Armenia Financial Institutions Fall Short on Anti-Money Laundering, Terrorism Funding Combating

Vulnerabilities in Armenia’s Financial System Revealed

A recent assessment report has highlighted the vulnerabilities of Armenia’s financial system in combating money laundering and terrorism financing. Despite efforts to improve anti-money laundering and combating the financing of terrorism (AML/CFT) regulations, many financial institutions have been found wanting.

Banking Sector Dominates Financial Landscape

The banking sector dominates the financial landscape in Armenia, with total assets accounting for approximately 91% of the overall financial system. While most banks are domestically owned, foreign presence is significant. The non-bank financial sector plays a relatively minor role in financial intermediation, further highlighting the importance of robust AML/CFT measures within the banking sector.

Inadequate Measures by Financial Institutions

The report notes that many banks lack effective internal controls and due diligence procedures, making it difficult to detect and prevent suspicious transactions. This highlights the need for more robust customer due diligence procedures, enhanced monitoring of transactions, and increased transparency in reporting suspicious activities.

Government Efforts to Address Concerns

The Armenian government has taken steps to address these concerns, including increasing cooperation with international organizations such as the Financial Action Task Force (FATF) and implementing new AML/CFT regulations. However, more needs to be done to ensure that financial institutions are equipped to effectively combat money laundering and terrorism financing.

Expert Warnings

Experts warn that the lack of effective AML/CFT measures poses significant risks not only to Armenia’s financial stability but also to its national security. It is essential for the government and financial institutions to take immediate action to strengthen their defenses against these threats.

Key Areas for Improvement

The report highlights several key areas where improvement is needed, including:

• More robust customer due diligence procedures
• Enhanced monitoring of transactions
• Increased transparency in reporting suspicious activities
• Greater cooperation between financial institutions and law enforcement agencies to share information and intelligence on potential money laundering and terrorism financing activities

Conclusion

While Armenia has made progress in strengthening its AML/CFT framework, there is still much work to be done to ensure that the country’s financial institutions are equipped to effectively combat money laundering and terrorism financing. It is crucial for the government and financial institutions to take immediate action to address these concerns and protect the integrity of the financial system.