Consequences of Financial Crime in Armenia: A Complex Issue with Deep Roots

Economic Growth and Corruption

Yerevan, Armenia - As the Armenian capital continues to showcase outward signs of economic growth and development, concerns about corruption and money laundering have been rising. While some believe that a significant portion of this growth is built on illicit funds, others argue that the country has made progress in combating financial crime.

The Roots of Corruption

Armenia’s struggle against money laundering is rooted in its history as a former Soviet republic, where the lack of transparency and accountability allowed for corruption to flourish. The country’s economy has been dominated by cash transactions, making it difficult to track and monitor suspicious activities.

Government Efforts Against Financial Crime

However, the Armenian government has taken steps to address these issues. In 2004, parliament adopted a comprehensive anti-money laundering and terrorism financing law, which consolidated existing laws and added new regulatory structures. A Financial Intelligence Unit (FIU) was established within the Central Bank of Armenia to coordinate efforts against money laundering and terrorist financing.

International Cooperation

Armenia is also a member of international organizations such as the Council of Europe’s MONEYVAL committee and has signed several treaties related to combating financial crime. These measures have been seen as a positive step towards improving transparency and accountability in the country’s economy.

Challenges Ahead

Despite these efforts, corruption and a shadow economy remain significant challenges for Armenia. The lack of political will to address these issues has allowed them to persist, with many seeing no reason to comply with the law when faced with widespread examples of corruption and impunity.

Potential Solutions

One potential solution is to promote non-cash methods of payment within the economy, such as the use of credit cards. This could improve transparency and help police economic transactions, reducing the scale of corruption and the scope of the shadow economy.

Recommendations for the Government

To overcome these challenges, the government should:

• Continue to strengthen its efforts against money laundering and terrorist financing, including through the implementation of the anti-money laundering law.
• Empower the FIU to conduct more effective monitoring and analysis of suspicious transactions.
• Promote the use of non-cash methods of payment within the economy, with a focus on increasing transparency and reducing corruption.

Key Findings

• Armenia has made progress in combating money laundering, with the adoption of a comprehensive anti-money laundering and terrorism financing law and the establishment of a Financial Intelligence Unit (FIU).
• The country is a member of international organizations such as the Council of Europe’s MONEYVAL committee and has signed several treaties related to combating financial crime.
• Corruption and a shadow economy remain significant challenges for Armenia, with many seeing no reason to comply with the law when faced with widespread examples of corruption and impunity.
• Promoting non-cash methods of payment within the economy could improve transparency and help police economic transactions, reducing the scale of corruption and the scope of the shadow economy.