) |
| R.22 | DNFBPs: Customer due diligence | LC (Largely Compliant) |
| R.23 | DNFBPs: Other measures | NC (Non-Compliant) |
| R.24 | Transparency and beneficial ownership of legal persons | LC (Largely Compliant) |
| R.25 | Transparency and beneficial ownership of legal arrangements | LC (Largely Compliant) |
| R.26 | Regulation and supervision of financial institutions | LC (Largely Compliant) |
| R.27 | Powers of supervisors | NC (Non-Compliant) |
| R.28 | Regulation and supervision of DNFBPs | PC (Partially Compliant) |
| R.29 |
Note: The ratings are based on the following criteria:
- PC: Partially Compliant
- LC: Largely Compliant
- NC: Non-Compliant