Financial Crime World

Armenia’s Banking Sector Takes Precautions Against Risk, Ensures Depositor Protection

Maintaining Financial Stability and Depositor Protection in Armenia

Yerevan, Armenia - The Armenian banking sector has implemented stringent measures to prevent illicit activities, safeguard customer deposits, and maintain financial stability.

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

Armenian banks are required to conduct due diligence on transactions and business relationships to identify potential risks. This includes:

  • Reporting suspicious transactions
  • Suspending or terminating relationships that pose a risk
  • Freezing assets linked to terrorist organizations or individuals

Deposit Guarantee Fund

The Central Bank of Armenia (CBA) has implemented a Deposit Guarantee Fund to protect depositors in the event of a bank’s insolvency or bankruptcy. The fund covers:

  • Deposits up to AMD 16 million for dram-denominated accounts
  • Deposits up to AMD 7 million for foreign currency-denominated accounts

Depositors are eligible for compensation if their bank is declared insolvent or bankrupt, provided they meet certain criteria.

Bank Secrecy

Armenian banks are required to maintain confidentiality of customer information (bank secrecy). This can only be disclosed in limited circumstances, such as:

  • With the customer’s consent
  • Upon request by regulatory authorities

Violations of bank secrecy rules can result in civil and criminal penalties.

Regular Contributions to the Deposit Guarantee Fund

The CBA has implemented measures to ensure that banks contribute to the Deposit Guarantee Fund on a regular basis. This provides a safety net for depositors in case of a bank failure.

Armenian Deposit Guarantee Fund Management

The Armenian Deposit Guarantee Fund pays compensation to eligible depositors within three years of a public notice announcing the insolvency or bankruptcy of a bank.

Conclusion

The implementation of these measures demonstrates Armenia’s commitment to maintaining a stable and secure banking sector, while also protecting the interests of its citizens.