Money Laundering and Terrorist Financing in Armenian Metal Dealers and Stone Merchants
A recent report has shed light on the lack of effective supervision and regulation of metal dealers and stone merchants in Armenia, leaving them vulnerable to money laundering (ML) and terrorist financing (TF). The report highlights several areas that need improvement to prevent ML and TF.
Lack of Effective Supervision
The Central Bank of Armenia (CBA) demonstrates a good understanding of ML/FT risks, but its practices and procedures are not risk-based. The CBA’s Financial Supervision Department does not conduct formal risk assessments of individual institutions or sectors, relying instead on the results of the National Risk Assessment (NRA). This lack of effective supervision leaves metal dealers and stone merchants vulnerable to ML and TF.
Lawyers and Accountants in the Spotlight
The report reveals that lawyers and accountants, as well as real estate agents, dealers in precious metals and stones, and other designated non-financial businesses and professions (DNFBPs), are not being effectively supervised for ML/FT risks. The Financial Monitoring Center (FMC) has been designated to supervise these sectors, but no supervisory regime has yet been implemented.
Transparency Lacking
The report notes that while legal persons in Armenia must register and provide basic information publicly available, there is no formal mechanism for monitoring the adequacy, accuracy, or currency of this information. Beneficial ownership information is also not checked regularly, leaving it vulnerable to misuse.
International Cooperation
Armenia’s international cooperation efforts are seen as effective, with authorities able to provide mutual legal assistance and extradition in a timely manner. However, law enforcement authorities have been slow to seek international cooperation, and there has been limited exchange of information on AML/CFT issues.
Priority Actions
To address these concerns, the report recommends that Armenia:
- Broaden its assessment of ML risks to consider not just convictions but also the magnitude and significance of overall criminal activity
- Deepen its analysis of vulnerabilities faced by the country towards ML, including those stemming from DNFBPs, abuse of legal persons, corruption, and the shadow economy
- Develop a national law enforcement policy to investigate and prosecute ML offenses
- Train law enforcement authorities on the use of financial intelligence products
Conclusion
The report’s findings highlight the need for increased vigilance in Armenia to prevent money laundering and terrorist financing. By implementing these priority actions, Armenia can improve its supervision and regulation of metal dealers and stone merchants, reducing the risk of ML and TF.