Financial Crime World

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Azerbaijan Strengthens Fight Against Money Laundering and Terrorism Financing

Azerbaijan has strengthened its laws and regulations to prevent the misuse of financial systems, demonstrating its commitment to combating money laundering and terrorism financing.

Reporting Entities’ Responsibilities

According to Article 8 of the Law on Combating the Legalization (Laundering) of Criminally Obtained Funds and the Financing of Terrorism:

  • Reporting entities must take measures to preserve and seize traces of crime if they detect any signs of money laundering or terrorist financing.
  • They must inform the financial intelligence unit and send relevant records to the competent authority conducting criminal prosecution.
  • Reporting entities are required to submit information on currency exchange values transported through the customs boundary of Azerbaijan to the financial intelligence unit, as per Article 8.2.

Customer Due Diligence Measures

Article 9 of the Law outlines customer due diligence measures that reporting entities must take:

  • Verify the identity of customers and beneficial owners.
  • Obtain information about their purpose and intended nature of business relationships.
  • Conduct ongoing due diligence on business relationships.
  • Reporting entities are prohibited from keeping anonymous accounts or issuing anonymous deposit certificates (Article 9.1).
  • They must verify identification information obtained about customers and beneficial owners through reliable sources (Article 9.8).

Enhanced Due Diligence Measures

The law requires reporting entities to take enhanced due diligence measures for higher-risk categories of customers, business relationships, or transactions, including:

  • Non-resident customers
  • Legal persons entrusted to manage funds
  • Companies with nominee shareholders or bearer shares
  • Correspondent banking relationships

In cases where reporting entities are unable to identify and verify the parties of transactions, they must not open accounts, commence business relations, or perform transactions (Article 9.15).

Conclusion

These measures aim to prevent the misuse of financial systems for money laundering and terrorist financing, and demonstrate Azerbaijan’s commitment to combating these serious threats to national security and stability.

Sources:

  • Law on Combating the Legalization (Laundering) of Criminally Obtained Funds and the Financing of Terrorism
  • Financial intelligence unit of Azerbaijan