Armenia’s Financial Regulatory Framework: A Review of Key Requirements

In an effort to ensure financial stability, Armenia has established a robust regulatory framework that governs various aspects of banking and finance. In this article, we will explore three key requirements that banks in the country must adhere to: Anti-Money Laundering/Know Your Customer (AML/KYC), Depositor Protection, and Bank Secrecy.

5. AML/KYC Requirements

The primary legal framework governing AML/CFT for banks in Armenia is the Law on Combating Money Laundering and Terrorist Financing. Additionally, banks must comply with recommendations issued by the Central Bank of Armenia (CBA) and relevant international institutions.

To ensure effective implementation, banks are required to have internal policies and procedures in place, including:

• Conducting customer due diligence at both the initiation of a business relationship and during ongoing service provision
• Evaluating potential risks associated with transactions and business relationships
• Reporting suspicious transactions and suspending or terminating transactions if deemed necessary
• Freezing assets owned or controlled by individuals related to terrorism or weapons proliferation

6. Depositor Protection Regime

The Deposit Guarantee Fund of Armenia (the “Fund”) is responsible for managing funds and paying compensation in the event of a bank insolvency. All banks in Armenia contribute to the Fund on a regular basis, with the amount calculated based on their total attracted deposits.

Depositors are protected up to certain limits:

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

Compensation is not provided in specific cases, such as when a depositor is a bank manager or significant shareholder.

7. Bank Secrecy Requirements

Bank secrecy refers to information belonging to a customer that becomes known to the bank during their business relationship. This includes account information, transaction details, trade secrets, and other confidential data.

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 CBA or Fund in connection with supervision
• Provision of information to companies providing services for the bank

These key requirements 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.