Financial Crime World

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Financial System in Armenia: Progress and Challenges

The Central Bank of Armenia (CBA) has made significant strides in promoting financial inclusion in the country. However, despite these efforts, there are still weaknesses that need to be addressed.

Financial Inclusion

According to a recent report, the level of financial mediation in Armenia is growing consistently. However, unsatisfied demand for financial services, high transaction costs, and inadequate financial awareness among the population remain major challenges.

  • Unsatisfied demand for financial services
  • High transaction costs
  • Inadequate financial awareness among the population

Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT)

The report highlights potential vulnerabilities in the AML/CFT system. Key findings include:

  • Medium-rated vulnerability from financial inclusion, with a declining trend going forward
  • Concerns about:
    • Criminal liability of legal persons
    • Access to banking secrecy by law enforcement agencies
    • Mechanisms for managing property seized or confiscated

Institutional Framework

The report praises the CBA’s efforts to develop the legislative framework for AML/CFT, which has undergone continuous improvement over the past decade. However, there are still challenges that need to be addressed:

  • Very low-rated vulnerability from the Financial Monitoring Center (FMC) in exercising its functions and cooperating with national and international counterparts
  • Medium-rated vulnerabilities from:
    • Law enforcement authorities in criminal prosecution
    • The CBA in exercising its licensing, regulatory, and supervisory functions

Recommendations for Improvement

The report highlights the importance of improving practices in instigating and investigating criminal cases related to money laundering, as well as increasing cooperation between authorities.

Overall, while progress has been made in promoting financial inclusion and developing the AML/CFT system, there are still challenges that need to be addressed to ensure a robust and effective system.