Armenia’s Money Laundering Risks Go Unaddressed Amid Predicate Criminality Concerns

Yerevan, Armenia - A recent evaluation has raised concerns that Armenia’s money laundering (ML) risks may not be fully assessed and understood, despite the country’s efforts to combat financial crimes.

Understanding of Foreign Terrorist Organization (FT) Risks vs. ML Risks

According to the report, while the understanding of FT risks appears adequate, ML risks seem to have been overlooked. The authorities’ lack of coordination in addressing these risks is particularly concerning, as it allows predicate criminality to go unchecked.

Interagency Committee’s Action Plan Criticized

The Interagency Committee on the Fight against Counterfeiting of Money, Fraud in Plastic Cards and Other Payment Instruments, Money Laundering and Terrorism Financing (Interagency Committee) is responsible for coordinating national anti-money laundering and combating the financing of terrorism (AML/CFT) policies. However, the committee’s action plan has been criticized for not properly identifying and assessing ML risks.

The report highlights that certain important intelligence work undertaken by government agencies and law enforcement bodies handling licensing and export control issues was not being brought into policy-making decisions. This lack of coordination has resulted in ML risks going unaddressed, allowing criminal networks to operate with impunity.

Reliance on Typologies and Pre-defined Indicators

Moreover, the authorities’ reliance on typologies and pre-defined indicators issued by the Financial Monitoring Centre (FMC) may be overlooking certain suspicious transactions and business activities. The FMC’s role as the lead agency within the AML/CFT operational system is crucial in identifying ML risks, but its efforts are hindered by a lack of cooperation with other law enforcement agencies.

Cash Declarations and Real Estate Transactions

The report also notes that cash declarations made at the border are not being effectively monitored, allowing large amounts of cash to be moved without scrutiny. The use of cash to purchase real estate is another concern, as it can facilitate money laundering and predicate criminality.

Failure to Pursue Seizure and Confiscation of Criminal Proceeds

Armenia’s authorities have been criticized for their failure to pursue the seizure and confiscation of criminal proceeds, instrumentalities, and property of equivalent value. This lack of effort has allowed criminals to retain the fruits of their illegal activities, perpetuating a culture of corruption and money laundering.

Conclusion and Recommendations

The report concludes that Armenia’s law enforcement efforts are not commensurate with the ML risks faced by the country. The authorities’ focus on securing convictions for predicate crimes rather than identifying and tracing criminal proceeds is hindering progress in combating ML.

To address these concerns, the Armenian government must take a more proactive approach to identifying ML risks and coordinating its anti-money laundering efforts. This includes:

Increasing cooperation between law enforcement agencies
Improving intelligence gathering and analysis
Pursuing the seizure and confiscation of criminal proceeds

Failure to do so will only perpetuate Armenia’s ML problems, allowing criminals to continue exploiting the country’s financial system for their own gain.